Former Lincoln lawyer sentenced to two years in prison in tax case


Date: March 21, 2023


United States Attorney Steven Russell announced that Craig Hoffman, of Lincoln, Nebraska, was sentenced on March 20, 2023, in Lincoln by Senior United States District Judge John M. Gerrard for willful failure to collect or pay over employment taxes. Hoffman was sentenced to two years in prison. After his release from prison, Hoffman will begin a two-year term of supervised release. There is no parole in the federal system. Senior Judge Gerrard ordered Hoffman to pay $325,197.90 in restitution.

Between 2011 and 2017, Hoffman Law Office, P.C. LLO was a professional corporation doing business as a law firm in Lincoln. Hoffman was the owner, operator, and sole employee of Hoffman Law, and exercised control over the business affairs, including authorizing business expenses, authorizing payment of employee compensation, approval of payments made by the corporation, and approval of payment of "payroll taxes" to the Internal Revenue Service.

Hoffman Law, by and through Hoffman as the sole employee, was obligated to withhold taxes from his employee compensation, including federal income taxes, and Medicare and Social Security taxes, also known as FICA or payroll taxes. Hoffman Law was required to make deposits of "payroll taxes" to the Internal Revenue Service on a periodic basis. In addition, Hoffman Law was required to file quarterly tax forms showing employee wages subject to withholding, the total amount of income taxes withheld, the total amount of "payroll taxes" due, and the total tax deposits. As owner, operator, and sole employee of Hoffman Law, Hoffman had the authority required to exercise significant control over the corporate financial business affairs of Hoffman Law, and had the responsibility to collect, truthfully account for, and pay over "payroll taxes" of Hoffman Law to the Internal Revenue Service.

Between 2011 and 2016, Hoffman Law failed to pay over to the Internal Revenue Service payroll taxes which were due and owing to the United States of America. For example, as of October 31, 2015, Hoffman failed to pay over to the Internal Revenue Service $11,155.12 in payroll taxes he owed for the previous quarter ending September 30, 2015.

In October 2013, the IRS notified Hoffman of its intent to file levies to collect the taxes due for 2010 and 2011. Thereafter, several levy payments totaling more than $46,000 were received from the bank that held the Hoffman Law operating account. In 2014, Hoffman began the practice of transferring funds from the firm's trust fund account to its operating account and then immediately writing checks to himself that he cashed or deposited into his personal bank account. Hoffman engaged in this conduct, at least in part, so that he could receive the funds before any levies on the account could be made by the IRS, which resulted in the account having a low balance from time to time in the event the IRS levied on the account. Between 2011 and 2016, Hoffman failed to pay $241,362.92 in employment taxes. Including interest and penalties, Hoffman's outstanding tax debt grew to $325,197.90, which is the amount of restitution he was ordered to pay to the IRS as part of his sentence.

"As an Attorney, Mr. Hoffman was not above the law. Investigating and prosecuting any business owner who intentionally fails to pay their employment tax obligations is a priority for IRS-Criminal Investigation," stated Special Agent in Charge Thomas F. Murdock of the IRS-Criminal Investigation St. Louis Field Office. "Today's sentencing is a reflection of just how serious the courts view these crimes, and Mr. Hoffman is now a convicted felon with a prison term to serve.

This case was investigated by the Internal Revenue Service – Criminal Investigation.