Business owners plead guilty, sentenced for tax theft

OLYMPIA, WASH. – Oct. 29, 2019 – The owner of an Everett restaurant has been sentenced for tax theft, and the owner of a Seattle home/interior design firm has been sentenced for operating an unregistered business in two recent criminal cases.

Kay Fuengarom, co-owner of Zab 99 Thai restaurant in Everett, was sentenced Oct. 4 to two years of probation after pleading guilty to third-degree theft. Fuengarom admitted using sales suppression software, known as a “zapper,” to underreport her business’s income and pocket sales tax she collected from customers.

Sales suppression software is used to eliminate cash transactions in sales records, allowing a business to avoid reporting and returning sales tax to the state. The use of sales suppression software is illegal and a Class C felony in Washington state.

As part of her probation, Fuengarom was ordered to obtain sales suppression monitoring software and hand over her business’s point-of-sales system to Revenue.

Department of Revenue auditors discovered Fuengarom had significantly underreported her business’s income during an audit in July 2016. Auditors estimated Fuengarom had withheld $213,651 in sales tax during the audit period between Jan. 1, 2012 and June 30, 2015.

Revenue auditors also suspected the use of sales suppression software. When confronted with questions about the software use, Fuengarom confirmed she had used it to reduce the amount of sales recorded.

In another tax case this month, Leah Steen, owner of Revival Home and Garden of Seattle, was sentenced Oct. 18 to two years of deferred probation and 80 hours of community service for operating her home/interior design business without registering it with the state.

Revenue had revoked Steen’s business registration in May 2012 after she failed to remit sales taxes, file excise tax returns, and respond to a tax warrant filed against her.

Despite the state revoking her registration, Steen continued to operate her business. After locating evidence of Steen operating, Revenue launched an investigation. When Revenue agents confronted Steen, she wrote a confession and apology and paid more than $421,000 in back taxes, penalties and interest. She also put up a $20,000 bond with Revenue to ensure her back taxes are paid.

State law requires that businesses register with the state before operating. Operating without a business license is a gross misdemeanor with a maximum penalty of 364 days in jail or a $5,000 fine.

Criminal charges in both cases were filed by the Criminal Justice Division of the Attorney General’s Office on behalf of Revenue.

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The Department of Revenue is Washington state’s primary tax agency, nationally recognized for innovation and quality customer service. Revenue administers nearly 60 categories of taxes that help fund education, social services, health care, corrections, public safety, natural resource conservation and other important services Washington residents count on.