Brookneal lumber baron pleads guilty to tax evasion

By Jeffrey Westbrook

Altavista Journal

The Brookneal owner of Adams Lumber Company pled guilty last week to tax evasion after failing to pay employee taxes to the Internal Revenue Service for the past twelve years. James Edward Adams, 65, is being prosecuted in the case by the United States Attorney's Office for the Western District of Virginia.

According to a press release from U.S. Attorney Christopher Kavanaugh, Adams took over the day-to-day operations of the family lumber mill (located Halifax County) in 2011. Adams acknowledged this fact in a statement as part of his plea agreement.

From that time, he collected his employees' Medicare and Social Security taxes, but he did not pay these taxes to the IRS, nor did he pay the legally required employer's matching contributions. The IRS reported that he had short-changed the U.S. Government $598,800 in these employees' taxes.

"In 2012," the U.S. Attorney's office reports, "Adams Lumber was referred to the IRS for failure to pay payroll taxes and a trust fund recovery penalty was imposed."

Moreover, over the next decade plus from the time the IRS began its investigation, Adams played the shell corporation game. Kavanagh's office charged that "Adams incorporated additional lumber and flooring entities, including Adams Wood, Halifax Forest, Halifax Flooring Products, Halifax Lumber Products, and Timber Trucking." Furthermore, he "exercised control over the companies' business and financial affairs."

The prosecutor's office explained the relevant legal requirement in further detail. "The Federal Insurance Contribution Act ('FICA') requires employers to withhold Medicare and Social Security taxes from their employees' wages, while the Internal Revenue Code requires employers to withhold federal income taxes from their employees' wages. Employers are required to hold these taxes ('trust fund taxes') in trust for the United States and to pay them over to the IRS on behalf of their employees."