Owner of Johnson Sausage Shop sentenced to one year for not paying tax withholdings to IRS


Date: December 1, 2022

Contact: newsroom@ci.irs.gov

Madison, WI — Timothy M. O'Shea, United States Attorney for the Western District of Wisconsin, announced today that Christa Johnson, of Cambria, Wisconsin, pleaded guilty and was sentenced in U.S. District Court in Madison, Wisconsin by U.S. District Judge James D. Peterson. Judge Peterson ordered Johnson to serve one year in prison and pay a $25,000 fine. She was also ordered to pay $326,905 in restitution to the IRS, which she paid immediately.

On June 16, 2022, a federal grand jury sitting in Madison, Wisconsin returned a 17-count indictment against Johnson, charging her with seven counts of withholding income taxes and payroll taxes from her employees and not paying the taxes over to the IRS, nine counts of not paying the employer's share of employment taxes, and one count of obstruction of IRS collection efforts.

Johnson owned Johnson Sausage Shoppe, Inc. (JSS) which operated as a meat processing plant, grocery store, and catering business in Rio, Wisconsin since 1996. As President of JSS, Johnson was responsible for all aspects of JSS's business operations, including accounting, finance, banking, payroll, hiring and firing of employees, paying bills, paying taxes, and filing Forms 1120-S, 941, and 940 with the IRS.

The indictment alleged that Johnson failed to timely file quarterly employment tax returns (Form 941) for JSS, and pay the employment taxes, starting with the first quarter of 2013 through the fourth quarter of 2016. During that time span, JSS paid $1,496,524.69 in wages and withheld from those wages FICA taxes and the employee's income taxes, which totaled $211,337.32, none of which was paid over to the IRS. Johnson also failed to pay to the IRS the employer's matching share of FICA taxes, which totaled $111,137.86, and federal unemployment taxes which totaled $4,430.54, for the same time period. In total, JSS owed $326,905 in unpaid taxes to the IRS.

At today's hearing, Johnson pleaded guilty to one count of not paying over the employee tax withholdings for the third quarter of 2016, but agreed the total tax loss of the scheme amounted to $326,905.

In imposing the one-year prison term, Judge Peterson told Johnson that her conduct was serious, not only in terms of a large tax amount due, but also because the crime took place over a long period of time and she engaged in a pattern of defiance with the IRS for a long time frame. Judge Peterson noted that numerous individuals gave Johnson repeated warnings that she was in violation of the law, but Johnson ignored these warnings, and chose to defy her tax obligations from 2013 through 2016. As a result, Judge Peterson stated that a prison term was necessary to punish her and provide specific deterrence so that she would not repeat this conduct. Judge Peterson also noted that a prison term was necessary to provide a general deterrence message to other employers so that they know if they withhold income taxes and employment taxes from their employee's wages and do not pay it over to the IRS, they will be held accountable, and will go to prison.

The charges against Johnson were the result of an investigation conducted by IRS Criminal Investigation. Assistant U.S. Attorney Daniel Graber prosecuted this case.