No Payroll Taxes – No Freedom! Dallas Businessman Sentenced to Federal Prison for Failure To Pay Payroll Taxes – A Business Ethics Nightmare

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Bruce Alexander Brown, a Dallas, TX area resident, must have bumped his head, because only a blunt force trauma would cause someone to believe that not paying your taxes is O.K.

Today the U. S. Department of Justice issued a press release and Mr. Brown is going to federal prison. According to the release, U.S. District Judge Ed Kinkeade sentenced Brown to 36 months in prison and ordered him to pay $4,235,670.16 in restitution to the Internal Revenue Service (IRS).

Wow…three years in prison and then over $4 million due when he gets out.

According to an 11-count indictment returned in April, 2007, Brown was charged with failing to file payroll tax returns or pay federal payroll taxes for Excell in 2001 and 2002. The indictment also charged him with failing to file personal tax returns for the years 2000, 2001 and 2002. As part of the plea agreement with the government, Brown specifically admitted failing to account for and pay to the IRS $297,384.41 in payroll taxes that were owed by Excell for the fourth quarter of calendar year 2002 alone.

According to documents filed in Court, from 1996 through at least 2003, Brown was the owner and sole stockholder of Excell Personnel, Inc., which “leased” employees to companies that did not want to directly hire their own workers. Excell would locate, hire and train employees, and then provide them to the businesses that were Excell’s customers. The customers did not directly pay the employees that Excell provided, but rather paid a fee to Excell that included the gross wages that would be owed to the employees for their labor, plus an administrative fee from which Excell received its profit and out of which Excell was obligated to pay indirect costs of the employees and Excell’s overhead expenses. Excell, in turn, paid the employees their wages, making deductions for the required withholding of income taxes, Federal Insurance Contribution Act (FICA) taxes and Medicare taxes that were required to be paid to the United States.

Brown admitted that he was aware of the legal obligations and that he knowingly and deliberately chose not to pay over to the IRS the required withholding taxes, social security taxes and Medicare taxes. As part of his plea he expressly admitted that during the fourth quarter of 2002, Brown, on behalf of Excell, wilfully failed to pay over to the IRS approximately $297,384.41 in federal income, FICA and Medicare taxes owed to the United States for Excell’s employees. The Court order that Brown pay a total of $4,235,670.16 in restitution to the government covered not only the taxes owed for that quarter, but also for payroll taxes owed and unpaid in all quarters of Excell’s operation from 1996 through 2003.

Texas Motivational Speaker, Chuck Gallagher

As a business ethics speaker, I’ve been where Brown is today. Sad to say, but fully truthful, I’ve been to federal prison for tax evasion as well. Guilt is guilt…so I won’t sugar coat my crime, but I must admit it wasn’t as willful as Brown.  YouTube

On February 13, 2008 Brown has been ordered to surrender to the Bureau of Prisons. That will be a day he won’t forget. Giving up your freedom and becoming a nobody – by most people’s standards is painful. Unless times have changed, he will have a cell mate and be required to work every day, five days a week, (except Federal holidays). Funny, but prisoners have off (from their 12 cent an hour jobs) Federal holidays.

He will likely serve 85% of his sentence. And, if he’s lucky, he will emerge a changed man. Prison has a way of doing that to you.

When I speak to business groups about the Truth about Consequences, I shave a mantra that is truth: Every choice has a consequence.

Perhaps Brown will, in time to come, be the better for the consequence he’s soon to experience.

As a side note…another notable character is on trial for IRS tax issues…Wesley Snipes. It will be interesting to see what outcome comes from that trial as well.

Bruce…my best to you. Learn from your dumb choices and make your life count.

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