By Paul Gable
Grand Strand Daily has learned that S.C. House District 56 representative Mike Ryhal and RAN Enterprises, LLC, a business owned by Ryhal, are being investigated by the Internal Revenue Service for alleged discrepancies in required tax filings.
The investigation reportedly stems from complaints to the IRS by several former employees of Rotelli’s restaurant, the business Ryhal operates under RAN Enterprises, LLC. The employees said their W-2’s for tax year 2012 show considerably less wages than they actually earned.
The employees said they were fired by Ryhal after each refused, in December 2012, to sign an individual, back-dated statement saying they were sub-contractors of Rotelli’s for tax year 2012.
According to one employee, Scott Higbee, the employees were paid every two weeks with a portion of their earnings paid by check and the remainder in cash from Ryhal. Higbee’s statement to the IRS says, “I was told by Mike (Ryhal) that he would be responsible and pay taxes at the end of the year. I didn’t know he didn’t until I received my W-2.”
In fact, Higbee received two, different W-2’s from Ryhal. The first W-2 was issued approximately January 20, 2013 showing total wages of $3,240.00 for tax year 2012 (see exhibit A below). The second W-2 was issued after the IRS began investigating Higbee’s allegations. It shows total wages of $11,650.50 for tax year 2012 (see exhibit B below).
According to records Higbee provided to the IRS, he was paid $4154.40 by check and $12,214.00 in cash during 2012. Neither W-2 comes close to reporting the total wages Higbee told the IRS he earned.
Higbee told the IRS he will report wages of $16,368.40 from Rotelli’s on his tax return, regardless of the W-2’s (pick one) showing less.
Looking closer at the two attached exhibits, you will notice that the same amount of federal and state withholding tax is reported on each while only social security and medicare withholding amounts change.
A second investigation, by the S.C. Employment Security Commission, began when Higbee filed for unemployment benefits presenting the same above mentioned pay records which contradicted the $3,240 Ryhal reported as wages for the past year.
Not reporting an employee’s full wage earnings and not making the required statutory payments on those earnings is, of course, against the law. However, it is a way of reducing the employer’s tax payments on payroll taxes, unemployment taxes, workmen’s compensation premiums, and, possibly, business income taxes.
Maybe it’s just a way to demonstrate a ‘Taxed Enough Already’ philosophy.
Ryhal has not responded to date to an e-mail requesting comment.
Exhibit A IMG
Exhibit B IMG_0001