Restaurant Owner Pleads Guilty To $420,000 In Tax Fraud

Restaurant Owner Pleads Guilty To $420,000 In Tax Fraud

Dexi Zheng, owner of two China Inn Buffet restaurants, filed the unreported sales under his father’s individual income tax return to save money.

Dexi Zheng, 33, the owner of two China Inn Buffet restaurants in St. Michael and Big Lake pled guilty to filing false federal income tax returns amounting to more than $420,000.
 
Zheng was first charged in July for one count of filing a false individual tax return. He will wait for his sentencing, which has yet to be scheduled. Zheng faces up to three years in prison.
 
According to court filings from the U.S. District Court of Minnesota, Zheng avoided paying taxes on the restaurants’ full revenue in at least two ways. From 2009 to 2013, he intentionally failed to deposit cash receipts into the restaurants’ bank accounts and in his Schedule C, an IRS-monitored income report.
 
Zheng also included the profits from both restaurants in his father's individual income tax return, despite his father having no affiliation with the restaurants. His unreported sales receipts and resulted loses in tax revenue are listed below:

Year     Amount of unreported sales receipts Resulted tax loss
2009 $243,204 $82,004
2010 $286,198 $96,462
2011 $291,446 $92,853
2012 $237,534 $76,121
2013 $214,773 $73,006
Total $1,273,155 $420,446

The case was the result of an investigation conducted by the Internal Revenue Service’s criminal investigation division.

“Individuals who corruptly violate the tax law to further their business interest and intentionally falsify their tax returns undermine public confidence in our tax system,” Shea Jones, a special agent for this case, said in a statement. She added that acts like this “unfairly disadvantage businesses that play by the rules.”