Local man receives prison term for failure to submit payroll taxes

A Searcy County man, 47-year-old Eric De Priest of Marshall, has been sentenced to serve 24 months in federal prison following his conviction on one felony count of willful failure to submit payroll taxes. De Priest's prison term will be followed by three years of supervised release.Duane "Dak" Kees, United States Attorney for the Western District of Arkansas, says the Searcy County man was ordered to pay a total of $284,736 in restitution for his conviction.The Honorable P.K. Holmes III presided over the sentencing hearing in the United States District Court in Fort Smith, with sentencing handed down Monday.

According to court records, De Priest is the co-owner of ZacBac Apparel LLC, a limited liability company formed in Arkansas in 2002. ZacBac’s principal place of business is in Marshall.

ZacBac manufactures clothing for government agencies such as the United States Postal Service and the military.

Kees says the Internal Revenue Code requires employers to pay to the United States of America the employer’s fair share of Federal Insurance Contribution Act taxes, also called FICA and Social Security taxes, and Medicare taxes owing on wages paid to employees.

The Internal Revenue Code also requires employers to withhold from wages of their employees the employees’ share of FICA taxes, Medicare and Social Security taxes, and income taxes (collectively, “payroll taxes”), to account for payroll taxes, and pay the withheld amounts of payroll taxes over to the United States of America.

Since 2005, De Priest exercised control over ZacBac’s financial transactions including, but not limited to, directing payments to creditors, authorizing payroll and submitting Federal Tax Deposits, and signing and filing payroll tax returns.

Specifically, for multiple consecutive quarters from March 2009 through and including Dec. 31, 2015, De Priest signed each of ZacBac’s Employer’s Quarterly Federal Tax Returns (known as a “Form 941”) as the “owner;” meaning, he was the person responsible for collecting, truthfully accounting for, and submitting ZacBac’s payroll taxes to the United States.

Between July 2012 and September 2015, ZacBac withheld over $293,000 in trust fund taxes from employees’ wages and failed to pay over to the United States $284,736 of this amount. During this same time period, ZacBac diverted more than $247,000 of the trust fund taxes collected from employees’ wages.

Specifically, during the fourth quarter of 2014 that ended Dec. 31, 2014, De Priest deducted and collected from the total taxable wages of ZacBac employees’ federal income taxes and Federal Insurance Contributions Act taxes in the sum of $24,710 he did not then pay into the Treasury of the United States.

De Priest was indicted by a federal grand jury in September 2018 and entered a guilty plea in February.

The investigation was conducted by IRS Criminal Investigations Division. Assistant United States Attorney Kyra Jenner prosecuted the case for the United States.

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