Maria Elizabeth Townsend, Tax Evasion, Washington 2015

Burbank businesswoman Maria Elizabeth Townsend has been sentenced to 40 months in prison for her role in evading over $3.3 million in federal employment taxes, announced the Justice Department’s Tax Division and the U.S. Attorney’s Office for the Eastern District of Washington.

Townsend, 39, was the president and majority shareholder of Townsend Controls Inc. (TCI), a Pasco electrical contractor. Between October 2005 and September 2009, she withheld $3,361,246 in federal employment taxes from the wages of TCI employees, but failed to pay over those taxes to the IRS.

Instead of paying the accumulating employment taxes, Townsend authorized the disbursement of more than $31 million in TCI funds. She also failed to file any Forms W-2 for her employees for 2007 and 2008 with the Social Security Administration.

At a five-day jury trial in February 2015, Townsend was convicted of 10 counts of failing to pay over federal employment taxes to the Internal Revenue Service (IRS). Her sentencing was held yesterday, and she was ordered to pay $3,327,124.49 in restitution to the IRS, as well as a $1,000 special assessment and $8,048.49 in prosecution costs.

“Holding business owners accountable who willfully evade their employment tax obligations to line their own pockets is among the Tax Division’s highest priorities,” said Acting Assistant Attorney General Caroline D. Ciraolo. “These offenders, who not only steal from the United States, but also take advantage of honest competitors, will be prosecuted to the fullest extent of the law, and like Ms. Townsend, will face incarceration and substantial financial penalties.”

U.S. Attorney Michael C. Ormsby added, “The sentence imposed in this case reflects the seriousness of ‘white collar’ crime and that those accused of failing to pay over payroll taxes deducted from their employees’ paychecks to the IRS will be fairly and justly held accountable for their criminal conduct.”

Chief Richard Weber of IRS-Criminal Investigation stated, “Employers who do not withhold employment taxes are not only cheating the government, they are cheating their own employees and creating financial problems for them. Ms. Townsend chose to ignore her duty to timely file and pay employment taxes and now has to pay the consequences.”

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