Kentucky office manager ducked taxes but spent $800,000 on vacations, other expenses
The manager of a Kentucky dental clinic admitted failing to pay federal taxes even as she spent more than $800,000 from business accounts on vacations, jewelry, retail purchases and other personal expenses.
Kathy Thorner, the manager and bookkeeper for her husband’s dental practice in Ashland, pleaded guilty Friday in federal court to two charges of failing to properly account for and pay taxes, and one charge of making a false statement on a return.
Her husband, William Thorner, was initially charged with conspiring with her to impede the work of the Internal Revenue Service, but U.S. District Judge David L. Bunning dismissed the charge against him at the request of the prosecutor, the court record shows.
William Thorner operated Caring Dentistry in Ashland for several years. Kathy Thorner was the manager and bookkeeper, and was responsible for handling taxes from August 2010 to December 2017, according to her plea agreement.
Kathy Thorner acknowledged failing to pay the IRS all the taxes withheld from employees’ paychecks and also not remitting money withheld from their checks for benefits.
Thorner gave inaccurate information to the accountant for the business, causing expenses to be overstated on its tax returns.
She also significantly understated the income from the practice and overstated the amount of federal withholding on the joint tax returns for her and her husband for several years, according to her plea agreement.
In one example, Thorner filed a quarterly tax return showing the business had paid payroll taxes totaling $20,401 to the IRS, when it hadn’t.
During the period covered in the case, Thorner “spent over $800,000 from business accounts on personal expenses including vacations, credit card payments, retail purchases and jewelry,” her plea agreement said.
The government argued that the tax loss from Thorner’s conduct was between $250,000 and $550,000, but she has argued it was between $100,000 and $250,000.
That dispute will be worked out as part of her sentencing, scheduled in September.
Thorner, who moved to South Carolina after leaving Ashland, faces up to five years in prison on each charge of not paying taxes and three years on the false reporting charge.
