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Bozeman woman sentenced to prison for failing to pay nearly $3 million in payroll taxes

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Posted at 4:43 PM, Aug 10, 2022

Melissa Lynne Horner of Bozeman was sentenced to 30 months in prison on Wednesday after pleading guilty in April to failing to pay the IRS more than $2.8 million in employee and employer taxes, according to U.S. Attorney Jesse Laslovich.

Prosecutors alleged that Horner, 43, spent some of the money on personal expenses, including home renovations and recreational vehicles, as co-owner of H & H Earthworks, Inc. in Belgrade.

According to court documents, Horner managed finances for the family-owned, commercial site-development business and from March of 2014 through 2019 spent payroll taxes withheld from Earthworks employee paychecks, instead of paying the tax money over to the IRS.

Horner reportedly used the money for personal expenses, including more than $100,000 on motorsport vehicles, $90,000 to a real estate title company in Bozeman, at least $50,000 on home renovations, and $20,000 for a motorhome.

The government further alleged that Horner withdrew Federal Insurance Contribution Act (FICA) taxes from the wages paid to Earthworks employees and failed to pay over the trust fund taxes to the IRS. Horner also failed to pay over Earthworks’ portion of the FICA taxes (Federal Income, Social Security and Medicare taxes). In addition, Horner failed to file quarterly Forms 941, Employer’s Quarterly Federal Tax Returns, prior to being notified of the criminal investigation.

“Those who evade our federal and state tax laws by cheating taxpaying Americans out of their hard-earned dollars, especially those who are entitled to their Medicare and Social Security payments, will be held accountable for their criminal conduct. Horner’s sentence shows that those who fraudulently refuse to pay taxes that every employer is required to pay will face criminal prosecution by our office. The people of our state and nation deserve nothing less,” U.S. Attorney Laslovich said.

“Business owners have an obligation to their employees and the IRS to pay over payroll and employment taxes,” said Andy Tsui, Special Agent in Charge, IRS Criminal Investigation Denver Field Office. “By withholding these taxes for her personal gain Ms. Horner not only defrauded the federal government, but also all honest taxpayers, and today’s sentencing is a direct reflection of the seriousness of her crime.”

U.S. District Judge Dana L. Christensen presided and ordered that Horner must also serve three years of supervised release after her prison term and pay $2,878,522 in restitution.

Assistant U.S. Attorney Karla E. Painter prosecuted the case, which was investigated by the IRS Criminal Investigation.