IRS sting results in tax-evasion charges against New England fishermen

Downtown New Bedford, Massachusetts, U.S.A.

Seven commercial fishermen based in the U.S. states of Massachusetts and Rhode Island have been charged with failing to report their income to the U.S. Internal Revenue Service.

The seven fishermen were charged with tax evasion and failing to file returns, according to the U.S. Department of Justice. They are Jorge Cazarin, Miguel Cruz Rubio, and John Doe of New Bedford, Massachusetts; Rodolfo Membreno of Fall River, Massachusetts; Wojciech Kaminski of West Warwick, Rhode Island; Christopher Garraty of Newport, Rhode Island; and Brian Kobus of Durham, Connecticut. At least one of the fishermen was arrested on the New Bedford waterfront.

Each allegedly avoided reporting between USD 900,000 and USD 1.9 million (EUR 828,000 and EUR 1.7 million) over multiple years.

“Each worked for fishing companies operating primarily out of New Bedford, Massachusetts, or Point Judith, Rhode Island, and received substantial compensation. The companies allegedly paid the fishermen as independent contractors and documented that income by, among other things, filing Forms 1099 with the IRS that reported the funds paid to the fishermen. It is alleged that notwithstanding the receipt of this income, each fisherman did not file individual tax returns or pay all the taxes owed on that income – for some defendants, they allegedly failed to file and/or pay taxes for a decade or more,” the U.S. DOJ said. “To conceal the source and disposition of their income, the fishermen allegedly cashed paychecks and then used the cash to fund their lifestyles. One of the defendants allegedly also used the name and Social Security number of another individual to conduct business as a further effort to hide income. In some instances, the fishermen allegedly filed false tax returns for certain years by either not reporting their fishing income or by reporting false business expense deductions to reduce the amount of taxes they owed.”

The investigations were initiated following a 2020 congressional mandate for the IRS to investigate what it describes as “high income, non-filers,” or individuals who earn over USD 100,000 (EUR 92,000) per year and fail to file tax returns, according to IRS Criminal Investigations Special Agent in Charge Joleen Simpson.

“The New England commercial fishing industry lands squarely within this directive,” Simpson told The New Bedford Light.

Because most fishermen are classified as independent contractors, technically, they are considered self-employed and are therefore responsible for their own tax withholding. While that can make their tax filing process more complicated, they are still liable any problems that arise from not paying their required taxes, Ronald Mullett, a supervisory special agent with the IRS, told the newspaper.

“We know [fishermen] are a hard-working lot. We certainly aren’t looking for ways to make it harder,” he said. “But for everyone else that goes to work wearing a hard hat, or an apron, or a stethoscope, and pays their taxes, it’s about being fair.”

Mullett said the problem is widespread in the fishing sector, with one in three fishermen not reporting any income, cumulatively adding up to around USD 255 million (EUR 234 million) in untaxed earnings, according to Mullett. He encouraged fishermen who are not caught up on their taxes to explore a voluntary disclosure process, which would give them the ability to potentially avoid criminal prosecution. 

Mullett said since the IRS investigated Carlos Rafael in New Bedford, resulting in his convection for falsifying fish quotas, tax evasion, and conspiracy, the IRS has become more savvy about how fishermen are skirting reporting requirements.

“Some things that were a bit of mystery aren’t a mystery anymore,” he said.

Photo courtesy of Heidi Besen/Shutterstock


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