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Owner of Bruce's Roofing in Enumclaw Sentenced to Two Years in Prison for Willful Tax Evasion

Bruce H. Sprague reportedly failed to pay more than $1 million in employment taxes and income tax withholding.

The owner of Bruce’s Roofing in Enumclaw, Washington, was sentenced today in U.S. District Court in Seattle to two years in prison and three years of supervised release for willfully failing to collect and pay over tax, announced U.S. Attorney Jenny A. Durkan. 

Bruce H. Sprague, 52, admitted with a guilty plea in July 2012, that he paid his employees a portion of their wages in cash from 2005-2008, and that he did not collect employment taxes including Social Security, Medicare and income tax withholding from the cash wages.  In his plea agreement, Sprague agrees to pay restitution in the amount of $1,179,761 to the IRS.  At sentencing U.S. District Judge Thomas S. Zilly said, “You were able to live the good life because you stole over a million dollars from the government…. Others need to know that you cannot steal from the government and not spend a significant time in jail.”

According to the plea agreement, Sprague, the sole owner of Bruce’s Roofing LLC, informed his employees in early 2005 that they would receive a portion of their wages in cash. The cash payroll was about fifty percent of each employee’s pay. No payroll taxes were collected on the cash portion of the employees’ pay. By paying in cash and not reporting the wages, Sprague avoided more than a million dollars in payroll taxes.  In 2006, Sprague failed to collect and pay over to the IRS $391,548 in employment taxes. In 2007, he failed to collect and pay over to the IRS $448,642 and in 2008, he failed to collect and pay over to the IRS $339,571. Even as he was failing to collect and pay over the employment taxes, Sprague was taking substantial wages and profits from the business – more than $929,000 in 2005, more than $1 million in 2006, more than $1.3 million in 2007, and more than $685,000 in 2008.  In his plea agreement, Sprague agrees to cooperate with the IRS to determine all taxes due and owing from him and his company.

“Trying to cheat on your payroll taxes by paying your employees in cash is a losing proposition,” said Kenneth J. Hines, Special Agent in Charge of the IRS in the Pacific Northwest.  “When you try to avoid payroll taxes by paying your employees in cash, you place yourself at risk of prosecution, penalties, and prison. Today's sentencing highlights the commitment of IRS Criminal Investigation to the vigorous pursuit of those who try to cheat on their payroll tax obligations.”

In asking that Sprague serve a prison term, prosecutors noted the sentence should send a warning to others.  This sentence “should signify to others who may be currently engaged in similar conduct, or those who may be tempted to engage in such conduct, that paying employees “under the table” is a serious crime that is not worth the price,” prosecutors wrote in their sentencing memo. 

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).  The case is being prosecuted by Assistant United States Attorney Susan Loitz.

Information provided by the U.S. District Attorney's Office in Seattle.

