The owner of an Oregon-based payroll services business has admitted to evading $24 million in employment taxes, according to a report by Small Business Trends. Robert Kohnle, who served as the president, secretary, and chief executive officer of Real Benefits Group Inc., trading as Aliat, confessed to deliberately neglecting to remit payroll taxes owed to the Internal Revenue Service (IRS).
Aliat, classified as a professional employer organization, provided payroll and related services to its clients. As part of its agreements, Aliat was responsible for collecting payroll taxes, including federal income tax and contributions to Social Security and Medicare, from its clients’ employees. These taxes were meant to be sent to the IRS.
However, Kohnle deviated from these agreements between 2016 and 2022. Despite collecting payroll withholdings from clients, he failed to transfer the funds to the IRS. Instead, he used the money to settle other liabilities and creditors linked to Aliat, including personal withdrawals. The total tax deficit incurred as a result of Kohnle’s actions amounts to $24,816,602.
This case highlights the importance of diligence and oversight for small business owners who outsource their payroll services. The incident underscores the need for businesses, particularly smaller enterprises, to regularly review and validate the operations of any external partners handling monetary transactions or tax-related duties.
Kohnle is now facing severe legal repercussions. His sentencing hearing is scheduled for January 8, 2024, where he could be sentenced to up to five years in prison, along with supervised release, restitution, and monetary penalties. The final decision regarding Kohnle’s sentence will be made by a federal district court judge, taking into account the U.S. Sentencing Guidelines and other statutory factors.
The announcement of this tax evasion scheme was made jointly by the Justice Department’s Tax Division and the U.S. Attorney for the District of Oregon. The IRS-Criminal Investigation unit will be investigating the case.
Small businesses in Oregon and beyond should take this incident as a reminder to monitor and hold themselves accountable for their tax obligations. It is crucial to exercise caution when working with third-party service providers to ensure compliance with tax regulations and to protect their businesses from potential legal consequences.