Circumstances are unclear on this still, but does failing to pay taxes constitute embezzlement now? If so, this could bring millions of taxpayers under the umbrella of criminal proceedings in the future for having not paid a tax. Up until now, owing money has not been a crime, save for child support arrears which was the first instance that I'm aware of making a debtor a criminal.
Depending on how the tax code is structured in that city, a person required to collect a tax is usually liable for the money even if they didn't collect it, and that would make it his funds under his control until transferred to the city treasury in some manner. If he had access to the city account and stole it from there, that would constitute embezzlement for sure, but this does not appear to be the case here.
Hotel owner charged for allegedly keeping taxes
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REDWOOD CITY, Calif. -- The owner of a South San Francisco hotel is facing charges after authorities say he collected hundreds of thousand dollars in taxes from guests, but failed to turn the money over to the city.
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http://www.sacbee.com/state_wire/story/2378407.html