Owner Of Signature Nails Spa Indicted On Tax Evasion and Obstruction

From Justice.gov

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NASHVILLE – A federal indictment unsealed today charged Chieu K. Tran, 54, of Nashville, the owner of Signature Nails Spa, (Signature) with tax evasion and obstruction of justice charges, announced Acting U.S. Attorney Mary Jane Stewart for the Middle District of Tennessee.  Tran was arrested by IRS Criminal Investigation Agents at his home this morning and will appear before a U.S. Magistrate Judge later today.

According to the indictment, Tran was the owner and operator of Signature Nails Salon in Nashville which provided manicure, pedicure and waxing services and employed approximately 25-50 nail technicians in any given year.  Tran paid the nail technicians based on a commission of 60% and paid those wages by a combination of 50% cash and 50% check.  For tax years 2014-2018, nail technicians were paid approximately $10.5 million.

In 2008, the Tennessee Department of Labor and Workforce Development (TNLWD) conducted an audit of Signature worker classifications and Tran was notified that his workers were to be classified as “employees” and that he was required to file quarterly reports to report the wages paid to them.  Tran appealed the TNLWD’s decision, arguing that his workers were “independent contractors” and not “employees.”  The TNLWD upheld the decision, and it became final.  Tran then began reporting some of his employees’ wages but continued to classify other employees as independent contractors, despite the decision of the TNLWD.

In 2017, the TNLWD again audited Signature and found that Tran paid his workers cash that he had not reported and that he continued to misclassify some employees as independent contractors.  The audit determined that Tran had underreported wages in 2014 by $987,203.80; underreported wages for 2015 by $1,075,718.40; and underreported wages in 2016 by $1,099,356.90.

The indictment alleges that Tran did not file federal employment tax returns reporting his employees’ wages and withholdings, as required, nor did he withhold employment taxes or pay the employer’s portion of employment taxes for wages paid to employees.  According to the indictment, the tax loss attributable to eight separate quarters during tax years 2015 through 2018 was over $542,000.

The indictment also alleges that while knowing the IRS was conducting a criminal investigation of him, Tran instructed nail technicians to lie to the IRS about cash payments received as wages.

If convicted, Tran faces up to 5 years in prison on each tax evasion and employment tax fraud count and up to 2 years on the obstruction count, and up to a $250,000 fine.

This case was investigated by the IRS-Criminal Investigation.  Assistant U.S. Attorneys Kathryn W. Booth and Stephanie N. Toussaint are prosecuting the case.

An indictment is merely an accusation.  The defendant is presumed innocent until proven guilty in a court of law.

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