Not a good look.

Ugh, this heritage railroad industry is small enough and fragile enough to not need things like this.

This can be described as failure to remit entrusted money.

What that refers to is that the withholdings from employees is not your money. It's the employees' money, "entrusted" to the employer to pay it into appropriate Social Security/Railroad Retirement accounts, Medicare accounts if applicable, and income tax accounts.

The IRS treats this sort of thing seriously; it's considered wage theft.

I was an auditor for West Virginia's State Unemployment agency for 36 years. I knew of only a few business owners who tried this sort of thing, and they got into trouble with the IRS because of it. I believe most of those people knew to take care of it promptly to avoid things like criminal cases.

Considering how few of these cases I knew about, I think most business owners knew how important it was to send that money in.

Occasionally this happens due to incompetence. Not all accountants understand tax law and how to submit etc. However, the article mentions over $600K and over a period of years, while getting notices from the IRS. That's not a mistake, and they take it seriously. A year in jail and all the debt could well mean the end of this railroad.

"Judge Peterson, in sentencing, said the failure to pay the taxes was a serious crime and was “part of a long-sustained pattern of criminal conduct,” and that the crime was aggravated by the fact he had engaged in the same conduct from 2014 to 2016, then did so again starting in 2018."

I'm not familiar with the operation but had always heard good things. I'm surprised to hear this.

We are getting OT here but I've always wondered who takes the loss in this kind of situation? The IRS or the employees whos withholdings were stolen?

It would be the IRS, the employees can prove they paid the money, so they're fine. The IRS will do everything within it's power to get the money. That includes liens and can end up in a bankruptcy auction if needed. They are not to be trifled with.

In this case, they say "Greg Vreeland, 55, of Springbrook, Wis., was sentenced on Tuesday, Sept. 24, by U.S. District Judge James D. Peterson after pleading guilt to the tax charge on April 18, U.S. Attorney Timothy M. O’Shea said in a press release today (Wednesday, Sept. 25). Vreeland also paid $684,469 to the Internal Revenue Service in unpaid taxes prior to entering the guilty plea."

I suspect that the fact he repaid the money meant he got a lesser sentence. Where he came up with $685K is a good question, but I suspect the fact he did helped his case.

My middle son actually had this happen to him - his employer wouldn't give him a W2 until demanded in writing and the IRS notified no W2 had been received, and when he did get one, it was hand-typed, and the Social Security and Medicare amounts were incorrect against his gross wages.

As soon as I saw that, I told him to immediately get another job. He argued, but he did. Not long after, he got a letter that the employer had never submitted any 941 payments since incorporating, or filed any Subchapter S or C corporate income tax, either. Or any state tax withholding.

He had to produce his pay statements - which he did - but with those, Social Security actually gave him credit for the wages in his permanent record. They went after the employer, not him. He even got a tax refund from the State based upon withholdings that were apparently never turned in.

Company no longer exists, as far as my son knows, his employer boss has completely disappeared, don't know where he want, doesn't think he got jailed. I know I certainly freaked out. I won't identify the company, but they did legal work..... I can't make that up.

FWIW, and as I recall, in the long-running final bankruptcy of the NYO&W the road tipped to liquidation when it was discovered the road was similarly failing to remit employee tax withholding.

What I don't know is, whether this turn of events was disclosed by the Trustee or if the Trustee was complicit.

"I suspect that the fact he repaid the money meant he got a lesser sentence. Where he came up with $685K is a good question, but I suspect the fact he did helped his case."

I believe he has made considerable money on car storage over the years, so coming up with the back payment may not have been a huge problem. Even so, this situation sure is a mystery. Greg seems like a sharp guy, so him either pulling this off deliberately, or somehow overlooking the IRS requirements for employees all this time, both seem very unlikely.