Puyallup steel business owner pleads guilty to tax fraud

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The co-owner and financial manager of a steel fabrication company in Puyallup, Wash., pleaded guilty to tax fraud Friday for using more than $1 million in payroll taxes on personal expenses including vacations, gambling and a pool, the US Attorney’s Office for Western Washington announced.

Donna Powell, 56, was indicted in February in US District Court on nine counts of failing to pay $1,167,891 in federal payroll taxes over the course of eight years. She withheld the funds from employee paychecks, the indictment said, but she did not file any Forms 941, an employer’s quarterly tax return filing, from 2010 through the first quarter of 2018.

This kind of “willful failure” to pay employment taxes carries up to a five-year prison sentence.

Pinnacle Steel Fabricators, located at 14021 Pioneer Way in Puyallup, manufactures steel parts, employing 15 to 20 people. In addition to co-owning the business with her husband Dain Powell, according to state Department of Revenue filings, Donna Powell acted as secretary/treasurer and accounting manager for the company.

Employers are required by law to file Forms 941 with the IRS detailing the amount of payroll taxes withheld from employee paychecks. Rather than properly paying these taxes to the IRS, the indictment said, she and her husband spent the money on themselves.

They spent at least $32,000 on travel to international destinations including trips to Europe, Mexico City and Jamaica, according to the February indictment. They went to casinos in Washington state and in Reno, Nevada, dropping some $41,000. In online gaming, they shelled out another $33,000.

“Spa and pool-related purchases” to the tune of at least $7,400 were also part of their scheme, according to the US Attorney’s Office.

“Like in the movies, illegal pool parties are all fun and games until they are not,” said Bret Kressin, the Seattle Field Office agent in charge of the IRS criminal investigation of this case.

“Ms. Powell had ill-intentions for her employees’ payroll withholdings and stole these amounts to pay for her own globe-trotting vacations, to fund her gambling, and to help pay for a pool,” he said in a press release. “While paying federal income taxes along with paying into Medicare and Social Security is not as fun as going on vacation or putting in a pool, honest people understand the need for these payroll withholdings and pay their fair share. Today’s guilty plea marks Ms. Powell’s recognition of this critical life lesson.”

The release added that when a business fails to send the tax funds to their lawful place, it “ultimately hurts the employees whose earning records are incomplete for Social Security, Medicare, and unemployment benefits.” These errors can be corrected if employees contact the IRS with concerns about federal withholding.

Powell is scheduled to be sentenced Nov. 7.

This story was originally published August 6, 2022 1:00 PM.

Kristine Sherred joined The News Tribune in December 2019, following a decade in Chicago where she worked for restaurants, a liquor wholesaler and a culinary bookstore. She previously covered the food business for Industry Dive and William Reed. Find her on Instagram @kcsherred and Twitter @kriscarasher.
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