This week, John Carr Jr. 69 of Gloucester was sentenced 52 weeks. The owner of a payroll and tax return preparation service was accused of failing to pay in excess of $1.38 million in state withholding taxes. Also, he allegedly filed false Massachusetts tax returns for many of his clients. Carr pleaded guilty in May to charges of Willful Failure by Preparer to Pay Over Tax and Willful Delivery of a False Tax Return. In total, he pleaded guilty to 25 counts. 23 for the former charge and 2 for the latter.
Carr is the owner of Boston Business Services Inc., which is a small payroll and employer tax return preparer. The business is based out of Gloucester, Massachusetts. The business was responsible for preparing payroll checks and direct deposits for many clients, which included businesses, government agencies and nonprofit organizations.
The business also withheld federal, state and social security taxes and unemployment insurance taxes. Then, these tax payments were impounded and sent to the appropriate taxing authorities. In January of 2016, the Attorney General’s Office initiated an investigation after a recommendation from the Massachusetts Department of Revenue. The investigation uncovered that Carr had impounded the tax payments, but fail to pay the Massachusetts Department of Revenue from 2010 to 2014. The investigation kicked off in early 2015 after four business clients of Boston Business Services filed complaints against the tax preparer.
Carr failed to pay the Department of Revenue an approximate $1.38 million in state withholding taxes. Carr was also accused of filing false tax returns, which understated the amount of taxes owed to the state. Carr pleaded guilty in the Suffolk Superior Court in May. Now, he has been sentenced to 52 weeks of weekend incarceration and three years probation. He has also been ordered to pay $18,000 in restitution. That offers little consolation to the companies that Carr duped.