HR Strange But True!
November 03, 2005

The Justice Department says a California man helped dairy farms in Idaho, California, Arizona, and Oregon avoid paying millions of dollars in federal employment taxes by falsely claiming they paid workers with in-kind payments of milk.

The department alleged that Michael Lee Yohe of Newberry Springs, California, and two companies, Ag-Mart Services, Inc., and Mancat, Inc., promoted a tax scheme that disguised cash wages paid to farm workers as purported in-kind payments of milk.

Under some limited circumstances, federal law exempts from tax withholding in-kind payments of agricultural commodities for agricultural labor. However, the department alleged the defendants prepared phony commodity statements that falsely reported that workers were paid in milk and arranged to have these statements distributed to workers in lieu of wage and earnings statements.

The complaint described the defendants' actions as a "brazen tax-evasion scheme" that caused more than $12 million in employment tax and income tax losses.

A federal court in Boise, Idaho, has barred the defendants from promoting their in-kind payment program and prohibited the corporate defendants from engaging in any payroll, employee-leasing, or labor management services.

Source: Justice Department

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