Virginia Beach businessman pleads guilty to tax crime

NORFOLK, Va. (WAVY) – A Virginia Beach man could face up to five years in prison for failing to pay nearly $1 million in payroll taxes to the IRS.

According to the U.S. Attorney’s Office, 61-year-old Michael Popina was the president and owner of Chesapeake Coatings and Decks Inc. (CCD), a painting and sandblasting company hired primarily by government contractors and marine businesses.

As part of its tax obligations, CCD was required to withhold federal taxes from its employees’ paychecks and give the money to the IRS. From 2010 to 2013, Popina failed to pay to the IRS about $130,000 in payroll taxes.

During an IRS investigation, agents discovered that Popina devised a scheme to avoid paying these taxes — he split his employees’ regular pay into two separate checks.

One of the checks was sent to his payroll company with taxes withheld and income reported to the IRS. The second payroll check was not sent to the payroll company, the taxes weren’t withheld and the income was not reported to the IRS.

Investigators learned that Popina failed to report account for nearly $4 million using this system. He failed to pay to the IRS a total of $950,000 in payroll taxes.

According to court records, Popina used this system because his business was poorly managed and the savings allowed him to keep his business open.

Popina pleaded guilty to failure to pay payroll tax and will be sentenced on Oct. 2. A federal district court judge will determine his sentence.