California Construction Owner Jailed for Employment Tax Fraud


A Berkeley-based businessman, Larry Kudsk, has been sentenced to a year in prison over employment tax crimes, sparking a pertinent reminder for small business owners on the importance of adhering to tax regulations.

Kudsk, the owner of two construction companies, Kudsk Construction, Inc., and M. Gutierrez, Inc., failed to account for and pay over employment taxes, a move that has landed him in hot water with the Internal Revenue Service (IRS). The two firms have been involved in various construction projects, some even government-affiliated, serving as general contractors or subcontractors.

Operating as the decision-maker for both firms, Kudsk was in charge of filing quarterly employment tax returns and ensuring that payroll taxes, deducted from employees’ wages, were appropriately paid over to the IRS. However, court documents reveal a failure on Kudsk’s part to fulfill these responsibilities for specified periods between 2014 and 2016. These omissions have caused a tax loss exceeding $250,000 to the IRS.

In addition to a year’s imprisonment, U.S. District Judge Jeffrey S. White mandated three years of supervised release for Kudsk, as well as a restitution payment of approximately $244,973 to the United States.

The sentencing was announced by 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. The case was investigated by the IRS-Criminal Investigation and prosecuted by Trial Attorneys Julia M. Rugg and Charles A. O’Reilly of the Tax Division and Assistant U.S. Attorney Katherine Lloyd-Lovett of the Northern District of California.

For small business owners, this incident serves as a stark reminder of the potential repercussions of neglecting employment tax obligations. Kudsk’s story is a cautionary tale that underscores the necessity of understanding and complying with tax regulations.

To avoid similar pitfalls, small business owners must ensure timely filing of employment tax returns and prompt payment of withheld taxes to the IRS. It’s crucial to remember that as employers, they bear the responsibility for the proper collection and payment of employment taxes.

Understanding and complying with tax regulations may seem daunting, especially for newer or smaller businesses. However, numerous resources are available, including IRS publications, tax professionals, and small business advisories, to assist in navigating these essential responsibilities.

In the long run, adherence to tax laws and regulations is not only a legal obligation but a fundamental part of operating a successful and sustainable business. By staying on top of their tax duties, small business owners can avoid significant legal and financial headaches, ensure the well-being of their employees, and continue contributing positively to the economy.

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Image: Depositphotos






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