Date: February 14, 2020
PHILADELPHIA – Myles Hannigan of Newtown Square, PA was sentenced to 52 months' incarceration, one year supervised release, and ordered to pay $3,270,566 in restitution by United States District Judge Chad F. Kenney for filing false tax information with the Internal Revenue Service on behalf of his clients. At the conclusion of today's sentencing hearing, Mr. Hannigan was immediately taken into custody and sent to federal prison.
The defendant pleaded guilty in July 2019 to obstructing the due administration of the IRS and seventeen counts of preparing materially false income tax returns, in connection with owning and operating Payroll Professionals, Incorporated ("PPI") located in Media, Pennsylvania. PPI is a third-party payroll processor, which assists its clients by issuing payroll checks and forwarding tax payments to federal, state, and local authorities. PPI's clients were small- to medium-sized businesses, and the clients relied on Hannigan to prepare and file tax Form 941, among others, with the IRS. Form 941 details employee wages that were paid by a company, and payroll tax withheld and paid to the IRS based on those wages.
Beginning in January 2012 and continuing up to December 2016, Hannigan prepared and submitted Forms 941 that falsely reported information to the IRS. In particular, Hannigan reported depositing more money to pay tax debt than he had actually sent to the IRS, causing 35 of PPI's client companies (who are considered victims in this case) to collectively underpay the IRS $3,270,566.89 for those tax years. These victims/companies gave Hannigan access to all necessary funds to pay the full tax debt, but Hannigan failed to do so. Hannigan hid his behavior from these victims/companies by presenting bogus documents that purported to be confirmation of payments he had made to the IRS on their behalf, and by re-directing IRS correspondence to his business address.
"As the third-party payroll processor, Mr. Hannigan's clients trusted him to prepare accurate employment tax returns and remit their payroll taxes to the IRS. Instead, he prepared fraudulent employment tax returns, lied to his clients and failed to remit their payroll taxes," stated John R. Tafur, Special Agent in Charge, IRS Criminal Investigation, Newark Field Office. "Today's sentencing holds Mr. Hannigan accountable for his crimes and shows how serious IRS Criminal Investigation is about pursuing individuals who intentionally cheat not only their clients but the entire taxpaying public."
"This defendant – an accountant whose business it was to handle payroll taxes – committed fraud and stole from clients and the United States government," said U.S. Attorney McSwain. "He also stole from the pockets of all taxpayers who do the right thing every year by paying their taxes. As we enter tax season this year, let this sentence serve as a warning to anyone who might be considering trying to get away with cheating the IRS: don't do it – because it will not end well."
The case was investigated by the IRS and the Treasury Inspector General for Tax Administration, and is being prosecuted by Assistant United States Attorney Jason Bologna.