Accounting
Tax Fraud Blotter: Where’s my refund?
Prime numbers; Power play; Great White sharks; and other highlights of recent tax cases.
Westbury, New York: Business owner Victor Aguayo has pleaded guilty to not collecting and paying over employment taxes from employee wages.
Aguayo was owner and president of Mabel Interior Design Inc., an interior painting business. He paid his employees some $3.6 million in cash wages but did not withhold or pay taxes from those wages. He also caused false quarterly returns to be filed that did not report those cash wages.
He caused a tax loss to the IRS of $545,743.
Sentencing is April 21. Aguayo faces up to five years in prison, as well as a period of supervised release, restitution and monetary penalties.
New Bedford, Massachusetts: Tax preparer Valentina Martinez, 50, has pleaded guilty to filing false returns to obtain fraudulent federal refunds.
Martinez worked for a national tax prep service. After preparing returns for clients and providing them copies, she added fraudulent claims for business deductions without clients’ knowledge and e-filed the returns.
Martinez caused the refunds to be deposited onto debit cards that she used to make ATM withdrawals and to pay for a Florida vacation and other purchases. Her scheme was discovered and her employment terminated when a taxpayer client complained to the prep service about a missing refund. By then, Martinez had already filed at least 12 false returns and caused more than $45,000 in losses to the IRS.
Sentencing is March 6. The charge of theft of government money carries a maximum of 10 years in prison, three years of supervised release, a fine of $250,000 and restitution to the IRS.
Palm Beach Gardens, Florida: Businessman Paul Walczak has pleaded guilty to not paying employment taxes and not filing his individual income tax returns.
Walczak controlled a web of interconnected health care companies operating under various names, including Palm Health Partners and Palm Health Partners Employment Services. At its peak, the latter employed more than 600 people and paid more than $24 million dollars annually in payroll.
From 2016 through 2019, Walczak withheld nearly $7.5 million in federal taxes from employees’ paychecks but did not pay over those taxes, despite having been penalized by the IRS in 2014 for not paying employees’ taxes. During this same period, Walczak also did not pay $3,480,111 of the business’s portion of his employees’ Social Security and Medicare taxes.
At the same time, he used more than $1 million from his businesses’ bank accounts to purchase a yacht, transferred hundreds of thousands of dollars to his personal bank accounts, and used the business accounts for personal spending at high-end retailers.
For 2019 through 2020, Walczak also did not file personal income tax returns.
Walczak caused a total tax loss to the IRS of $10,912,334.80.
Sentencing is Feb. 28. He faces a maximum of five years in prison for the employment tax charge and a year in prison for not filing income tax returns. He also faces a period of supervised release, restitution and monetary penalties.
Independence, Missouri: Attorney John C. Carnes, 69, has pleaded guilty to evading $857,000 in income taxes.
Carnes admitted that he willfully attempted to evade paying his personal income taxes for 2012 through 2018. He kept his income in his attorney trust accounts, then withdrew cash to pay personal and business expenses.
Carnes had two trust fund accounts. He withdrew $444,527 in cash from one from 2016 through 2019 and $144,364 from the second from 2013 through 2015. He used the cash to gamble and pay personal expenses.
Carnes deposited $232,000 in fees received for services provided in the sale of the former Rockwood Golf Course property in November 2017 and the Missouri City Power Plant project, and other income, into his attorney trust accounts.
The total tax loss to the IRS for 2012 through 2018 totaled $618,949. He also had unpaid federal income tax for 1990 to 1993, 1996 to 2003 and 2005, totaling $175,590. Carnes also had Missouri unpaid income taxes totaling $62,922.
From 2009 to 2020, the IRS continuously engaged in various forms of investigative and enforcement activity regarding his outstanding tax liabilities.
Carnes faces up to five years in prison.
Lake Geneva, Wisconsin: William S. Gallagher, owner and manager of a swimming pool service and retail company, has pleaded guilty to one count of failure to truthfully account for and pay over federal employment taxes.
Gallagher’s company employed some 15 workers. For each quarter in tax years 2018 through 2020, Gallagher willfully failed to truthfully account for and pay over employment taxes. Dating back to 2014, the loss to the IRS totaled more than $606,000.
Sentencing is Jan. 30. Gallagher faces up to five years in prison and up to a $250,000 fine, as well as up to three years of supervised release after completing any imprisonment.
Jacksonville, Florida: Travis Morgan Slaughter and Tripp Charles Slaughter have pleaded guilty to conspiracy to commit mail and wire fraud and conspiracy to commit tax fraud related to a roofing business they operated.
Travis Slaughter has agreed to forfeit to the U.S. $2,780,947 he obtained from the mail and wire fraud offense and to pay $6,768,612 in restitution for the payroll tax loss, $2,780,947 for unpaid workers’ compensation insurance premiums and $271,217 for two paid workers’ compensation claims.
Tripp Slaughter has agreed to forfeit to the United States $416,800 he obtained from the mail and wire fraud offense and to pay $623,269 in restitution for the payroll tax loss, $416,800 for unpaid workers’ compensation insurance premiums and $137,778 for a paid workers’ compensation claim.
