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11/16/2012 6:01:00 AM
IRS rounds up Kiddie Korral honcho
Warnings ignored since 2005; total owed exceeds $318,000
JC AMBERLYN/MinerThe owner and operator of three Kiddie Korral daycare facilities in Kingman pleaded guilty in federal court Tuesday to charges of withholding $318,000 in federal employment taxes dating back to 2003.
JC AMBERLYN/Miner

The owner and operator of three Kiddie Korral daycare facilities in Kingman pleaded guilty in federal court Tuesday to charges of withholding $318,000 in federal employment taxes dating back to 2003.

Erin Taylor
Miner Staff Reporter


KINGMAN - A daycare operator who ignored repeated warnings from the Internal Revenue Service faces possible imprisonment for failing to pay $318,304 in back taxes.

Raycene Rosencrans Osterman, who operates three Kiddie Korral facilities, admitted in federal court Tuesday that she withheld federal employment taxes dating back to 2003 but never remitted the withheld taxes to the IRS.

She conceded in her plea agreement that she was warned as early as 2005 that she could face criminal penalties for failing to pay.

She said she was warned again in 2008. In 2009, she was visited by a third IRS agent. "In response, I repeatedly promised this agent that I'd deposit the overdue payments, but I never followed through on these promises," she said in court files. "Finally, in January 2011, an agent warned me again that I needed to make the missing deposits."

Osterman said she used the money to pay business expenses, including $260,000 in rent payments to her landlord, Five-O Partners. Five-O Partners is a trust controlled by her family members, according to documents.

Osterman was ordered to repay the total amount of $318,304.48. She faces a fine of up to $10,000 and up to five years in prison when she is sentenced Feb. 5 in U.S. District Court.



ICT - Mohave Electric WI_Power Boy 233x388
Related Stories:
• $318,000 tax bill waiting for day care owner headed to prison
• $300K fine imposed on Kingman day care tax evader


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Reader Comments

Posted: Wednesday, November 21, 2012
Article comment by: completely avoidable

Its called a 1099 form. Most intelligent family owned and operated business's give their employees a 1099 so they can be responsible for their own taxes and withholdings.


Posted: Monday, November 19, 2012
Article comment by: tj denton

anson if there was a republican in the house you would be screamin economic collapse doomsday. you know it, i know it, we all know it. anyways, i hope this guy pays up. someones gotta pay for this presidents bills

Posted: Monday, November 19, 2012
Article comment by: Nice Chuckle

@mac

"The 16 amendment does not say income tax is legal. The 16 amendment was never ratified."

Yes, it was ratified. Wing nut, tin foil hat wearing, extremist conspiracy theorists who have tried to say it wasn't have all failed to prove it so. Case closed.


Posted: Monday, November 19, 2012
Article comment by: Steve McCall

Wasn't the 16th amendment passed by congress in 1909 and ratified February 13, 1913? Just trying to remember some history.

Posted: Monday, November 19, 2012
Article comment by: az mac

Allan Gleason

The 16 amendment does not say income tax is legal. The 16 amendment was never ratified. Just keep accepting what the government tells you. Will not be long before they have all you own.
The jury did have the law from the state which said if you pay federal tax, you have to pay state tax. That was also said in the video. So if you do not have to pay federal tax then you do not have to pay state tax. Most states say the same thing.


Posted: Monday, November 19, 2012
Article comment by: Concerned Parent

What is going to happen to Kiddie Korral after all of this is said and done? Everyone keeps talking about how this is "karma in action" and how horrible she may or may not be to her employees. My question is about the children. Will they be closing down? Will all the children that love going there have to find a new place to learn and have fun? What this lady did is her own issue, as they say "You made your bed, now you can lay in it." ... but what happens to the kids who love Mrs. Raycene and actually enjoy getting up in the morning to go there?

Posted: Sunday, November 18, 2012
Article comment by: Steven Robinson

@ az mac and "There is NO LAW on paying taxes":

Perhaps IF you understood WHAT kind of taxes were due you might sing a different tune. Take the word "taxes" out of the story and replace it with retirement money withheld from EMPLOYEES to go into their individual retirement accounts.

