Jefferson County Businessman Sentenced to 18 Months for Failing to Pay Employee Taxes

ST. LOUIS — Danny L. Nickelson Jr., a Jefferson County businessman, was sentenced to 18 months in prison on May 12, 2026, for failing to pay over withheld taxes on behalf of his employees.

Nickelson withheld Social Security and Medicare taxes along with federal income taxes from his employees' paychecks but did not forward those amounts to the IRS, according to the U.S. Department of Justice. The case was prosecuted in the Eastern District of Missouri.

The scope of the violation centers on trust-fund taxes that employers are required to hold in trust and pay quarterly. The exact dollar amount and number of employees affected were not detailed in the charging documents, yet every dollar withheld represents payroll taxes that fund Social Security, Medicare and general federal revenue.

Under standard IRS procedures, such failures can affect dozens to hundreds of employee wage records per business depending on the size of the payroll.

The sentence changes Nickelson's status from defendant to incarcerated individual; he must report to prison on a date set by the Bureau of Prisons. Upon release he will remain subject to supervised release and full repayment of the outstanding trust-fund taxes plus interest and penalties.

The judgment activates standard IRS collection mechanisms that can include liens, levies and demands on any remaining business assets.

Downstream, the conviction requires the IRS to record the debt and pursue civil recovery against Nickelson personally and any related corporate entities. It also obligates the agency to update employment-tax compliance records that influence future audits of similar businesses in the region.

Federal sentencing data will feed into the Justice Department's quarterly enforcement statistics on payroll-tax cases, which in turn inform allocation of investigative resources by IRS Criminal Investigation and the Tax Division.

This marks the latest federal prosecution of an employer for trust-fund tax violations in Missouri. The Department of Justice has pursued such cases for decades under 26 U.S.C. § 7202, which makes willful failure to collect or pay over taxes a felony punishable by up to five years in prison. The 18-month term falls within typical ranges for first-time offenders who ultimately plead guilty.

Primary sources: U.S. Department of Justice