WILLIAMSPORT — The operator of two temporary employment businesses in Clinton County has been accused of not remitting $1.13 million in Social Security, federal income and Medicare taxes withheld from employees’ gross pay.

Dawn Herlocher, 48, who operated Liberty Workforce and Reliable Valley Services in Loganton, is charged with 40 counts of failure to collect, account and pay trust fund taxes.

She was arraigned Friday in U.S. Middle District Court, pleaded not guilty and was released under the supervision of pretrial services.

Magistrate Judge Sean A. Camoni gave her 30 days to find an alternative to medical marijuana to avoid violating terms of her supervision. He explained use of marijuana is illegal under federal law.

Herlocher is accused of failing to truthfully account for and pay trust fund taxes on behalf of the Liberty and Reliable employees from June 2020 through April 2025.

The law requires employers to remit to the IRS quarterly contributions under Social Security and Medicare that matches what is withheld from employees’ pay for those purposes.

Employers also must file within a month after a calendar quarter a federal tax return stating the total amount of income taxes withheld, the amount of Social Security and Medicare taxes due and total tax deposits.

Herlocher was responsible for collecting trust fund taxes, filing the required forms and paying employment taxes for employees because she exercised control over the financial affairs of Liberty and Reliable, according to the indictment.

The government explained in the indictment it uses the trust fund term because employers are required to hold the withheld taxes in trust until paid.

The indictment contains a clause that would require Herlocher, if convicted, to forfeit to the government all assets, including property that could be traced to the criminal activity.

The maximum sentence for each of the 40 counts is five years.