A Delaware County accountant has been charged in an 18-count federal information for allegedly submitting fraudulent payroll tax filings to the Internal Revenue Service that resulted in underpayments of more than $3.2 million.
Myles Hannigan, 48, of Newtown Square, is charged with one count of obstructing the due administration of the IRS and seventeen counts of preparing materially false income tax returns.
“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 U.S. Attorney William M. McSwain in a release announcing the charges. “He also stole from the pockets of all taxpayers who do the right thing by paying their taxes. It will continue to be a priority of my office to bring tax cheats to justice and thereby protect honest taxpayers.”
A listed number for Hannigan’s Newtown address was not in service and no attorney had been listed on the federal docket as of Wednesday afternoon.
Hannigan was the owner and operator of Payroll Professionals Inc. in Media. The business operated as a third-party payroll processor that issued payroll checks and forwarded tax payments on behalf of clients to federal, state and local authorities, according to the information.
Prosecutors say Hannigan’s clients were small to medium-sized businesses that relied on PPI to prepare and file forms with the IRS reflecting wages paid, as well as income tax withheld and paid to the government.
But the information claims Hannigan prepared and submitted false forms with the IRS for 35 clients who had provided him with access and funds to pay taxes between January 2012 and December 2016.
The forms indicated the companies – considered victims of the alleged scheme – had deposited more money with PPI to pay tax debt than Hannigan actually sent to the IRS, resulting in a collective underpayment of approximately $3,270,566 for the tax years 2011 through 2015, according to the information.
The differences in what Hannigan collected from clients and what he actually deposited range from a mere $49 to more than $356,000, according to the information. Hannigan would allegedly either issue a partial payment or no payment at all. The information lists one instance where Hannigan was supposed to pay $392,023 on behalf of a company in 2013, but remitted only $264,645, a difference of more than $127,000.
The information indicates Hannigan attempted to conceal the scheme by presenting bogus documents to the victim companies confirming payments had been received by the IRS and by directing any IRS correspondence about shortages to his business address. This prevented the IRS from notifying the clients that they were behind on taxes for months or even years, according to the information.
Hannigan additionally falsely claimed in some cases to have been given power of attorney by clients for their IRS dealings and falsely held himself out as a certified public accountant, the information says.
The federal government claims Hannigan essentially operated a “Ponzi scheme” over the course of the scheme by borrowing one client’s money to pay the debts of another. The alleged scheme collapsed when interest and penalties on missing payments became too large to hide.
Hannigan faces up to 54 years in prison and a fine of more than $1.8 million if convicted.
The case is being prosecuted by Assistant United States Attorney Jason P. Bologna.