NJ Contractor Charged with Criminal Tax Evasion for Unreported Checks

A Union County NJ contractor was arrested last week for tax evasion for not reporting cashed check income.

Joel Konopka, 45, of Elizabeth, New Jersey, is charged by indictment with four counts of corporate tax evasion, two counts of filing false corporate tax returns, and two counts of failing to file corporate tax returns.

According to documents filed in this case and statements made in court:

From 2014 through 2017, Konopka was the owner and sole shareholder of Konopka Construction Inc., a business that provided construction, contracting, and snow plowing services in northern New Jersey. Under the tax laws of the United States, Konopka was responsible for filing truthful and accurate corporate tax returns, Form 1120s, on behalf of Konopka Construction reporting all of the company’s income.  From 2014 through 2017, Konopka Construction realized business income of at least $3.3 million, including more than $1 million in 2016. Konopka did not truthfully and accurately report that income. For tax years 2014 and 2015, Konopka filed corporate returns which reported no income for Konopka Construction for both years. For tax years 2016 and 2017, Konopka failed to file any corporate returns as required. From 2014 through 2017, Konopka caused no payments to be made to the IRS for any corporate tax.

Konopka did not report the income because he operated the business almost exclusively in cash. Konopka received hundreds of checks annually made payable to Konopka Construction for services rendered totaling hundreds of thousands of dollars and cashed the checks at check cashing businesses. 

Few people know that check cashing businesses are heavily regulated by the government and mandated to keep copies of all checks cashed, photos of customers, and records of all check cashing activities. As a result, the government was able to easily identify all the unreported cashed check income.

Our firm has represented many clients who are contractors who have cashed checks at check-cashing stores. The contractors often use the cashed check proceeds to pay workers and vendors, which in itself is not unlawful. The IRS investigations are complex and difficult to defend.

Konopka’s tax evasion charges are punishable by a maximum potential penalty of five years in prison and a maximum $500,000 fine per count. The filing of false tax returns charges is punishable by a maximum penalty of three years in prison and a $500,000 maximum fine per count. The failure to file tax return charges is punishable by a maximum of one year in prison and a $100,000 fine per count.

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