MADISON, WIS. – Timothy M. O’Shea, United States Attorney for the Western District of Wisconsin, announced that Joseph Kott, 44, Sun Prairie, Wisconsin, was sentenced today by Chief U.S. District Judge James D. Peterson to an 18-month federal prison term for willfully failing to pay over income tax and employment tax withholdings to the Internal Revenue Service for five years from 2014 to 2018. The judge also ordered Kott to serve two years of supervised release after imprisonment, and to pay restitution of $622,702.08 to the IRS. Kott pleaded guilty to this tax charge at today’s combined plea and sentencing hearing.
According to the indictment, Kott, a licensed master electrician, owned and operated Alpha Electric, LLC, which was an electrical installation and service contracting business located in Sun Prairie. Kott owned the business since 2002 and was responsible for all aspects of Alpha’s business operations, including accounting, finance, banking, payroll, hiring and firing of employees, paying bills, paying employees, and issuing Forms W-2. For tax years 2014 through 2018, Kott failed to pay over a total of $428,966 in withheld income taxes and employment taxes. The indictment also alleged that Kott failed to pay the employer’s matching share of FICA and Medicare taxes which totaled another $193,739.
At today’s sentencing, Judge Peterson explained that the biggest driver for a significant custodial sentence in this case was the need to send a general deterrence message to the public, and especially other employers, to not cheat on paying taxes to the IRS. The judge noted that members of the business community need to know that if they get caught cheating, they will face significant penalties including substantial prison time, and the payment of tax penalties and restitution to the IRS. Judge Peterson pointed out that Kott committed a very serious tax offense, both in terms of the long time period (five consecutive years), as well as the large tax amount ($622,702), evaded by Kott.
The judge rejected the defense argument that Kott should not be imprisoned because of the COVID pandemic, noting that the pandemic does not take incarceration off the table in criminal cases. The judge recognized that the federal Bureau of Prison has worked hard to protect the prison population during the pandemic.
Judge Peterson set Kott’s prison report date for April 7, 2022.
The charges against Kott were the result of an investigation conducted by IRS Criminal Investigation. Assistant U.S. Attorney Daniel Graber handled the prosecution.
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