Between 2015 and 2021, Butdorf diverted over $494,000 in mandatory quarterly payroll withholdings directly into private accounts for herself and her husband. Rather than keeping the funds segregated for the federal government as required by law, she financed personal luxuries including a Florida condominium, vacations, and private club dues. Alongside her 18-month federal prison sentence, the court ordered her to complete a period of supervised release and pay full restitution to the Internal Revenue Service.
Key points
Federal law strictly requires payroll managers to keep withheld employee tax funds segreg…: Federal law strictly requires payroll managers to keep withheld employee tax funds segregated from general or personal expenditures.
Misappropriating payroll withholdings can directly threaten the future Social Security an…: Misappropriating payroll withholdings can directly threaten the future Social Security and Medicare benefits of affected company workers.
Diverting mandatory employee taxes grants noncompliant enterprises an unfair competitive…: Diverting mandatory employee taxes grants noncompliant enterprises an unfair competitive edge over law-abiding business operations.
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An Ohio woman who used hundreds of thousands of dollars in employee tax payments to fund a luxury lifestyle has been sentenced to 18 months in federal prison. Tammy Butdorf, 51, was sentenced in federal court in Akron after being found guilty of failing to pay employment taxes withheld from workers at her husband's electrical contracting business. This was confirmed in an official statement released by the U.S. Attorney's Office for the Northern District of Ohio. Butdorf worked as the accountant and office manager for the family business. Her duties included collecting federal income tax, Social Security, and Medicare payments from employees' wages and sending the money to the government. However, an investigation by the Cleveland office of the Internal Revenue Service Criminal Investigation (IRS-CI) found that she had been moving the money into private accounts over a period of six years. Between 2015 and 2021, Butdorf failed to send more than $494,000 (£380,000) in required quarterly employment taxes to the federal government.
Misdirected funds spent on property and private clubs
Court records show that instead of sending the withheld…
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