Reporting by Dennis Byron
After accepting responsibility for federal payroll tax evasion, Shanga Hankerson, the son of legendary superstar Gladys Knight has agreed to a 2-year plea deal for not paying the government their monies. At the time of his arrest, Hankerson had owed the government in excess of 1 million dollars in back taxes and feds decided to close down all three of his restaurants that bare his famous mother’s name.
“Hankerson willfully disregarded his tax obligations for many years,” said Acting U.S. Attorney Kurt R. Erskine. “Payroll taxes fund social insurance programs, including Social Security and Medicare, and are a large source of revenue for the federal government. Employers who fail to comply with their legal obligations will be held accountable.”
“While ownership of a well-known restaurant in our community has its perks, it also comes with great responsibility,” said IRS Criminal Investigation Special Agent in Charge James E. Dorsey. “Paying taxes is a way to give back to the community, but unfortunately Hankerson chose to use those funds for other means. This sentencing emphasizes that all employers, big and small, have equal responsibility to collect, report, and pay over their payroll taxes.”
According to Acting U.S. Attorney Erskine, the charges and other information presented in court: In 1997, Hankerson opened his first restaurant, Gladys Knight’s Chicken and Waffles, in Atlanta. Over the next several years, Hankerson expanded the concept to at least three other locations in northern Georgia and Washington, D.C. Hankerson was the sole owner of the businesses that operated the restaurants.
As an employer, Hankerson’s companies were required to withhold from employees’ gross pay Federal Insurance Contributions Act (“FICA”) taxes, which represent Social Security and Medicare taxes, and federal income taxes. Collectively, these withheld taxes are referred to as “payroll taxes.” Specifically, employers are required to file, one month after the conclusion of the calendar quarter, an Employer’s Quarterly Federal Tax Return, setting forth the amount of payroll taxes due.
An individual is responsible for collecting, accounting for, and paying over the payroll taxes if he or she has the authority required to exercise significant control over the employer’s financial affairs. As the sole owner, Hankerson was the responsible person, and he had the responsibility to collect, truthfully account for, and pay over payroll taxes due. From at least 2012 to 2016, Hankerson failed to fully remit over $1 million in payroll taxes due.
Shanga Hankerson, 45, of Atlanta, Georgia, was sentenced by U.S. District Judge Michael L. Brown to serve two years in prison, one year of supervised release, and ordered to pay restitution of $1,039,310.65. Hankerson was convicted on July 21, 2021, after he pleaded guilty.
Many had thought the singer herself owned the restaurant but it was later revealed during a lawsuit where she sued her son to remove her name off of all business records as she was only the pitch person for his brand. Former employees later told federal investigators that Hankerson used the money to pay for wild sex parties and illicit drugs.
