Westport Business Owner Gets 7 Years in Under-The-Table Pay Scheme

The Herald News reports that a Stoughton business owner was recently sent to prison for seven years in connection with running a $30 million scheme in paying employees.

Boston payroll issues are critically important for employees and employers alike. For businesses, navigating the complex payroll laws in Massachusetts can be treacherous and requires sound legal advice.
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A small business (or a large one!) can’t afford legal distractions when it is trying to make a mark on the marketplace. This can not only take away from the focus of the company’s owners, but close the window of opportunity it has to make an impact.

In this case, business co-owner Michael Powers was sentenced to seven years in prison and fined more than $9 million, which will be paid to the Internal Revenue Service, two insurance companies and the Massachusetts Department of Unemployment Assistance.

He co-owned a temporary work agency and was convicted of holding back state and federal payroll taxes and workers’ compensation insurance premiums. After the seven years in prison, he must complete another two years on supervised release.

After a trial, Powers and his co-owner, co-defendant, John Mahan were convicted each on one count of mail fraud, two counts of filing false tax returns and one count of conspiracy to defraud the IRS and workers’ compensation insurers.

The government alleged that from 2000 to 2004, they operated Commonwealth Temporary Services, Inc., which put to work many unemployed people throughout Massachusetts. But instead of paying employment taxes, including Social Security and Medicare, they under-reported their payroll and paid much of it in cash. This also reduced the company’s insurance premiums, the newspaper reports. The total fraud, prosecutors argued, was $30 million.

The newspaper reported that the man’s co-defendant was sentenced to just over 6 years in prison for his role in the case.

This case represents an orchestrated attempt to thwart payroll and tax laws that govern small businesses. But there are many examples of companies just getting started who may get caught up in an IRS audit or other type of scrutiny.

When companies start from scratch, they must have sound legal advice for all aspects of their business. There are many laws on the books governing employment. With the government constantly looking to collect as much tax revenue as possible, the IRS has been called on to step up its efforts.

This is why it’s critical for small business owners to contact a Boston employment lawyer if they have questions about their payroll system. And workers who feel they might be getting shorted or suspect something isn’t right should also seek advice to ensure their company is held accountable.

Boston employment lawyers assist employers and employees. A worker who believes his/her company has shorted them money or isn’t properly withholding taxes can benefit from the experience of a lawyer who has handled many of these issues in the past.

If you need to speak to an employment attorney in Belmont, Boston or elsewhere in Massachusetts, contact The Brown Law Firm, LLC, for a free and confidential consultation. Call 617-489-0817 or contact us through this website.

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Legal Advice Critical for Small Business Startups in Massachusetts: October 11, 2011

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