COURT ORDERS COLORADO EMPLOYER TO PAY EMPLOYMENT TAXES

Business Ceased Withholding And Paying Payroll Taxes In 2000

WASHINGTON, D.C. - Eileen J. O=Connor, Assistant Attorney General for the Justice Department’s Tax Division, announced today that a federal district court in Denver, Colorado has ordered Colorado Mufflers Unlimited, Inc., of Northglenn, and its officers and shareholders to resume withholding federal taxes from their employees’ wages. According to the order, entered August 10, Colorado Mufflers’ officers ceased withholding and paying payroll taxes and filing accurate employment tax returns in 2000.

In addition to Colorado Mufflers, the order applies to Richard D. Rudd, Sr., Delores Rudd, Sherilyn Gallegos, Richard D. Rudd, Jr., and George Gallegos, III, each of whom were identified by the court as an owner or officer of the corporation.

The court’s order states that the defendants raised “patently meritless ‘tax protestor’ arguments” about the applicability of the tax laws to themselves and their business. The order directs the individual and corporate defendants to withhold income, Social Security and Medicare taxes from employee wages, to pay these taxes to the Internal Revenue Service as they become due, and to start filing accurate tax returns, going back to the year 2000. The court also ordered the defendants to make payroll tax deposits within three days of each payroll, to issue Forms W-2 to employees, to post the court’s order on their business premises, and to notify current and former employees of the order.

“Employers who fail to withhold payroll taxes and pay them into the Treasury are harming not only their employees, but the public as a whole,” said Assistant Attorney General Eileen J. O=Connor.

This injunction is the latest in a string of injunctions obtained by the Justice Department that require employers to obey tax withholding laws. Further details about some of these injunctions are available at http://www.usdoj.gov/tax/04_tax_243.htm, http://www.usdoj.gov/tax/03_tax_498.htm, and http://www.usdoj.gov/tax/03_tax_692.htm.

Information about the Tax Division is available at http://www.usdoj.gov/tax/index.html.

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