California Construction Firm Owner Receives Prison Sentence for Employment Tax Crimes

A recent legal case in California has resulted in the sentencing of Larry Kudsk, the owner of two construction firms, to 12 months in prison for willfully failing to account for and pay over employment taxes. The charges stemmed from Kudsk's failure to file employment tax returns and pay payroll taxes withheld from employees' wages for multiple quarters, leading to a significant tax loss for the Internal Revenue Service (IRS). This article provides an overview of the case, highlighting the consequences and restitution imposed on the defendant.

Case Background:

Larry Kudsk, operating Kudsk Construction, Inc., and M. Gutierrez, Inc., both construction businesses, acted as general contractors or subcontractors on various projects, including government contracts. As the responsible party for these companies, Kudsk was obligated to file quarterly employment tax returns and ensure the timely payment of payroll taxes to the IRS. However, Kudsk failed to fulfill these obligations for significant periods, including 2014 and the last three quarters of 2015 for M. Gutierrez, Inc., as well as all four quarters of 2016 for Kudsk Construction, Inc. The resulting tax loss to the IRS exceeded $250,000.

Sentencing and Restitution:

Following the legal proceedings, U.S. District Judge Jeffrey S. White imposed a 12-month prison sentence on Larry Kudsk. In addition to the prison term, Kudsk was ordered to serve three years of supervised release. To address the financial impact of the tax crimes, the court also mandated restitution of approximately $244,973 to be paid to the United States.

Government Announcement

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department's Tax Division and U.S. Attorney Ismail J. Ramsey for the Northern District of California jointly made the announcement of the sentencing. Their statement emphasizes the seriousness of employment tax crimes and the commitment to holding individuals accountable for willful violations of tax laws.

Investigation and Prosecution:

The case was investigated by the IRS-Criminal Investigation unit, which thoroughly examined the evidence and conducted a comprehensive review of the financial transactions and tax filings related to Kudsk's construction businesses. Trial Attorneys Julia M. Rugg and Charles A. O'Reilly from the Tax Division, along with Assistant U.S. Attorney Katherine Lloyd-Lovett from the Northern District of California, prosecuted the case.

Conclusion: 

The sentencing of Larry Kudsk serves as a reminder of the consequences individuals face when willfully neglecting their responsibilities regarding employment taxes. The case underscores the commitment of law enforcement agencies and the justice system in addressing tax crimes and ensuring compliance with tax laws. Through this prosecution, the authorities send a clear message that deliberate non-compliance with employment tax obligations will not be tolerated, and offenders will be held accountable for their actions.