Press Release  Business Owner Sentenced for Failure to Pay Over $1.38 Million in State Withholding Taxes, Filing False Tax Returns for Clients

Boston — The owner of a payroll and tax return preparation service has been sentenced for failing to pay more than $1.38 million in state withholding taxes and filing false Massachusetts tax returns on behalf of his clients, Attorney General Maura Healey announced today.

Superior Court Judge Beverly Cannone sentenced John Carr, Jr., age 69, of Gloucester, to 52 weeks of weekend incarceration and three years probation. He was also ordered to pay $18,000 in restitution.

In May, Carr pleaded guilty in Suffolk Superior Court to the charges of Willful Failure by Preparer to Pay Over Tax (23 counts) and Willful Delivery of a False Tax Return (2 counts).

Carr owns Boston Business Services, Inc., a small payroll and employer tax return preparation service based in Gloucester. In this business, Carr prepared payroll checks or direct deposits on behalf of his clients, which included local businesses, government entities, and nonprofits. He withheld federal and state income taxes, Social Security taxes and unemployment insurance taxes from his clients’ checks and deposits. Carr then impounded these tax payments from his clients’ accounts and forwarded them to the various taxing authorities, along with the applicable tax returns.

The AG’s Office began its investigation in January 2016 following a referral from the Massachusetts Department of Revenue (DOR).

Authorities found that between 2010 and 2014, Carr impounded tax payments from his clients, but failed to pay the DOR $1.38 million in state withholding taxes. Carr also filed false tax returns with the DOR, which understated the amount of income tax withholding which the clients owed to the state.

This case was prosecuted by Assistant Attorney General Peter A. Mullin of AG Healey’s White Collar and Public Integrity Division with assistance from Victim Witness Advocate Amber Anderson. The tax return discrepancies in this case were discovered by the Massachusetts Department of Revenue’s Wage Enforcement Unit and the case was investigated by DOR’s Criminal Investigations Bureau.

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