Former owner of Red’s restaurants, John Drivas, has pleaded guilty to defrauding the IRS and the Massachusetts Department of Revenue. Drivas, who operated three restaurants in Massachusetts and New Hampshire, failed to report cash wages to the IRS, causing employment tax losses of $439,341. Additionally, he collected over $1.5 million in state meals taxes from restaurant customers but did not pay it to the state. Drivas pleaded guilty to multiple counts of failure to collect and pay over employment taxes and wire fraud for not paying state meals taxes.
According to the Department of Justice, Drivas paid wages to employees in both payroll checks and cash, without reporting the latter to the IRS. Employers are required to withhold income taxes, social security, and Medicare taxes from employee wages. In Massachusetts, restaurant owners must collect sales taxes on meals, including a local option tax. Drivas operated Red’s Sandwich Shop in Salem, Red’s Kitchen and Tavern in Peabody, and Red’s Seabrook in Seabrook. His sentencing is scheduled for December 5.
The case highlights the importance of complying with tax laws and paying required taxes. Business owners have a legal obligation to accurately report wages, pay employment taxes, and submit collected taxes to the state. Drivas’ plea serves as a reminder that tax evasion can have serious consequences. The Department of Justice and the Massachusetts Department of Revenue work together to ensure tax compliance and hold individuals accountable for fraudulent activities.
Source
Photo credit www.boston.com