Since 2007, the Slaughters have operated a roofing business, first under the name Great White Construction, then under the name Florida Roofing Experts, and finally under the name 5 Star Roofing Services. Although the names changed, each business operated in the same manner, banked at the same financial institutions and employed the same employees. The company contracted with PEOs to prepare payroll checks for employees, after making deductions for payroll taxes, and to file payroll tax returns and forward tax payments to governmental authorities.
The company did not provide the PEOs with information about all the hours worked by, or all the wages due to, its employees. Instead, the company also paid the employees directly, with separate checks drawn on company bank accounts, and did not deduct payroll taxes from these checks. By paying employees with “split checks” — one from the PEO and one from the company — the company avoided paying the full amount of federal payroll taxes due.
During January 2017 through July 2020, the PEOs issued payroll checks to the employees totaling some $4,930,613, after deducting and paying over to the IRS the payroll taxes. During that same period, the company issued checks to the employees totaling some $18,545,845, with no payroll taxes being deducted or paid. The total unpaid payroll taxes on that amount were $2,768,377.
The PEOs also secured workers’ compensation insurance coverage for the company. The premiums charged by the workers’ compensation insurers were based on the total amount of payroll that the company reported to the PEOs. If the company had reported the actual amount of payroll, the insurers would have charged additional premiums totaling $2,780,947.
The Slaughters also underreported their personal income to the IRS. For 2014 through 2019, the total unpaid taxes due on Travis Slaughter’s unreported income totaled $2,467,183. For 2015 through 2019, the total unpaid taxes due on Tripp Slaughter’s unreported income totaled $263,614.
They each face a maximum of five years in prison for the tax fraud and up to 20 years in prison for the mail and wire fraud.
Treasury Secretary Scott Bessent named Internal Revenue Service chief operating officer Melanie Krause as acting commissioner after the retirement of acting commissioner Douglas O’Donnell.
O’Donnell has been acting commissioner since January, taking over from former IRS commissioner Danny Werfel, who announced he would be
“The IRS has been my professional home for 38 years,” O’Donnell said in a statement Tuesday. “I care deeply about the institution and its people and am confident that Melanie will be an outstanding steward of the Service until a new Commissioner is confirmed.”
The IRS has been going through a period of turmoil, with an estimated
Senate confirmation hearings have not yet been scheduled for Long, but he is expected to be questioned about his record of
Until Long is confirmed, IRS COO Krause will now move into O’Donnell’s deputy commissioner role and serve as acting commissioner of the nation’s tax agency.
“On behalf of the Treasury Department, I want to thank Doug O’Donnell for his decades of public service and dedication to the nation’s taxpayers,” Bessent said in a statement Tuesday. “He has been a remarkable public servant, and I wish him the best in retirement. At the same time, Melanie Krause and the agency’s leadership team are well positioned to serve during this critical period for the nation in advance of the April tax deadline.”
Krause has served as IRS COO since April 2024 after acting as deputy commissioner of operations support since January of the same year. As COO, she oversees the operations including the Chief Financial Officer; Chief Risk Office; Facilities Management and Security Services; Human Capital Office; Office of Chief Procurement; Privacy, Governmental Liaison and Disclosure; Research, Applied Analytics and Statistics.
She began her career at the IRS in October 2021 as chief data and analytics officer. In this role, in addition to leading the RAAS team, Krause also coordinated research activities including using AI and other advanced analytics. Krause also served as acting deputy commissioner for services and enforcement from November 2022 to March 2023.
Prior to joining the IRS, Krause spent 12 years in the federal oversight community, including the Government Accountability Office and the Department of Veterans Affairs Office of Inspector General. Krause also maintains an active license as a registered nurse. She holds bachelor, master and doctoral degrees from the University of Wisconsin-Madison.
The Pennsylvania Institute of CPAs released a
The report analyzes how accounting firms in Pennsylvania are structuring compensation, navigating retention and recruitment challenges, and adapting their benefits to remain competitive.
Jennifer Cryder
“Our latest findings make it clear: salary alone isn’t enough to attract and retain top talent in today’s market and firms need to be thinking differently about what matters,” said PICPA CEO Jennifer Cryder in a statement. “Holistic compensation strategies that include competitive benefits, flexible work arrangements, and clear career development pathways are critical in today’s world. Above all, we intend for this report to provide firm leaders with the insights they need to build a sustainable workforce for the future.”
The report found the firms surveyed by PICPA are experiencing inconsistencies in their ability to retain talent, with 48.3% reporting an increase in staff retention, while 24.1% of the respondents saw a decrease and 27.6% said retention remained stable. Firms reported an average salary increase of 8% in June 2024, up from 5% in July 2023, indicating slow but consistent average salary growth.
Offering comprehensive benefits remains a priority, with 88.5% of the firms surveyed providing medical insurance, 80.8% offering dental coverage, and 73.1% including vision insurance for employees.
Efforts to attract talent are changing, with 58.7% of the firms that responded to the survey increasing their hiring activity over the past year, while 37.9% maintained steady recruitment levels.
Many firms are responding to employee expectations for work-life balance, with 80% of the surveyed firms allowing flex hours outside of core hours and 76.9% offering flexible work options year-round.
With over half (54.2%) of the surveyed firms identifying hiring and talent retention as a top priority in 2025, the report stresses the need for firms to move beyond traditional compensation models. The report found a shift toward total rewards strategies — integrating salary, benefits, professional development and work-life balance — is essential to attracting and retaining top talent in an increasingly competitive market.
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