Arrested in Los Angeles in June of this year, Mencia is facing allegations of tax crime by the State of California that include tax evasion and failure to file taxes that involve a pattern of felony conduct as outlined in the Complaint filed in the Superior Court of the State of California.
The charges against Mencia are local, not federal. While Mencia has a history with the Internal Revenue Service (IRS), federal tax concerns are not at play in this prosecution. The Los Angeles County District Attorney's Business Tax Fraud Unit was established in May of this year to pursue businesses and individuals alleged to have deprived public coffers of tax revenue.
Facing 12 felony tax counts, Mencia is accused of failing to report and pay taxes on $8.7 million in corporate and personal income for the years 2019 through 2024. Mencia owns and operates Nedlos Entertainment, Inc. The high-profile case against Mencia is the first case brought by the Business Tax Fraud Unit.
Los Angeles County District Attorney Nathan Hochman stated, “Mencia has an income most people can only dream of, and like everyone else, he is required to file his personal and corporate tax returns and pay his fair share. Today we are sending a message to the tax scofflaws that it is no longer business as usual in Los Angeles County. The days of a free pass for failing to file returns and pay taxes are over.”
The matter was originally initiated by the California Franchise Tax Board, the entity responsible for collecting personal and corporate taxes in California. For taxpayers facing questions about tax fraud allegations, understanding how tax authorities define and pursue tax fraud can be an important first step. Our resource guide, Understanding Tax Fraud, provides additional background on the topic.
Mencia could face more than 11 years in prison if convicted on the allegations. According to the District Attorney’s Office, Mencia was sent 78 tax notices to his residence. As we often note, do not ignore collection notices from any federal or state agency. The repeated notices underscore the importance of addressing tax problems before they escalate.
In this case, the alleged conduct has led to the possibility of imprisonment, along with financial, personal, corporate, and reputational loss. Altogether, Mencia owes more than $300,000 in personal and corporate taxes. Media reports note that he recently listed a $6.8 million residence in Encino for sale.
California is not shy about naming those in arrears on their taxes. Check out the Franchise Tax Board Personal Income Tax List of the current top 500 tax delinquencies in the state.
Ignoring notices or knowledge that you have regarding personal or corporate compliance problems around offshore tax accounts, tax returns, or employer payroll taxes is a risky bet. Whether you are living on the East or West Coast, if you are on a state or federal list for significant tax debt, speak with an experienced tax attorney for strategic advice before it makes the media.
Contact our tax lawyers at 440-250-9709. Robert J. Fedor, LLC is an established, reputable tax firm serving clients across the U.S. and abroad from offices in Cleveland and Chicago.