In other words, this was money that Ms. Osterman was handling on behalf of the employees. It was all those employees' FICA, Medicare and withholding taxes, not the income taxes owed by Ms Osterman. Imagine IF a bank employee didn't deposit your money into the bank on your behalf. Isn't that theft? Focus on the topic, and save the immorality (Which I heartily agree with you!) of Income taxes for another day!


Posted: Sunday, November 18, 2012
Article comment by: Anson's Nephew

“Because of the ignorance of most people you will soon see this country crash.”

Let’s see, if memory serves you began this rant in the Fall of 2010 by saying the dollar was going to crash at that time. Then you repeated in the winter followed by the Spring, Summer and Fall of 2011 and then it was the winter and spring of 2012 then suddenly you changed it to “soon” with no date specified and now you are continuing this ridiculous meme. Very sad how the doomsayers are proven incorrect time and time again.

Oh, and BTW, don’t pay your taxes and see how that works out for you.


Posted: Sunday, November 18, 2012
Article comment by: Doing Research

Allan Gleason is 100% correct

How about, instead of just running with something that sounds too good to be true and accepting a random youtube video as fact, you actually take 10 seconds to google "What laws impost income taxes"

Furthermore, you want to see a video on employment taxes? The IRS has one meant to explain to small business operators how to be compliant.

http://www.tax.gov/virtualworkshop/



Posted: Sunday, November 18, 2012
Article comment by: anonymous anonymous

Folks who have been advocating no laws can enforce the income tax laws have been finding out the hard way via a federal prison cell they are living in a delusion of grandeur! I guess like my old daddy use to say a hard head makes a soft tail! Another old saying two things unavoidable death and taxes! Try to dodge either one and you will be disappointed!

Posted: Sunday, November 18, 2012
Article comment by: Al DiCicco

I never liked seeing a daycare playground so close to the road. Who approved zoning for that? IRS is illegal. America from Freedom to Fascism, Aaron Russo, watch it slaves.

Posted: Saturday, November 17, 2012
Article comment by: Oh Dah

I'm beginning to hear banjo music.....the inbreds are moving in and there is no escape! What has Kingman come to. It's an article about a crooked businesswoman who used her bisiness as a piggy bank. Much of her business income cashflow came fron the government in the form of childcare costs provided for "low income" people to care for their kids while they worked or sat on their laurels collecting welfare. She took the taxes from her employees, without remitting to the gov't. She knew she did it!

Posted: Saturday, November 17, 2012
Article comment by: yep mr.c.

You may want to research the sixteen amendment. As it gave congress the right to tax income. Please correct me, if I happen to be wrong.

Posted: Saturday, November 17, 2012
Article comment by: Amoreena Boose

Well anyone who disagrees has NO CLUE what they are talking about and have obviously never Met or Worked for her! She deserves everything she gets and then some! Karma in Action!

Posted: Saturday, November 17, 2012
Article comment by: truth teller

This company got large amounts of money from the Government for child care for the poor. Look around us businesses also are depended on the Government . Cheating is way of life why is that ?
WASHINGTON — Arizona had the second-highest income inequality in the nation between 2008 and 2010, trailing only New Mexico for the gap between its richest and poorest residents, a new report says.

The report by the Center on Budget and Policy Priorities and the Economic Policy Institute said that for every dollar earned, on average, by the poorest 20 percent of the state’s population in the two-year period, the top 20 percent was earning $9.80.

It also said the gap has widened steadily over the decades. In Arizona, top earners made $5.20 for every $1 of low-income earners’ wages in 1977-1979, but it had grown to a ratio of $8.60 to $1 by 2007-2009. That was slightly faster growth than the nation as a whole, which went from 5.2 to 1 to 8.3 to 1.


Posted: Saturday, November 17, 2012
Article comment by: Suzanne cheever

The only comment I have to say about Racine and the Kiddie Korral and all its workers past and present is that they worked very hard and I took three of my children there for almost 10 years and never had an issue with them.
I am sorry to hear about the tax issues but she worked very hard to keep the business going through the rough times Kingman has been going through the last few years.
The only reason that my kids no longer go there is because I was lucky enough to escape awful Mohave County and move my kids to the Midwest where it is beautiful to raise my children!!
My condolences to Racine I know you worked your butt off and Alison too when she worked for you!!


