The Most Dangerous Tax a Business Can Ignore: Lessons From La Mota

Over the past 20 years, I have seen my share of accounting horror stories, and many of them begin with businesses neglecting their obligations to employees, particularly payroll taxes. I have had numerous clients who underestimate just how serious delinquent payroll taxes can become. When cash flow gets tight, business owners sometimes begin treating payroll taxes like any other outstanding bill, something that can be delayed while they pay rent, vendors, or other operating expenses. Unfortunately, the IRS does not see it that way. Of all the tax liabilities a business can accumulate, unpaid payroll taxes are among the most consequential, and they can create problems that extend well beyond the business itself.

A recent case involving one of Oregon's most recognizable cannabis dispensary chains provides a good example. On October 15, 2026, the Department of Justice announced that Rosa Cazares, CEO of La Mota LLC and 503 Staffing LLC, had been indicted on eight federal counts involving the willful failure to pay payroll taxes. Federal prosecutors allege that approximately $1.54 million in payroll taxes went unpaid over eight calendar quarters between 2020 and 2021. Each count carries a potential sentence of up to five years in federal prison. These are criminal allegations, and Cazares is presumed innocent unless proven guilty.

For those familiar with Oregon's cannabis industry, La Mota is hardly an unfamiliar name. The company became one of Oregon's largest dispensary chains, largely by marketing inexpensive cannabis products. However, this is not the first time La Mota has found itself in the headlines. In 2023, reporting uncovered millions of dollars in outstanding tax liens and numerous lawsuits involving unpaid vendors and creditors. The company also became embroiled in a political scandal involving then-Oregon Secretary of State Shemia Fagan, who accepted a $10,000-per-month consulting contract with a La Mota affiliate while her office was conducting an audit of Oregon's cannabis regulatory agency. Fagan resigned in May 2023 and was subsequently fined $3,600 by the Oregon Government Ethics Commission in 2025 for violations of state ethics laws. The latest federal indictment adds another chapter to an already controversial history.

Why payroll taxes are different

Not all taxes are treated equally. Income taxes are generally obligations arising from a business's earnings, and depending on the entity structure, those liabilities can often be contained within the business. A C corporation, for example, generally shields its shareholders from personal liability for the corporation's income taxes. Payroll taxes are different because a substantial portion of those taxes never belonged to the business in the first place.

When an employer processes payroll, it withholds federal income taxes along with the employee's share of Social Security and Medicare taxes. These amounts are referred to as trust fund taxes because the employer is effectively holding the employees' money in trust until it is remitted to the government. The employer's matching Social Security and Medicare contributions are separate obligations and are not part of the trust fund. When a company withholds these taxes and fails to remit them, the IRS views the company as having used somebody else's money to finance its operations. From the government's perspective, the employer was entrusted with those funds and failed to deliver them.

The Trust Fund Recovery Penalty

The consequences can be severe. The IRS can hold the individuals responsible for paying those taxes personally liable for 100% of the unpaid trust fund balance. This is known as the Trust Fund Recovery Penalty, and it means that the IRS can go after the people involved regardless of whether the business is structured as an LLC, S corporation, or C corporation. This can include owners, shareholders, officers, managers, and even bookkeepers or payroll providers who had control over the company's financial decisions. Simply holding one of those positions does not automatically make someone liable, but if you were responsible for making financial decisions and knowingly allowed payroll taxes to go unpaid, the IRS may come after you personally.

The IRS takes these liabilities very seriously and can make life extremely difficult for a business with delinquent payroll taxes. In addition to penalties and interest, unpaid payroll taxes can result in federal tax liens, bank levies, investigations into the personal finances of those involved, and aggressive collection efforts. The IRS is particularly concerned with businesses that continue operating while falling further and further behind. In the most serious cases, deliberately failing to remit payroll taxes can even result in criminal prosecution, as illustrated by the allegations involving La Mota. It is also worth mentioning that many states, including Oregon, treat marijuana taxes collected from customers as funds held in trust, which can create similar personal liability for those responsible for remitting them.

If you are behind, here is where to start

If your business has fallen behind on payroll taxes, the first priority is to stop the problem from getting worse. Make sure all outstanding payroll tax returns are filed and, more importantly, that current payroll taxes are being deposited on time. Once the business is current, the next step is to identify the trust fund portion of the outstanding liabilities and begin paying that balance down. There is a strategy available that allows businesses to specifically direct voluntary payments toward the trust fund portion of their payroll taxes rather than the employer's portion. This generally requires providing the IRS with written instructions identifying exactly how the payment should be applied. Without those instructions, the IRS may apply the money elsewhere, leaving the individuals involved exposed to personal liability.

The remaining payroll tax liabilities, penalties, and interest can often be addressed through an installment agreement or, where appropriate, an Offer in Compromise. The most important thing is to take action before the problem becomes unmanageable. I have seen businesses recover from significant tax liabilities, but the longer payroll taxes remain unpaid, particularly when new liabilities continue to accumulate, the more difficult those situations become. If your business is falling behind, address it now. It is far better to develop a plan to resolve these obligations than to have the IRS develop one for you.