A Lakeville restaurateur and his wife are accused of underreporting sales and thus underpaying more than $231,000 in sales taxes.
Linxiong Li, 37, and Wenzi Zeng, 39, were indicted in Dakota District Court on four counts of a felony of aiding or aiding the filing of a false or fraudulent tax return. Li was also charged with four criminal counts related to failure to pay sales taxes.
Li Sawa Japan Steakouse & Sushi at 18453 Orchard Trail owns and conducts business with Zeng, according to a research affidavit.
The criminal charges allege that from May 2016 to December 2019, the couple used their POS system to hide sales figures by removing items from checks or by changing the price of items after transactions were completed.
The couple ran a specific point-of-sale system that could be used to “funnel sales by allowing the owner to run multiple databases simultaneously” — a work-accurate book and a custom book for tax reporting purposes, reading fees.
Minnesota Department of Revenue investigators collected tax records provided by Lee dating back to May 2016, when he purchased the restaurant, and found that the monthly percentage of cash sales was less than 10 percent in 24 files per month, when comparable restaurants reported 20-30 percent of cash sales. Bank records also showed little or no cash deposits in the restaurant’s account.
The auditor found 17,970 instances of items being deleted from requisition checks in the POS database, charge status. $231,291 in underreported sales resulted in an underpayment of government sales tax of approximately $16,400. With fines and interest, the total amount owed now is roughly $28,000, which he didn’t pay me, according to the fee.
Each tax-related felony charge carries a maximum penalty of five years in prison and a $10,000 fine. The couple is scheduled to return to court on August 3.