A former Tennessee mental health practice owner pleaded guilty on April 15, 2026, to willfully failing to pay over employment taxes to the IRS on behalf of the company she owned and operated.
According to court documents and statements made in court, the defendant, 52, was the sole owner and president of a mental health counseling center with multiple locations throughout Tennessee. She controlled the company’s financial affairs and was responsible for withholding Social Security, Medicare, and federal income taxes from the employee wages, remitting those funds to the IRS each quarter, and filing quarterly employment tax returns.
From 2015 through 2020, however, the defendant willfully failed to remit payroll taxes collected from employees and did not file more than 20 quarterly employment tax returns. In total, she caused a tax loss to the United States of more than $1 million.
The defendant pleaded guilty to one count of willful failure to account for and pay over employment taxes. She is scheduled to be sentenced on September 17, 2026, and faces a maximum penalty of five years in prison.
Compliance Perspective
Issue
Employers are required to withhold payroll taxes from employee wages, including Social Security, Medicare, and federal income taxes, and remit those funds to the federal government on a scheduled basis. Employers are also responsible for submitting their portion of payroll tax contributions and filing required employment tax returns. Many states impose additional withholding requirements that must also be satisfied. Failure to properly collect, account for, and remit payroll taxes may result in significant penalties, including fines and potential criminal liability. To reduce the risk of noncompliance or mismanagement, organizations should implement internal controls, including separation of payroll duties and oversight of the payroll process.
Discussion Points
- Review your payroll policies and procedures to ensure they clearly define responsibilities for withholding, tracking, and remitting employment taxes, as well as filing required returns. Policies should establish internal controls such as separation of duties, approval processes, and oversight mechanisms to prevent errors or misuse of funds. Organizations may also consider periodic reviews of these processes with an external compliance advisor to ensure controls are effective.
- Ensure that staff involved in payroll processing are properly trained on employment tax requirements, including withholding, reporting, and remittance obligations. Training should also emphasize timelines, documentation standards, and the potential consequences of noncompliance. Med-Net Academy offers the course, Fraud Module 7 – Auditing, Monitoring, Responding, Investigating, and Litigating Responsibilities, which discusses how organizations demonstrate compliance through auditing and monitoring financial and medical records, outlines systems for responding to compliance concerns, and explains the steps to take when potential noncompliant activity may require investigation.
- Conduct routine internal audits of payroll processes to confirm that employment taxes are being accurately withheld, reported, and remitted. Consider incorporating periodic independent or third-party reviews to identify potential gaps, strengthen internal controls, and support ongoing compliance efforts. Contact Med-Net Healthcare Consulting or info@mednetconcepts.com for more information.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*