COURT ORDERS HONOLULU EMPLOYERS TO COMPLY WITH FEDERAL TAX WITHHOLDING AND PAYMENT REQUIREMENTS

WASHINGTON, D.C. - The Justice Department announced today that a federal court in Honolulu, Hawaii, issued a preliminary injunction ordering Frederic Zimmer and his company, Artforms, Inc., to comply with federal employment tax withholding and payment requirements. The court order also prevents Zimmer or Artforms from transferring any assets that would prevent compliance with the Internal Revenue Code.

The Justice Department filed suit on February 25, 2004, seeking to enjoin the defendants from interfering with the administration of the internal revenue laws. The complaint alleges that the defendants, who operate a business manufacturing ornamental metal-work gates and doors, have failed to comply fully with their employment tax obligations since 1998. The United States later moved for a preliminary injunction. Zimmer and Artforms did not oppose entry of the injunction.

The April 23 order enjoined Zimmer and Artforms from:

• failing to pay timely future withholding and Federal Insurance Contributions Act ("FICA") and Federal Unemployment Tax Act ("FUTA") tax liabilities;


• transferring any money or property to any entity for the purpose of having that entity pay net salaries or net wages of any employee of Frederic Zimmer and/or Artforms, Inc.; and


• assigning any property or rights to property or making any disbursements for any purpose after the date of the order until the amounts required to be withheld from the wages, salaries, or other compensation of the employees of Frederic Zimmer and/or Artforms, Inc. after such date are first paid to the Internal Revenue Service.

“All employers must comply with federal employment tax laws,” said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. “Failing to withhold and pay federal taxes exposes an employer not only to a federal injunction, but also to significant civil penalties and, in some cases, criminal prosecution.”

The order remains in effect until a hearing on the permanent injunction is held.