Newtown Square accountant charged with stealing payroll tax funds from business clients
Myles Hannigan of Delaware County, who stole over $1.8 million, could face up to 54 years in prison.
The U.S. Attorney’s office on Wednesday charged Myles Hannigan, 48, of Newtown Square, with stealing payroll tax payments from his business clients.
Hannigan owned and operated Payroll Professionals Inc., or PPI, which operated out of Media. PPI was a third-party payroll processor that was hired by business clients to issue paychecks and forward tax payments to federal, state, and local authorities.
PPI’s clients were small to medium-sized businesses, and clients paid Hannigan to prepare and file Form 941 with the IRS. Form 941 details employee wages that were paid by a company and income tax withheld and paid to the IRS based on those wages, according to a statement from William McSwain, U.S. Attorney for the Eastern District.
Beginning in January 2012 and up to December 2016, Hannigan allegedly submitted forms that reported false tax information to the IRS.
Hannigan kept more money to pay tax debt than he actually had sent to the IRS, causing 35 of PPI’s client companies, considered victims in the case, to collectively underpay the IRS $3,270,566.89 for those years. The companies gave Hannigan access to funds to pay the full tax debt, but Hannigan allegedly failed to do so.
The accountant hid his scam by presenting fake documents that purported to be confirmation of payments of taxes he had made to the IRS on company clients’ behalf, and by redirecting IRS correspondence to his business address.
Hannigan is alleged to have operated a Ponzi scheme of borrowing from one client’s money to pay the debts of another, which collapsed when the interest and penalties owed to the IRS, which he was hiding from clients, grew too large.
Hannigan was charged in what’s known as an “information” document with one count of obstructing the IRS and 17 counts of preparing materially false income tax returns.
If convicted, he faces a maximum sentence of 54 years in prison, one year of supervised release, a fine of as much as $1.8 million, and a special assessment of $1,800.
“As alleged in the Information, this defendant – an accountant in business to handle payroll taxes – committed fraud and stole from clients and the United States government,” said McSwain in a news release. “He also stole from the pockets of all taxpayers who do the right thing by paying their taxes.”
The case was investigated by the IRS and the Treasury Inspector General for Tax Administration and is being prosecuted by assistant U.S. Attorney Jason Bologna.