Two Iowa businessmen indicted for not paying employment taxes

A grand jury last week indicted two Iowa businessmen involved with ethanol production on federal employment tax violations.

Randy Less, of Hopkinton, and Darrell Smith, of Forest City, are each charged with multiple counts of 'willfully failing to collect, truthfully account for and pay” federal income, Social Security, and Medicare taxes that were withheld from the wages of their employees at Permeate Refining, Inc., in Hopkinton. They are accused of not paying $423,975 in employment taxes from 2009-2012.

Both men had initial appearances and were charged on Tuesday. Less was charged with 11 counts and Smith was charged with five counts. Both also were conditionally released with a pending trial set for March 28.

If convicted, each would have to serve five years in federal prison on each count and a $250,000 fine for each count.

According to the indictment, Less was the majority owner, a general partner, and the general manager of Permeate. Less had the responsibility to collect and pay the Internal Revenue Service (IRS), Social Security, and Medicare taxes withheld from the wages of his employees.

Less is accused of failing to pay over $116,000 to the IRS in withheld taxes from the fourth quarter of 2009 through the fourth quarter of 2010.

The indictment shows that another company, Algae Energae, purchased an ownership interest in Permeate in September 2009. After that purchase, Smith, a corporate officer and manager, along with Less also had the responsibility to collect and pay the taxes withheld from wages of over $300,000 to the IRS from the first quarter of 2011 through the third quarter of 2012.

If convicted, the defendants face a statutory maximum sentence of 5 years in prison and a $250,000 fine for each count.