Dale Thrush Faces Over 15 Years in Prison for Payroll and Filing Violations

Dale Thrush, a Michigan businessman, has been convicted of multiple employment tax crimes and willful failure to file personal tax returns, highlighting the serious legal risks for business owners who neglect their tax obligations.

The Case and Conviction Details

1. Conviction Date: March 5, 2025.
2. Charges: Three counts of willful failure to pay payroll taxes and four counts of willful failure to file individual income tax returns.
3. Acquittal: Acquitted on seven additional counts of payroll tax violations.
4. Business Operations: Automotive repair service shops and a gas station.

Misuse of Payroll Tax Funds

Thrush diverted withheld payroll taxes for personal expenses, a serious breach of trust.

Details of the Misuse

1. Withheld Taxes: Failed to remit Social Security, Medicare, and income taxes withheld from employees’ wages.
2. Diversion of Funds: Used funds for personal expenses, including remodeling and construction for his wife’s business.
3. Violation of Trust: Employment taxes are considered funds held in trust for the government.

Failure to File Personal Income Tax Returns

Thrush also failed to file his personal income tax returns, compounding his legal troubles.

Details of the Filing Failure

1. Time Period: 2013 to 2016.
2. Legal Obligation: Failed to file despite earning income and being legally obligated to do so.
3. Criminal Offense: Willful failure to file is a criminal offense.

Potential Sentencing and Penalties

Thrush faces significant prison time and financial penalties.

Possible Penalties

1. Willful Failure to Pay Payroll Taxes: Up to five years in prison per count.
2. Failure to File Personal Tax Returns: Up to one year in prison per count.
3. Sentencing Date: July 17, 2025.
4. Sentencing Factors: U.S. Sentencing Guidelines and statutory factors.

Government’s Commitment to Tax Enforcement

The Justice Department emphasizes the importance of holding employers accountable.

Key Statement

1. Acting Deputy Assistant Attorney General Karen E. Kelly: “Business owners who misuse payroll taxes and fail to comply with tax obligations harm not only the government but their employees and the public trust. This conviction reflects our commitment to enforcing tax laws and protecting workers.”
2. Investigating Agency: IRS Criminal Investigation (IRS-CI).
3. Prosecuting Attorneys: Trial Attorneys Mark McDonald and Evan Mulbry of the DOJ Tax Division.

Lessons for Business Owners

Thrush’s conviction provides critical lessons for all employers.

Essential Reminders

1. Payroll Tax Compliance: Withhold and remit payroll taxes on time.
2. Prohibition of Misuse: Do not use payroll taxes for personal expenses.
3. Personal Filing Obligations: File personal income tax returns as required.
4. Legal Consequences: Tax violations can lead to criminal charges, imprisonment, and fines.
5. Professional Guidance: Work with CPAs and tax attorneys for compliance.

Conclusion: Prioritize Compliance

1. Serious Consequences: Tax crimes lead to criminal prosecution and prison.
2. Employer Responsibilities: Understand and meet employment tax obligations.
3. Enforcement Focus: The IRS and DOJ prioritize payroll tax violations.
4. Protecting Employees: Ensuring the integrity of the U.S. tax system.

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