A California businessman played the long game when it came to employer tax fraud, and, in the end, he lost as big as he played.
Luis Perez is a 56-year-old Californian who owned and operated a variety of employment staffing companies. According to the Department of Justice (DOJ), Perez ran companies including BaronHR LL, BaronHR West, Inc., Fortress Holding Group LLC, and others. From the outset of his time in business, Perez beat a steady path of non-compliance.
The businesses of Perez were uniquely positioned to take advantage of payroll taxes—the wage and social safety net taxes withheld from workers used to fund current and future Social Security and Medicare programs, among other programs. Not only was Perez responsible for withholding and paying his own employer taxes, but he also handled withholding for temp workers hired into companies by his group of businesses.
The allure of payroll taxes
Employer payroll taxes can be a real temptation to business owners and operators. There are a number of ways that a business owner can take advantage of their responsibility to withhold and pay over employment taxes to the Internal Revenue Service (IRS). An IRS criminal investigation found that Perez was operating outside of the lines for pretty much the full 20 years he was in business. Beginning in 2001, Perez withheld wage taxes, but remitted less than he collected.
By 2007, the IRS had connected with Perez for taxes not paid on behalf of his company, Check Mate, Inc. By 2009 until 2017, the business interests of Perez had failed to pay employment taxes from 2001 to 2010, excepting 2004 and 2005. His tax debt, including the harsh Trust Fund Recovery Penalty, totaled nearly $29.6 million.
Even at that point, Perez did not take the hint. He filed false tax returns and continued to understate the income of his companies. Throughout the term of his tax crimes, he had funded a lifestyle that included luxury real estate, a jet, courtside seats to the LA Lakers, and vehicles. Perez’s automobile collection included a Ferrari 360 Spider F, a Rolls-Royce Phantom, a Duffy D 22 Bay Island boat, a Mercedes-Benz SLS, and a Mercedes-Benz G-Class. Some of these vehicles were titled in the names of others, as were bank accounts and payments for his purchases.
A quiet end and years in federal prison
When the end rolled around, Perez pled guilty to one count of tax evasion and one count involving a false tax return. While the allegations sound small, Perez will sit in prison for more than eight years thinking about how he is going to pay the $38 million he owes in restitution. Big time tax crime, small time felon for whom life will pass slowly by.
Already involved in your own payroll tax controversy? We can help
As a business owner, you need to understand regulatory requirements to keep your company compliant. The legal group at Robert J. Fedor, Esq., L.L.C., delivers the guidance needed to keep your tax returns and payroll operations off the radar of the IRS. Contact us to speak with a knowledgeable tax attorney today at 440-250-9709. We serve clients across the U.S. and internationally from our offices in Cleveland and Chicago.
If you would like to quietly gain a better understanding of employment tax fraud, download our free eBook, Employment Tax Fraud: What Every Business Owner Needs to Know.
