Washington (July 30, 2004) — The Department of Justice is suing in federal court in Sacramento, Calif. to collect more than $500,000 in unpaid employment taxes, penalties and interest from a Redding, Calif., employer who has openly refused to withhold federal taxes from his employees' wages.

Walter Allen "Al" Thompson, the employer named in the complaint, appeared on the television program "60 Minutes II," where he asserted that wages are not taxable and that employers need not withhold federal taxes from their employees' wages.  Thompson does business as Cencal Aviation Products, which makes jackets, flight bags and other accessories for private pilots.

The government's complaint seeks a ruling that Thompson personally owes more than $500,000 in employment taxes, penalties, and interest.  The complaint also seeks a ruling that Thompson and his spouse owe $27,721 in federal income taxes, penalties and interest that they have refused to pay, and requests that the court order the seizure of the Thompsons' residence, with the net proceeds of the sale being used to help pay their tax debts.

"All employers must comply with federal employment tax laws," stated Eileen J. O'Connor, assistant attorney general for the Tax Division.  "When employers violate employment tax laws, they harm not only their employees, but the public as a whole."


— WebCPA staff

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