BALTIMORE- A U.S. District Court judge on Friday sentenced an Ocean City business owner to 10 months in prison, followed by one year of supervised release, for failing to file individual income tax returns and failing to report employment tax withholdings.
According to his guilty plea, 43-year-old Patrick McLaughlin operated several concession businesses in Ocean City including: photo companies Sunbeach Studios, Ltd. and United Beach Photo, Inc.; Arctic Inventions, Ltd., which operated a fleet of retail ice cream trucks; and 85 N Sunny, which provided beach equipment rentals to tourists.
Court records show that McLaughlin failed to file corporate tax returns for Sunbeach, Arctic and United for tax years 2003 to 2009. As a result, McLaughlin failed to pay $10,239 in corporate taxes for United alone, from 2007 to 2009.
Federal prosecutors said McLaughlin also did not file individual income tax returns for tax years 2005 to 2009, thus failing to pay a total of $151,114 in federal income taxes earned from his businesses. According to court documents, when in December 2010, IRS agents notified McLaughlin that he was under criminal investigation, McLaughlin submitted corporate and individual income tax returns for the missing years thereafter.
Court records show that from 2006 to 2008, McLaughlin also failed to report and remit Social Security and Medicare taxes (employment taxes) withheld from his employees' wages, resulting in a total employment tax loss to the government of $135,348.46.
Prosecutors also noted that similarly, in 2007 and 2008, McLaughlin and 85 N Sunny withheld more than $8,000 and $12,000 respectively in employment taxes, which he had a duty to pay, along with an additional $21,259. Prosecutors said that instead, McLaughlin did not report any withholdings and made only a one-time payment of $230.
As a result of McLaughlin's failure to pay corporate, individual and employment taxes, the total tax loss to the government is $296,701.46, prosecutors said.
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