The owner of a Texas roofing, siding and sheet metal company is headed to federal prison for 30 months after admitting he worked to block the IRS from collecting roughly $1.4 million in payroll taxes his business never paid over (via U.S. Department of Justice).
David Stone owns Engineered Metals Company. Along with the prison term, he'll serve a year of supervised release and must pay about $1,384,766 in restitution to the United States, the Justice Department said in its Oct. 29 announcement. The case ran through the U.S. Attorney's Office for the Western District of Texas, and IRS Criminal Investigation handled the investigation.
Stone had already pleaded guilty to a single count of corruptly endeavoring to obstruct the due administration of the internal revenue laws. IRS Criminal Investigation announced that plea in a release datelined Austin on April 21, 2026. At that point the charge carried a maximum of three years in prison, and a federal judge had yet to set the sentence.
So what did he do? According to the Justice Department, Stone withheld employment taxes from his workers' paychecks from 2013 through 2024 but willfully didn't send that money to the IRS. Once the agency started trying to collect, he stopped filing his own individual income tax returns. He also covered personal bills, including child support and alimony, out of the company's bank accounts.
That last part is what turned an unpaid tax bill into an obstruction case. Running personal spending through business accounts while the IRS is chasing a balance makes it harder for collectors to see, and reach, what the owner actually has. Prosecutors framed the conduct as an effort to frustrate collection, not just a failure to pay.
The federal releases don't list where the company is based beyond Texas, and they don't name the judge. The prosecution was handled by trial attorneys from the Justice Department's tax section, now part of a Fraud Division the department set up in April.
The money at the center of this case is what the IRS calls trust fund taxes. When you run payroll, the federal income tax you withhold and your employees' share of Social Security and Medicare taxes aren't really yours. The IRS describes the business as holding that money in trust for the government until the deposit is made.
When it doesn't get deposited, the IRS can go after people, not just the company. Under the Trust Fund Recovery Penalty, anyone responsible for collecting and paying those taxes who willfully fails to do it can be personally assessed for the unpaid trust fund amount. That can include owners, officers, partners and anyone else with the authority to decide which bills get paid.
"Willful" is a lower bar than most people assume. The IRS says it doesn't take evil intent. If you knew, or should have known, the taxes were owed and you were indifferent to the requirement, that can be enough. Paying suppliers, rent or other creditors with the available cash while payroll taxes sit unpaid is one of the signs the agency looks for. And the business doesn't have to close for the penalty to apply.
Once the penalty is assessed, the IRS says it can pursue the responsible person's own assets through a federal tax lien, levy or seizure. People who get a letter proposing the penalty have 60 days to appeal, and the agency may ask them to sit for an interview about their duties and authority over the company's money.
Why it matters for Contractors
Payroll is where a lot of small shops get into trouble. A slow season, a customer who pays late or a big materials bill can make it tempting to float the 941 deposit for a few weeks. That's borrowing money that was never yours, and the IRS treats it that way, including by coming after the owner personally.
If you fall behind, the worst move is the one this case shows: hiding money or shuffling personal spending through the business while collectors are working the file. Unpaid payroll taxes are a civil problem that can often be worked out with the IRS. Obstructing collection is a federal crime.
For a crew of five or fifteen, the simple safeguards matter. Keep withheld taxes in a separate account or use a reputable payroll service that makes deposits for you, check your IRS account for missed deposits, and keep personal bills off the company card. If you're already behind, call a tax professional before you call anyone else.