Workers’ Comp Premium Evasion: Massachusetts Businessman Sentenced for Million-Dollar Payroll Tax Fraud Scheme
In a significant crackdown on payroll tax fraud, a Dorchester businessman was sentenced on December 10, 2024, to one year and a day in prison, followed by three years of supervised release. The court also ordered him to pay $2,574,976 in restitution after he pleaded guilty to a multi-year tax fraud scheme that allowed him to evade millions in employment taxes.
The Case Against Det Tran
Det Tran, the owner and operator of HTP Temp. Inc. (HTP), a temporary employment agency, pleaded guilty on September 11, 2024, to two counts of failure to collect and pay over employment taxes. His fraudulent activities spanned several years, leading to severe financial consequences for both the government and his employees.
Key Details of the Investigation
Operation of HTP Temp. Inc.: From at least 2018 through 2021, Tran ran HTP, providing temporary workers to client businesses.
Off-the-Books Cash Wages: During this period, Tran paid approximately $8 million in cash wages “off the books” to his employees. This deliberate concealment allowed him to avoid reporting these wages properly to the IRS.
False Tax Filings: By concealing cash payments, Tran misled his accountant, resulting in false quarterly tax filings to the IRS for employee wages and tax withholdings.
Tax Evasion Impact: Tran's actions enabled him to evade over $2.1 million in employment taxes owed to the IRS between 2018 and 2021.
The Consequences
Tran's sentencing highlights the severe penalties for payroll tax fraud. By evading employment taxes, not only did Tran defraud the government, but he also put his business and employees at risk. The court’s decision to impose prison time, supervised release, and significant restitution underscores the importance of compliance with tax laws.
The Broader Implications of Tax Fraud
This case serves as a stark reminder of the consequences of attempting to evade workers' compensation premiums and employment taxes. Businesses are urged to maintain accurate records, file truthful tax returns, and pay all employment taxes to avoid legal and financial repercussions.
Final Thoughts
As seen in this case, payroll tax fraud undermines the integrity of the tax system and places unnecessary burdens on honest businesses and workers. Employers are encouraged to seek professional guidance to ensure full compliance with tax laws.
If you suspect instances of payroll tax fraud, reporting them to the appropriate authorities helps maintain fairness in the business landscape.
