New Hampshire Man Also Failed to File Personal Tax Returns

A former CEO of a startup software company in New Hampshire admitted guilt in a payroll tax fraud scheme that defrauded the IRS of more than $14 million. The irresponsible taxpayer also failed to file personal tax returns despite receiving a substantial annual salary.

Tax Fraud Scheme Unveiled

The New Hampshire man served as co-founder and CEO of a startup technology company. His responsibilities included overseeing the company’s finances, filing quarterly employment tax returns, and ensuring compliance with federal, state, and local tax laws.

Between 2014 and the third quarter of 2021, the irresponsible taxpayer withheld Social Security, Medicare, and income taxes from employees’ paychecks but failed to remit these funds to the IRS. He also neglected to pay the company’s share of employment taxes, causing a significant shortfall.

Despite employing a payroll service company that regularly alerted him about unpaid taxes, the irresponsible taxpayer did not address the issue. Additionally, employees raised concerns, such as discrepancies between their W-2 forms and Social Security Administration records, but no corrective actions were taken.

Personal Tax Filing Neglected

From 2013 to 2020, the former CEO failed to file personal income tax returns, even though he earned an annual salary of approximately $250,000. This deliberate noncompliance exacerbated the financial losses to the government.

Financial and Legal Consequences

The irresponsible taxpayer’s actions resulted in over $14 million in losses to the IRS, alongside additional losses to state and local taxing authorities. He now faces serious legal consequences, including:

• Prison time: Up to five years for failing to account for and pay over payroll taxes and up to one year for failing to file personal tax returns.
• Restitution: Repayment of the full tax liability to the IRS and other taxing entities.
• Additional penalties: Fines and a period of supervised release.

IRS Investigation and Prosecution

The IRS Criminal Investigation unit led the inquiry, uncovering the extent of the fraud. Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Jane E. Young for the District of New Hampshire made the announcement.

Lessons from the Case

This case underscores the importance of compliance with payroll tax obligations. Employers must remit withheld taxes promptly and fulfill their own tax responsibilities. Failure to do so can lead to criminal charges, financial penalties, and reputational damage.

For employees, discrepancies in tax records or pay stubs should be addressed immediately to prevent personal financial risks.

Protecting Tax Integrity

The IRS and Department of Justice continue to prioritize enforcement actions against individuals and businesses that violate tax laws. This serves as a strong deterrent to those who might consider engaging in similar schemes.

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