Date: June 30, 2020
Trenton, N.J. – The owner and operator of a commercial office cleaning business based out of Tinton Falls, New Jersey, pleaded guilty today to employment tax charges and tax evasion.
John Storz, a resident of Eatontown, NJ, entered his plea via video conference before U. S. District Judge Peter G. Sheridan. Storz pleaded guilty to one count of failing to collect, account for and pay over payroll taxes and one count of tax evasion. Sentencing is scheduled for December 7, 2020.
"Today's guilty plea by should send a strong deterrent message to those that would attempt to avoid paying their fair share of taxes," stated Michael Montanez, Special Agent in Charge, IRS-Criminal Investigation, Newark Field Office. "When Mr. Storz made the decision to evade paying taxes for himself and his business, he also made the decision to cheat every honest taxpayer. Employment tax fraud investigations are a priority for IRS-Criminal Investigation, and we will continue to vigorously pursue those individuals who attempt to cheat the system."
According to court documents and statements made in court:
Storz owned and operated John Storz Enterprises Inc., d/b/a Class A Cleaners (JSEI), located in Tinton Falls, NJ. As the owner and operator of JSEI, Storz was responsible for collecting, accounting for and paying over payroll taxes for his employees. Storz was also responsible for filing with the IRS Form 941, Employer's Quarterly Federal Tax Returns, reflecting the employment taxes that the business had withheld and paid to the Internal Revenue Service each quarter.
During the years 2013 through 2015, Storz cashed over $1.2 million dollars of client checks at a check casher. Storz utilized the majority of the cash to pay his employees off the books. Storz was required to withhold, report and pay over employment taxes to the IRS on the amount of wages he paid to JSEI employees. Storz admitted that for the third quarter of 2015, he failed to report any of the cash wages paid to his employees. In doing so, Storz failed to pay over $6,471.29 in payroll taxes on behalf of his employees.
In total, for tax years 2011 through 2015, Storz failed to pay over approximately $213,513.46 in employment taxes.
During the years 2013 through 2015, JSEI was considered a Sub-Chapter S corporation. As such, the ordinary business income of JSEI was reported on the personal tax returns of Storz. Storz failed to report as income any of the checks that he cashed at the check casher on the corporate returns of JSEI. In addition, Storz used the business bank account to pay for personal expenses such as his home mortgage, life insurance, car lease payments, personal credit card purchases and home utilities. Storz deducted these personal expenses as business expenses on the corporate returns of JSEI therefore reducing the amount of ordinary business income of JSEI that Storz reported on his personal tax return.
Storz admitted that for the 2015 calendar year, he failed to include approximately $179,500 of additional taxable income on his personal tax return, which resulted in an additional tax due and owing of approximately $49,499.
In total, for the tax years 2011 through 2015, Storz failed to report approximately $717,628 of additional income, which resulted in a total tax loss of approximately $182,210.
The count of failing to truthfully account for, file and pay over payroll taxes and the count of tax evasion each carry a statutory maximum prison sentence of five years and a statutory maximum fine equal to the greatest of: (1) $250,000; (2) twice the gross amount of any pecuniary gain derived from the offense; or (3) twice the gross amount of any pecuniary loss sustained by any victims of the offense.
The investigation was conducted by IRS-Criminal Investigation, Newark Field Office, under the direction of Special Agent in Charge Michael Montanez and the U.S. Attorney's Office, under the direction of U.S. Attorney Craig Carpenito.
The Government is represented by Assistant U.S. Attorney Sarah A. Sulkowski.