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October 02, 2003
Employer Who Stopped Withholding Taxes Pleads Guilty
A Texas business owner has pleaded guilty to a felony charge of failing to turnover withholding taxes, the New York Times reports.

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Under a plea agreement with a federal attorney, Richard M. Simkanin, owner of Arrow Custom Plastics, will pay a $250,000 fine, will remain liable for taxes owed, and will be sentenced to no more than three years in prison, according to the newspaper. In exchange for the guilty plea, the U.S. attorney dropped 26 other charges against Simkanin.

Simkanin stopped withholding taxes from his employees' paychecks in 1999 and adopted the so-called 861 position. Advocates of this position contend the section of tax code with the number 861 requires only a small number of employees, primarily those who work for foreign-owned businesses, to pay taxes on their wages.

The newspaper notes that a group of Americans who challenge the validity of the collection of taxes have cast Simkanin as a hero to their cause.

The newspaper reports that the Internal Revenue Service has said it will prosecute and seek civil orders against businesses that refuse to withhold taxes. The Justice Department has filed three lawsuits to force three employers to withhold taxes.

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