Date: August 17, 2023 Contact: newsroom@ci.irs.gov Timothy M. O'Shea, United States Attorney for the Western District of Wisconsin, announced that Gustavo Reyes, Verona, Wisconsin, was sentenced today by U.S. District Judge William M. Conley to 18 months in prison for tax evasion. Reyes pleaded guilty to this charge on May 24, 2023. Between 2013 and 2020, Reyes owned and operated a drywall business in Dane County. In 2015, the Internal Revenue Service (IRS) commenced a civil audit of Reyes's income tax returns for 2013 and 2014 and determined that he had significantly underreported his income for those years. Between 2015 and 2019, the IRS sent multiple notices to Reyes regarding tax deficiency assessments for the 2013 and 2014 tax years but he did not respond. On December 22, 2014, the IRS filed a tax lien for tax year 2013 against Reyes in an attempt to collect tax due and owing. On February 9, 2017, the IRS filed a tax lien for tax year 2014 against Reyes. The IRS continued its collection efforts in 2018 by sending a letter to Reyes and filing levies against several of his business bank accounts. Despite the IRS's collection efforts, Reyes failed to pay any of his tax debt. Beginning with tax year 2018 and continuing to 2020, Reyes worked with others to create five nominee entities in Dane County through which he operated his drywall business, including Royal LLC, American Drywall, and Morales Construction. By operating his drywall business through the nominee entities, Reyes attempted to defeat IRS collection efforts for tax years 2013, 2014, 2016, 2017, and 2018. In addition, Reyes avoided IRS liens and levies by operating in large amounts of cash that he received from cashing checks at different establishments around the Madison area. In total, Reyes owes $557,907.19 in unpaid taxes. At the sentencing hearing, Judge Conley stated that the IRS had made "remarkable efforts" to handle Reyes's failure to pay taxes as a civil matter, but Reyes inexplicably chose to ignore the IRS's communications. Judge Conley also stated that Reyes made a bad situation with the IRS worse when he "doubled down" and used other people to create fictitious companies in an attempt to avoid the IRS's liens and levies. The charge against Reyes was a result of an investigation conducted by IRS Criminal Investigation and the Wisconsin Department of Workforce Development. The prosecution of the case has been handled by Assistant U.S. Attorney Aaron Wegner.
