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
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
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.