PHILADELPHIA – United States Attorney William M. McSwain announced that Myles Hannigan, 48, 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.

“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.”

“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.”

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.

PHILADELPHIA – United States Attorney William M. McSwain announced that Myles Hannigan, 48, of Newtown Square, Pennsylvania, was charged by Information with one count of obstructing the due administration of the Internal Revenue Service (IRS), and seventeen counts of preparing materially false income tax returns.

Hannigan owned and operated Payroll Professionals, Incorporated (“PPI”), which operated out of Media, Pennsylvania.  PPI is a third-party payroll processor that 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 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. 

Beginning in January 2012 and continuing up to December 2016, Hannigan allegedly prepared and submitted Form 941s that falsely reported information to the IRS.  In particular, Hannigan reported depositing more money to pay tax debt than he actually had 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 allegedly failed to do so.  Hannigan hid his behavior from these victims/companies by presenting bogus documents that purported to be confirmation of payments of taxes he had made to the IRS on their behalf, and by re-directing IRS correspondence to his business address.  In essence, 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) became too big to hide.

“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 McSwain.  “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.”

If convicted, the defendant faces a maximum possible sentence of up to 54 years in prison, one year of supervised release, a fine of up to $1,805,000, and a special assessment of $1,800.

The case was investigated by the Internal Revenue Service (IRS), and the Treasury Inspector General for Tax Administration (TIGTA), and is being prosecuted by Assistant United States Attorney Jason P. Bologna.

An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.