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Ocean City

Former beach photo franchise holder sentenced

NANCY POWELL ¦ Staff Writer

(Oct. 12, 2012) The former owner of an Ocean City beach photo franchise and other businesses was sentenced Oct. 5 to 10 months in prison for failing to file tax returns and for failing to file employment tax withholdings.

Patrick McLaughlin, 43, of Ocean City, had faced a maximum sentence of one year.

“He was not ordered to pay restitution because he had paid in back taxes in full,” Public Affairs Officer Vicki Leduc of the United States Attorneys Office for the District of Maryland said on Tuesday.

McLaughlin operated several resort businesses, including beach photo companies Sunbeach Studios and United Beach Photo, plus Arctic Inventions, which operated a fleet of ice cream trucks, and 85 N Sunny, a beach equipment rental business.

According to a press release from the office of United States Attorney for the District of Maryland Rod. J. Rosenstein, McLaughlin did not file corporate tax returns for Sunbeach, Arctic and United for tax years 2003 to 2009. He failed to pay $10,239 in corporate taxes for United alone, from 2007 to 2009.

He also did not file individual income tax returns for tax years 2005 to 2009. He should have paid $151,114 in federal income taxes earned from his businesses.

From 2006 to 2008, McLaughlin did not report or pay Social Security and Medicare taxes withheld from his employees’ wages. He should have remitted $135,348.46, according to the press release.

In 2007 and 2008, McLaughlin and 85 N Sunny withheld more than $8,000 in Social Security taxes and $12,000 in Medicare taxes. He reported no withholdings and made only a one-time payment of $230.

In October 2010, the Ocean City Council agreed to McLaughlin’s request to cut in half the minimum cost for the yearly licensing fee for his beach telescope photos businesses. It had been $300,000, but McLaughlin said that was too high, considering that the businesses were experiencing extremely hard times because of the popularity of digital cameras, which not only cut down on the number of customers, but added to the cost of developing the photos.

On Dec. 6, 2010, McLaughlin was the sole bidder in an auction to hold the beach photo franchises for the next four years. The next day, agents with the Internal Revenue Service raided his beach photo business at 16th Street, carting away computers and boxes of files.

Investigators determined McLaughlin should have paid $296,701.46 in corporate, individual and employment taxes.

“Corporations are required to file tax returns just like individuals,” said Rick A. Raven, special agent in charge, IRS Criminal Investigation, Washington, D.C. Field Office, in the press release. “Mr. McLaughlin’s willful actions of failing to file multiple corporate and individual tax returns violates federal tax law. IRS Criminal Investigation will continue to pursue corporations and individuals who willfully fail to file correct and accurate tax returns.”

After his release from prison, McLaughlin will be on supervised parole for one year.

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