Press Release  Owner of Payroll, Tax Business Indicted in Connection With Failure to Pay Over $1.38 Million in State Withholding Taxes

Boston — The owner of a payroll and tax return preparation service has been indicted in connection with 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.

John Carr, Jr., age 68, of Gloucester, was indicted Wednesday by a statewide grand jury on 23 counts of Willful Failure by Preparer to Pay Over Tax and two counts of Willful Delivery of a False Tax Return. He will be arraigned at a later date.

Carr owns Boston Business Services, Inc., a small payroll and employer tax return preparation service based in Gloucester. In this role he prepared payroll checks or direct deposits on behalf of his clients, which included local businesses, government entities, and nonprofits, and took out federal and state income taxes, Social Security taxes and unemployment insurance taxes. 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.

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

These charges are allegations and the defendant is presumed innocent until proven guilty.

This case is being 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 and Financial Investigator Daniel DeAngelis. The tax return discrepancies in this case were discovered by the Massachusetts Department of Revenue’s Wage Enforcement Unit and investigated by DOR’s Criminal Investigations Bureau.

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