New Jersey Construction Company Owner Sentenced for Tax Evasion

A New Jersey construction company owner was sentenced yesterday to 15 months in prison for evading employment tax penalties assessed against him.

The following is according to court documents and statements made in court: Joseph Caravella, of Randolph, owned several masonry companies in New Jersey. From 2008 to 2016, the IRS assessed approximately $650,000 in Trust Fund Recovery penalties against Caravella for causing three masonry businesses that he owned to not pay their federal employment taxes. The timely payment of federal employment taxes is critical to the functioning of the U.S. government because, for example, they are the primary source of funding for Social Security and Medicare. The federal income taxes that are withheld from employees’ wages also account for a significant portion of all federal income taxes collected each year. Congress empowered the IRS to impose a penalty equal to the amount of the unpaid taxes — called a Trust Fund Recovery Penalty — against any responsible individual who fails to ensure that these taxes are paid timely. Caravella pleaded guilty to attempting to evade these Trust Fund Recovery penalties.  

From around March 2008 through April 2019, Caravella sought to evade the payment of these penalties by placing companies that he controlled in the names of nominee owners and avoiding the use of a bank account in his own name to prevent the IRS from levying the funds. Also during that time, Caravella continued to cause his businesses not to pay employment taxes, resulting in an additional loss of $1.2 million to the IRS.

In total, Carvalla caused a tax loss to the IRS of $1,885,519.39.

Acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division and U.S. Attorney Alina Habba for the District of New Jersey made the announcement.

IRS Criminal Investigation is investigating the case.

Trial Attorney Hayter L. Whitman of the Tax Division and Assistant U.S. Attorney Christopher Fell for the District of New Jersey are prosecuting the case.