Nielsen's Owner Arrested for Failing to Pay Meals Taxes

The owner of a Church Street landmark was arrested for embezzlement Thursday after he turned himself in on two felony criminal warrants.

Michael Paul Willis, 28, of Vienna, the owner of the Nielsen's Frozen Custard, was charged with two counts of embezzlement for not paying Town of Vienna meals taxes during several periods over the last year.

"[Owners] act as agents of the town to collect meals tax, so when it's not turned over to the town that’s considered embezzlement," Vienna Police Officer Bill Murray said.

Police said Willis did not pay meals taxes from May to July 2010 and for September 2010.

The felony warrants were a last-resort measure by the town after several attempts to get Willis to pay business license fees and file meals tax returns, Murray said.

Calls to Willis were not returned. Nielsen's has been registered in Vienna since 2002, but it's not clear when Willis became owner.

In May, police issued five misdemeanor warrants for Willis, charging him twice for failing to obtain a business license and three times for not filing meals tax returns.

Willis filed for a business license in 2010, but did not pay the tax, which for retail businesses, including restaurants, is $0.17 per $100 of gross receipts of the prior year. In 2011, he neither filed nor paid the tax. The three charges for not filing returns were for May, June and July 2010; September to December 2010; and January to March 2011.

Vienna Town Code requires all businesses that sell food to pay 3 percent of its qualifying meals sales, whether or not that food is prepared on premises. It is not an assessed tax on the business, but instead included in the price that patrons pay at the time of purchase.

This money is used to fund various capital improvement projects in town.

About 80 businesses in town pay meals taxes, said Kirstyn Barr, Vienna spokeswoman. In fiscal 2010, meal and lodging tax revenue, which is included in the town's debt service fund, brought in $1.68 million. At the end of this fiscal year, the town will collect about $1.75 million, Finance Director Phil Grant said.  

"[Issuing warrants] is not generally something we do, even in hard economic times," Barr said. "This is a last resort."

It's unclear how much Willis owes, because sales are self-reported. Police records say each of the charges are for amounts in excess of $200.

The town does not plan to shut down the business because of the charges, Barr said.

Willis will appear in court separately for his felony and misdemeanor charges, Murray said. If convicted, Willis could face a $2,500 fine and one year in prison for each of his misdemeanor charges. The felony charges carry a prison sentence of one to 25 years for each charge, though a jury could reduce that to less than a year with a $2,500 fine.