Posted: Friday, November 16, 2012
Article comment by: Taxes Educate Kids, Taxes Provide Roads, Taxes Pay for Our Soldier Who Defend the USA, ...

We certainly could use a house cleaning here of these wackos that push not paying taxes.

Please do us true Americans a favor. Please not only push others not to pay taxes but don't pay any taxes yourselves (that is if you earn a pay check at all or are not one of the 47%ers).

And why not go a step further - go out and hold your "No Law Requires Taxes" protest sign, write letters to the editor telling your friends you know as a fact there is no law requiring taxes. Oh, unlike your comments here, stand behind your words, be out there, put your name to this message, remember this is the "Land of the Brave."


Posted: Friday, November 16, 2012
Article comment by: Ignorance Isbliss

When you have a business, you must deduct taxes from their pay. This woman wasn't doing it, or paying into Social Security. Now many employees won't be able to collect much of the retiement they are due. The sixteenth amendment to the U.S. Constitution, Section 8, Clause 1, states that the federal government has the right to levy taxes however, it does not specifically state what kinds of taxes or the tax rates: "The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States but all Duties, Imposts and Excises shall be uniform throughout the United States."

Posted: Friday, November 16, 2012
Article comment by: Bound to Happen

I used to work at Kiddie Korral but after a year there, I just knew something wasn't right with the way that woman handled finances. She would never pay us on our pay days because she didn't have the money so we would have to wait another week or so. It's just amazing that she stayed in business this long.

Posted: Friday, November 16, 2012
Article comment by: Used to Work for her

It's a federal law to pay taxes! So yeah you have to pay. When I worked for her you got two pay checks but only in the beginning of the month say you got one on the 5th and again on the 7th. Holy crap was it hard. We all knew something was going to happen to her. Finally something happened!

Posted: Friday, November 16, 2012
Article comment by: Jerry Jones

So, she robbed the feds by sticking her hand in their cookie jars (HER EMPLOYEES)...ouch

Posted: Friday, November 16, 2012
Article comment by: Allan Gleason

The claim that "There is NO written LAW that WE THE PEOPLE HAVE to PAY taxes!" is pure nonsense!

In 1913, the Sixteenth Amendment to the U.S. Constitution was ratified. It empowered Congress to tax "incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." The Internal Revenue Code is today embodied as Title 26 of the United States Code (26 U.S.C.) and is a lineal descendant of the income tax act passed in 1913.

I watched the video mentioned below which involved a juror describing a court case in Illinois where neither the judge nor the prosecutor presented the requested Illinois law involved... so the jury found the defendent innocent. I don't understand why the jury was not made privy to the law but such law does exist as follows: Through Public Act 97-0652. ILLINOIS INCOME TAX ACT. AS AMENDED THROUGH PUBLIC ACT 97-0652. Sec. 101. (Short Title) .
Perhaps more important to us in Arizona we find the Arizona Personal Income Tax Laws in Arizona State Code Section, 43-1011.

I didn't bother looking up the law requiring an employer to withhold taxes from employees for remission to the government, but I'm certain it can be found via Google!


Posted: Friday, November 16, 2012
Article comment by: paying for everyone paying for everyone

You should be glad people pay taxes. Where do you think your welfare checks come from?

Posted: Friday, November 16, 2012
Article comment by: My two cents ..

What a shame about all this. I knew her Mother in Law who started this kindergarten many years ago down on Oak Street and from what I understood, did a great job.

At the time, it was badly needed in Kingman and the only other anything similar was Mrs. Goodale who took in children daily up near the K on the hill - another great childcare giver.

Osterman's whose family this lady obviously married into were a great Kingman family with a great name back then. Who knows what happens over the years. Sad!


Posted: Friday, November 16, 2012
Article comment by: Elliott Ness

Exactly what Al Capone said, I don't have to pay no stinking' taxes! Well when the Federal Marshall's haul you to prison, you can keep saying it to your cell mate.


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