United States Attorney Richard G. Frohling announced that, on January 27, 2022, Patrick Souter entered a guilty plea in federal court in Milwaukee to charges that he willfully failed to truthfully account for and pay over “trust fund” payroll taxes to the Internal Revenue Service, in violation of Title 26, United States Code, Section 7202.
According to documents filed in court, Souter is the vice president and a 50 percent shareholder of Kenwood Keys. Federal law requires employers to collect payroll taxes (which include federal income taxes, Social Security taxes, and Medicare taxes) from the wages paid to its employees, and to pay over these taxes to the United States through the Internal Revenue Service (“IRS”). The taxes withheld from wages paid to employees are commonly referred to as the “trust fund” portion of payroll taxes. Federal law also requires employers to pay additional payroll taxes to the IRS in an amount equal to the employees’ share of Social Security and Medicare taxes. These taxes are referred to as the “matching” portion of payroll taxes.
According to court filings, beginning in 2006 and continuing through 2020, Souter regularly failed to pay over to the IRS all or a portion of trust fund payroll taxes that he had withheld from employees’ wages. During that same time period, Souter also regularly failed to pay to the IRS all or a portion of the matching part of payroll taxes owed by Kenwood Keys. As part of his plea, Souter admitted that during the period from 2006 through 2020, he failed to pay the IRS a total of $559,249.82 in payroll taxes.
The IRS Criminal Investigation division in Milwaukee is investigating this case, which is being prosecuted by the United States Attorney’s Office for the Eastern District of Wisconsin.
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