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Description: New Haven, Connecticut criminal law lawyer represented Defendant charged with tax fraud.

Lizbel Sanchez, aka Lizbel Diaz, age 47, from Broofield, Connecticut, is a minority owner of Danbury Food Corp. (“DFC”), which operates a C-Town grocery store in Danbury. Sanchez was responsible for DFC’s accounting and financial records, and for collecting and paying over certain federal taxes from DFC’s employees, namely federal income taxes and Federal Insurance Contribution Act (“FICA”) taxes, which include Medicare and social security taxes. She also was also responsible for ensuring that DFC, as an employer, paid its own share of FICA and its Federal Unemployment Tax (“FUTA”), which were based on its employees’ taxable wages.

An investigation revealed that, Sanchez and DFC paid several employees in cash and failed to collect, account for and pay over the federal income taxes and FICA taxes associated with the cash wages. Sanchez also failed to account for and pay over DFC’s share of FICA taxes and its FUTA obligation based on the taxable wages of those employees that DFC paid in cash. This conduct caused a tax loss of $408,121.85 to the IRS for the 2016 tax year.

On April 14, 2022, Sanchez pleaded guilty to one count of willful failure to collect or pay over taxes.

Sanchez has paid $408,121.85 in restitution to the IRS. She also has acknowledged similar conduct for DFC in 2017 and 2018, and for other businesses in which Sanchez had an interest in 2016, 2017 and 2018. Additional tax losses will be addressed civilly by the IRS.

This investigation was conducted by the Internal Revenue Service – Criminal Investigation Division and the case was prosecuted by Assistant U.S. Attorney David T. Huang.

26 U.S.C. 2702, provides:

Any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution.

Outcome: Defendant was sentenced to two years of probation and was ordered to pay a $400,000 fine.

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