Every payroll check has money taken out of it before the worker sees it. Federal prosecutors in Oregon say one Portland executive did not send $1,542,413 of that money to the IRS, and a grand jury has indicted her on eight counts.
The defendant is Rosa Cazares, the chief executive of a cannabis business called La Mota, LLC, and a payroll processing company, 503 Staffing LLC. The indictment is an allegation, and she is presumed innocent unless proven guilty.
Eight quarters, two companies
The U.S. Attorney’s Office for the District of Oregon says in its October 15 announcement that Cazares lives in Portland and oversaw the financial affairs of both companies. U.S. Attorney Scott E. Bradford’s office announced the indictment, and Assistant U.S. Attorney Meredith D.M. Bateman is the prosecutor.
Prosecutors allege that from March 2020 through December 2021 she failed to withhold, accurately account for or pay over federal income tax and Social Security and Medicare taxes taken from employee wages. That covers eight calendar quarters. Each count charges one quarter of nonpayment.
The unpaid total is $1,542,413 in what the IRS calls trust fund taxes. The announcement notes that employers must deposit those taxes, together with their own matching contributions, every quarter and report them on Form 941, the quarterly payroll tax return.
The charge is willful failure to collect or pay over tax under 26 U.S.C. 7202. Each count carries up to five years in federal prison, plus fines and restitution. No court dates have been announced.
The question workers and their families ask when a case like this surfaces is what it means for them. If an employer holds back tax from a paycheck and never passes it on, who is responsible, and is the worker’s own record affected? The IRS has a clear answer on the first half of that question, and the Oregon announcement is silent on the second.
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The same announcement points to other Oregon tax matters. A Jacksonville, Oregon man was sentenced on August 21 for tax evasion, employment tax crimes, bank fraud, wire fraud and aggravated identity theft. The office says additional matters are pending.
Why withheld payroll tax is treated differently
The IRS calls these amounts trust fund taxes because the employer holds them for the government. Its Internal Revenue Manual defines them as withheld income tax and the employee’s share of Social Security tax, along with some other collected taxes. The manual says the employer’s own share of employment taxes is not covered by the same penalty.
When trust fund taxes go unpaid, the IRS can assess a Trust Fund Recovery Penalty against any responsible person, meaning someone with the duty or power to collect and pay the tax. The manual lists corporate officers, LLC members and managers, directors, and in some cases staff at payroll service providers and professional employer organizations. More than one person can be held responsible, though the IRS collects the full amount only once.
The penalty equals the total tax that was not paid over. The IRS assesses each responsible person separately for each quarter. Responsibility turns on who had authority over the money, including who controlled finances, could sign checks or could hire and fire.
The manual also explains willfulness, the word that separates a civil penalty from a crime. It means the failure was intentional, deliberate, voluntary and knowing, not accidental. Factors include knowing about a pattern of noncompliance, prior IRS notices about unpaid employment taxes, and steps taken once the problem was known. Paying employees’ net wages when the money is not there to cover the withholding counts as willful.
What the statute says about the crime
The criminal law at issue is 26 U.S.C. 7202. It covers anyone required to collect, account for and pay over a tax who willfully fails to do so. The statute makes that a felony with a fine of up to $10,000, up to five years in prison, or both, and prosecution costs may be added.
The prison ceiling in the Oregon indictment is the same five years for each count. No conviction has been entered, and a judge would decide any sentence.
What the workers’ side looks like
The announcement describes the money as taken from employee wages. It does not describe any harm to individual employees, and it does not say whether workers’ own tax records were affected.
IRS Criminal Investigation says criminal tax cases can begin inside the agency when an auditor, collection officer or analyst detects possible fraud. They can also begin with information from the public, or from another law enforcement agency’s investigation, according to its page on how criminal investigations are initiated. The Oregon announcement does not say how this case began.
The open question belongs to the worker: whether the withholding shown on a pay stub reached the government. The announcement spans eight quarters, from March 2020 to December 2021, and it describes the unpaid money as taken from employee wages. The withholding on each pay stub and the year-end wage statement are the records that show what was taken from a worker’s own pay.
Is a smaller paycheck leaving benefits unchecked?
When a paycheck is the main income, every dollar of withholding matters, and so does every program that could ease the monthly budget. Most of those programs are opt-in, which means they pay only to households that apply.
The Benefits Checklist turns from this payroll story to a related job: finding out which programs a household has never looked at. It covers eleven benefit programs, including Medicare Savings Programs, Extra Help, SNAP and heating help, with the 2026 income limits and a printable application tracker.
Walk through 11 benefit programs and the 2026 income limits with the Benefits Checklist →
More Financial Reading
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This article was produced with the assistance of AI and reviewed by the editorial team.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
