An Entity a Day Will Keep the IRS Away, Right?

Here’s a scheme that’s sure to work to avoid remitting payroll taxes to the IRS. Every day (or week or month), I’ll form a new business entity that’s collecting the tax. Once the amount due to the IRS gets large, I’ll just use a new entity. The IRS will never catch on, right?

As I’ve said before and will say again, if you want a sure-fire way to get in tax trouble, withhold payroll taxes and don’t remit them to the IRS. I guarantee it will be investigated and you will get in trouble. Agim Zendeli apparently didn’t read my prior posts on this subject.

Mr. Zendeli operated the Ziggies chain of restaurants in Missouri. Mr. Zendeli, liked the good life; for eleven years (from 2004 to 2014), he used the restaurants as a piggy bank for his personal life.

During this period, Zendeli lived a lavish lifestyle, and spent substantial sums on vacations, gambling trips, entertainment and luxury vehicles, including three BMWs, two Cadillac Escalades, two Infiniti QX56s, a 2009 Mercedes, a 2008 Acura and a 2004 Land Rover.

That was done by not remitting the payroll taxes. His scheme was what I noted in my first paragraph.

In order to avoid IRS collection of past due employment taxes, Zendeli repeatedly formed new entities to continue restaurant operations. Once each company accumulated a large tax debt to the IRS, Zendeli ceased operating under that company’s name and opened a new entity, often in the name of a family member, partner, or employee. Zendeli, however, maintained custody and control of the businesses.

Mr. Zendeli also tried to deceive the bankruptcy court; that didn’t work:

In addition, Zendeli attempted to avoid payment of approximately $654,260 in past due federal and state employment taxes by filing bankruptcy on March 26, 2010. Prior to the bankruptcy, Zendeli divorced his wife and transferred the trademarked name “Ziggies®” to his father, for a token payment. (Funds from the 2011 sale of trade name “Ziggies®” were remitted through Zendeli’s bankruptcy proceedings, after the trustee determined a fraudulent transfer of assets had occurred.)

In the end, Mr. Zendeli pled guilty to failing to remit $1.3 million in federal payroll tax. He’s agreed to make restitution; he’s also facing up to five years at ClubFed.

As a helpful hint to any business owners who think this scheme will work: It won’t. But I’ve been reporting on these schemes for nearly 11 years, and I suspect if I keep this blog going another 11 years I’ll still be able to note these. It’s so much easier to simply pay your taxes and live a less lavish lifestyle…but that doesn’t occur to the Bozo contingent.

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