Caveat Emptor!

The State of Maryland is scrutinizing all PSP’s (Payroll Service Providers) as the result of a recent case involving a provider, AccuPay, that allegedly mishandled client funds.  The principals, husband and wife Kevin and Beverly Carden, were sentenced to prison terms for wire and mail fraud respectively, in connection with accepting clients’ money for periodic tax filings without actually paying the entire amounts over to the respective Federal and state entities.  Read more about the case here.

“When customers realized that the money they entrusted to AccuPay was not being used as intended to pay their taxes, Kevin Carden misled them with false cover stories,” said U.S. Attorney Rod J. Rosenstein. “What really happened was that Kevin and Beverly Carden took money intended for the IRS and spent it themselves, causing millions of dollars in losses to their customers.”

“It is unacceptable to help yourself to other people’s money and violate their trust,” said Thomas Jankowski, Special Agent in Charge, IRS Criminal Investigation, Washington D.C. Field Office.  “Today’s sentencings serve as reminders that this criminal behavior was inexcusable and IRS-CI is committed to bringing culpable individuals to justice.”

.This case should serve as a reminder to all clients of PSP’s that they are ultimately responsible for their tax filings and payments.  Even if you use a service to outsource your payroll and/or tax filing, you must have procedures in place to verify that your deposits and tax returns have been deposited and filed timely.

Your internal audit and compliance teams must have procedures in place to verify deposits and reconcile them to your bank accounts, as well as to your general ledger.  Its no one’s responsibility except yours.


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