The Bel Air payroll company AccuPay Inc. has filed for Chapter 7 bankruptcy, with the business owners under investigation for allegedly not forwarding the payroll tax payments of their clients to tax collectors. The AccuPay filing is a perfect example of how a bankruptcy case and a tax resolution case can be intricately connected. The Greenberg & Bass Law Firm and the Tax Resolution Institute have extensive experience working on such cases. If AccuPay is found guilty of failing to cover the trust fund payments of their clients, the retribution of the Internal Revenue Service and the Employment Development Department of California could be quite severe.
AccuPay Inc. filed a petition for a Chapter 7 bankruptcy in Baltimore, listing 95 creditors and debts of between $100,001 and $500,000. Chapter 7 allows for an orderly liquidation of a company’s assets to pay off creditors. A bankruptcy attorney for the company’s owners said that his clients believe they will have funds available to pay creditors. In the bankruptcy filing, the company lists estimated assets of between $100,001 and $500,000. “The principals believe that there is sufficient money to pay the claims,” said James A. Vida, the attorney for AccuPay’s owner, Beverly Carden. “That’s what they think, and that’s subject to bankruptcy court procedures.”
With an estimated 500 to 600 clients, the firm shut down at the end of February after a Bel Air veterinary hospital, Animal Emergency Hospital, accused it in a lawsuit of “repeatedly and regularly” failing to pay or making only partial payments of federal and state withholding and unemployment taxes over the past five years. DuClaw Brewing Co. had filed a complaint last summer. Three more AccuPay clients — a law firm, another veterinary clinic, and a construction company — then filed lawsuits making similar allegations. The total losses alleged in pending complaints came out to more than $465,000. What is even worse is the violation of trust of such clients, and the fact that this is not the first time it has happened. Other clients with similar claims sued the company about five years ago.
Since the recent lawsuits, both the Bel Air Police Department and the Internal Revenue Service have started investigating the firm. Vidmar explained, “When the company abruptly stopped, there may have been deposits in the works and payments in the works. There is money there. The bank accounts are there. There’s money there to be distributed.” But some creditors worry that relief may not come at all or too late to help with the looming payroll tax problems with both the IRS and the state taxing agencies.
Gary Burrows, owner of Honor Star Service Inc. of Dallastown, Pa., an AccuPay client that provides snack services to offices, says his company is out about $23,000 worth of payments that AccuPay was supposed to make last year to the IRS and tax collectors in Maryland and Pennsylvania. “It’s going to be a long, drawn-out thing,” Burrows said. “The tax people are going to want to get paid before all this is settled, and being a small company, we just don’t have that money laying around.”
Police in Bel Air have said the investigation could involve hundreds of potential victims, including any business that hired AccuPay to handle its payroll and remit its state and federal taxes. Greenberg & Bass and the Tax Resolution Institute can help clients caught in a similar financial and/or tax resolution crisis by providing quality bankruptcy and tax resolution services. . Please call the Greenberg & Bass and the Tax Resolution Institute at 800-401-5926 to set up a free consultation and find out whether a Chapter 7 bankruptcy or tax resolution services make sense for your company.