LEXINGTON, Ky. (LEX 18) — Federal documents reveal the owner of two popular Mexican restaurants in Lexington and Nicholasville is under investigation by the IRS for allegedly under reporting income by more than $2.3 million over a four-year period.
The investigation involves Mi Pequena Hacienda restaurants on Lansdowne Drive in Lexington and at Brannon Crossing in Nicholasville, where IRS agents and state police conducted operations at both locations last Tuesday.
According to court documents, IRS agents suspect owner Lorena Gallegos of under reporting receipts from the restaurants by more than $2.3 million from 2019 to 2023.
The documents describe a potential tax evasion scheme, noting bank records show discrepancies between actual deposits and reported income. As part of their investigation, agents even dined undercover at both restaurant locations.
Despite the investigation, the restaurants remain open and continue to serve customers. On a recent Monday, both locations were busy during lunch service.
"We've always had a great experience here. The food is really good. Authentic Mexican. Probably the most authentic restaurant around here," said Ben Hilton, a repeat customer.
Mi Pequena Hacienda addressed the situation on Facebook, stating: "At this time, we are fully cooperating with the ongoing process. We remain committed to transparency and compliance, and we will continue to serve our customers with the same dedication and hospitality they've come to expect."
For loyal customers like Hilton, the allegations came as a surprise.
"I couldn't imagine anything weird going on like that. It's hard to believe. They've definitely got our support," Hilton said.
Hilton emphasized his continued support for the local business despite the investigation.
"Hopefully people continue to come here and support them, them being a local restaurant. It's good food and it's hard not to keep coming back," Hilton said.
Neither the IRS nor state police have commented on the case.