Shane McKown November 30, 2012 at 02:59 AM
The writers of this article have a fundamental misunderstanding of how payroll taxes work. Getting paid in cash means that the employee is the one who is avoiding taxes. The employer does not retain that money. There ARE some fees that are being avoided but nothing close to the tune of $1.2 million. It seems the sentence was handed out as if the defendant had "stole" $1.2 mil when that simply isn't the case based on what I'm reading. Employers are essentially the middle man to collect taxes from the employee to give to the IRS.
April Chan November 30, 2012 at 04:04 AM
Thanks for your feedback, Shane. This was information we received from the Seattle office of the U.S. Attorney Thursday. I would agree to a point that when an employee gets paid in cash, they avoid having to pay taxes on that amount. But my understanding of employment taxes is that the employer is also responsible for matching portions of the taxes withheld, particularly for social security, medicare and unemployment. Not reporting full wages then, means the employer was paying taxes on lower wages than they actually paid. Apparently over the course of about 3 years, this amounted to a shortfall of nearly $1.2 million in the case of Mr. Sprague. Perhaps someone with a better understanding of tax law and help explain the intricacies here?
Klondiko December 02, 2012 at 05:56 PM
Cheats like this put the entire system in jeopardy. I'm glad the government is coming down hard on him.
Bret December 02, 2012 at 06:52 PM
The government steals from us at every turn! When a wage contract gets broken, the government would NOT help me as I am self-employed. BUT, after paying out thousands in unrecoverable fees, they want a cut of the remainder? I pay for people to live free off my tax dollars, yet, I am the one who goes to prison if I refuse to support criminals and illegitimate children! I have seen rapists and child molesters get LESS time! Goes to show, that refusing to give to an organization who is totally irresponsible with your money to begin with, IS the BIGGER CRIME!
Craig December 03, 2012 at 06:12 PM
I agree with Brett.. I think a mistake was made, fine him and let him keep working. It serves all of us to have him generate tax dollars, not cost us tax dollars. Our court system is all wrong, Its all about money, they let scum walk free and penalize people that can generate tax dollars. The reason people cheat is because our own government is stripping us down to the bone. TAX TAX TAX
laurie December 06, 2012 at 02:59 PM
I agree with Shane, Bret and Craig. The government now days is all about screwing over the USA citizens and giving money to other countries. It needs to STOP!! BRUCE is paying the money back do WHY...JAIL TIME? Sounds like SOCIALISM TO ME
US Citizen December 13, 2012 at 09:31 PM
Yes he is paying back the money that he STOLE (remember, he ADMITTED to taking $1.17 MILLION in four years, AND he got significant wages/profit during that time on top of it - that is not just a few bucks...it doesn't appear he was 'hurting for money' and just couldn't make ends meet). He was able to live 'the good life' by stealing from our government, and ultimately, all of us citizens because he COMMITTED A CRIME! I'm glad to see our legal system work in this case - he made his own choices (to go into business for himself, to knowingly break the law so he could have a better life for himself - based on the info, Mr. Sprague TOLD his employees they would get part of their wages in cash - again, his decision and his direction) and now he needs to live with the consequences...paying the money back that wasn't his to begin with is not a punishment - I'd have to say that prison time is the appropriate punishment. There is a lot of info out there about how Payroll Taxes work...
dexterjibs December 14, 2012 at 04:30 AM
As far as I am concerned, he paid his employees and paid some taxes and did a great job on my roof. Him sitting in prison is doing no one any good. The govt screws us everyday and it won't get any better with Obummer given another 4 years.
Craig December 15, 2012 at 07:06 PM
US Citizen.... I do not agree. What do tax payers gain by putting a man in prison who can and will generate tax dollars. In a case like this the only thing tax payers have lost is revenue. He is paying it back, and you know as well as I do that there are penalties and interest rates added to those tax dollars that were not paid. We all know by doing our own personal taxes that if you are late with your tax payments you are charged with generous interest rates...DAILY. So why spend more tax dollars by imposing jail time? If you really want to make a difference go after the people that are the making laws and running our country by checking expence reports and vouchers. Make then answer to where all of my tax dollars going. spend spend spend. I know, lets just raise the Dept Ceiling more. I'm not condoning what was done, BUT there are people out there who committ horrible crimes and have far less punishment. Let the penalties and finance fees be the punishment.
US Citizen December 27, 2012 at 05:33 AM
I appreciate your comments Craig, but don't be fooled...it's not uncommon for people in these situations to NOT be charged interest and NOT to be fined; hence they only have to pay back what they should have paid some years ago (after using that money to make their own gains, interest and live the good life that doesn't belong to them - that is out and out THEFT). I'm not saying anything about his/his employees' work product, but he stole money for his own gain...SIGNIFICANT gain. I work hard for what I have in my life and I do it legally; it ticks me off when someone so brazenly steals like this - he should go to prison as punishment (just paying back what he owes isn't punishment).
John Doe January 01, 2013 at 08:36 PM
I've seen Bruce's Roofing. It employed all illegal Mexicans, who many refused to work unless paid cash. It interfered with the illegals collecting from DSHS, free medical and food and Federal housing assistance. Why the government needs to collect from Bruce’s Roofing, is to pay for all of the illegal alien invaders and legal immigrants. The IRS lies, and makes it sound like it depriving a US citizen of the money. Hog wash. I would suggest you go down to your local DSHS office and see for yourself who is in there and who is sucking our state and country dry. You guessed it, Mexicans. US citizens are a minority in a DSHS office.
Proud Mexican AMERICAN&LEGAL January 23, 2013 at 05:05 PM
John Doe it shows how much yhu know about ”mexicans” . This isnt about race this is totally about something different so for you to pull the race card is ridiculous ! Maybe YOU should go to the DSHS and take a good look around & tell me if you see a bunch of ”mexicans” in there getting benefits ! No ! The majority of people getting benefits and mostly the people i see in a DSHS office are asians, ethiopians, russians, and americans ! I have hardly EVER seen hispanic people in there . They cant even get benefits from DSHS because they are illegal . DSHS is kind of messed up because if a american citizen is with a hispanic thar is illegal and have kids with them they can recieve benefits for theirself and their children but not for the hispanic that is illegal but they will count their income and lower your benefits or even deny you benefits if the ”illegal” makes too much . Its bs ! And bruces roofing did have a bunch of employees that were hispanic but did you see any americans or other races working on a roof in the hot or freezing weather tryin to make ends meat ?? No . So stop with all the racism because they can pull the race card also ! This country is so full of racism its ridiculous !
einer olsen January 31, 2013 at 05:44 PM
What most have not commented on is that While this practice was going on, Bruces Roofing had a significant competitive advantage over it's Legal competitors. How many jobs did he steal from honest businesses, who were paying their legal share? As for the hispanic argument, there isnt one. Racism is BS. If employers used E-Verify to determine status of prospect employees, we would not have any cause to argue.
US Citizen February 02, 2013 at 07:53 PM
Well put einer olsen!!!
Julie Handysides March 23, 2013 at 06:26 AM
He may have failed to pay the government, but he is in no way shape or form a greedy man. He is one of the biggest philanthropists I have ever met. He is generous, kind hearted, loving and has worked hard his whole life. Prison is no place for him. He has helped so many people and if you would put it into numbers it would far exceed the amount he “owes” the government.

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