NEW FOR FRIDAY: OC Franchise Holder Sentenced To 10 Months In Jail For Failing To File Taxes

BALTIMORE — U.S. District Judge Catherine C. Blake sentenced Patrick McLaughlin, 43, of Ocean City, today to 10 months in prison, followed by one year of supervised release, for failing to file individual income tax returns and failing to report employment tax withholdings.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Rick A. Raven of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office.

“Corporations are required to file tax returns just like individuals,” said Rick A. Raven, Special Agent in Charge, IRS Criminal Investigation, Washington DC Field Office. “Mr. McLaughlin’s willful actions of failing to file multiple corporate and individual tax returns violates federal tax law. IRS Criminal Investigation will continue to pursue corporations and individuals who willfully fail to file correct and accurate tax returns.”

According to his guilty plea, McLaughlin operated several concession businesses in Ocean City including: photo companies Sunbeach Studios, Ltd. and United Beach Photo, Inc.; Arctic Inventions, Ltd., which operated a fleet of retail ice cream trucks; and 85 N Sunny, which provided  beach equipment rentals to tourists.

McLaughlin failed to file corporate tax returns for Sunbeach, Arctic and United for tax years 2003 to 2009.  As a result, McLaughlin failed to pay $10,239 in corporate taxes for United alone, from 2007 to 2009.

McLaughlin also did not file individual income tax returns for tax years 2005 to 2009, thus failing to pay a total of $151,114 in federal income taxes earned from his businesses.  When in December of 2010, IRS agents notified McLaughlin that he was under criminal investigation,  McLaughlin submitted corporate and individual income tax returns for the missing years thereafter.

From 2006 to 2008, McLaughlin also failed to report and remit Social Security and Medicare taxes (employment taxes) withheld from his employees’ wages, resulting in a total employment tax loss to the government of $135,348.46.  For example, during 2007, McLaughlin and United withheld $29,381 from the United employees, which McLaughlin had to pay as an employment tax, along with an additional $14,355.  Instead, McLaughlin did not report any withholdings nor make any employment tax payments.   Similarly, in 2007 and 2008, McLaughlin and 85 N Sunny withheld more than $8,000 and $12,000 respectively in employment taxes, which he had a duty to pay, along with an additional $21,259.   Instead, McLaughlin did not report any withholdings and made only a one-time payment of $230.

As a result of McLaughlin’s failure to pay corporate, individual and employment taxes, the total tax loss to the government is $296,701.46.

9 comments on “NEW FOR FRIDAY: OC Franchise Holder Sentenced To 10 Months In Jail For Failing To File Taxes

  1. Must Must Must always pay your taxes! Jail = bad!

    Just for fun on this beautiful Sunny and warm October Friday – how many OC full time employees make over $100K a year??? I remember a report that stated many do. Heck then, removing 3 of those employees would make up that $296K.

    I know I know – apples to oranges in comparison and actually ZERO comparison.

    VRRRRRRRRROOOOOOOOOOOOOMMMMM CRUISERS!!!!

    ~BUSHMAN!~

  2. Seems like the state of Delaware Parks and Rec has some responsibility here for granting this person a beach stand with no bid, replacing a 20 year veteran. Gerald Hocker and Mary Voshell should be asked some questions about the selection process. Maybe the beachstand should have gone to someone who pays taxes.

  3. There is no way the city will allow Mr. McLaughlin to keep his franchises. Do they really want to be associated with a convicted felon? There are plenty of other honest people who will not embarrass the great town of Ocean City. RE-BID!!

  4. It seems as if everyone knows the true story flyrz6. Not much to figure out, it’s all in the report. Patrick did not file taxes from 2005 until they raided his office in 2009. It seems pretty clear that he would still not be paying taxes to this day unless he got caught. The most egregious part of this is he collected employment taxes from his employees, but did not pay them out to the government. That’s stealing from your employees! Just Horrible.

  5. Patrick is on of the kindest good hearted person I have known for over 25 years. He cares about his employees and treats them great. SO a disgruntled employee who does not do their job gets fired and can bash him? Yea that is fair. No one knows the true story here, I stand by Patrick 100%.

  6. I do not understand how DNREC could be so egregious, but then again it is run by Democrats. They don’t understand the value of a dollar because it’s always someone elses dollar they are gambling with…

  7. Everyone knew he was stealing, employees raised a fuss but he never changed his ways. Surprised it took this long for him to get caught. Hopefully time behind bars makes him re-think who he steals from…

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