Sen. Barbara A. Mikulski urged the Internal Revenue Service to quickly investigate the potential fraud at a Harford County payroll company and called for the agency to protect "honest small businesses" that might have had their payroll tax payments misdirected or delayed.
Police in Bel Air, where the company is based, are investigating whether AccuPay Inc. stole years of tax payments rather than sending them to tax collectors on behalf of clients.
The company, with an estimated 500 to 600 clients, shut down last week after a Bel Air veterinary hospital filed a lawsuit Wednesday alleging that the company "repeatedly and regularly" failed to pay or made only partial payments of federal and state withholding and unemployment taxes over the past five years.
In a letter sent Tuesday to IRS acting commissioner Steven T. Miller, Mikulski said at least 10 businesses have filed complaints about Accu-Pay, "and the late fees resulting from misdirected or delayed state and federal taxes could be very damaging to Maryland's small businesses."
In addition to as many as 10 complaints received by the Bel Air Police Department, AccuPay is being sued by five clients making similar allegations and claiming losses of more than $465,000, according to state records.
In her letter, Mikulski acknowledged that the tax agency is investigating "suspicious activity and potential fraud."
She urged the IRS to protect small businesses that properly withheld appropriate payroll taxes and asked it to quickly process requests from AccuPay clients to have interest on unpaid or late taxes waived.
"Additionally, I would ask that you work with state and federal law enforcement to ensure that any criminal activity is prosecuted fully, and the victims are fairly compensated for any loss they have suffered," she wrote.
Stuart Levine, a Towson attorney, said he has been working with IRS collections agents on behalf of several AccuPay clients since the company shut its doors last week. But on Tuesday, he said he was notified by a collections agent that all AccuPay matters have been transferred to the criminal investigations unit of the IRS. He said he was told IRS collections is no longer handling the matter.
A spokesman for the IRS, Grant Williams, said on Tuesday he could not comment.
"The IRS is prohibited by federal law from discussing or commenting on any particular taxpayer's situation or case," he said.
Levine said the notification from the IRS "shows they really understand that the clients didn't cause this."
As for his clients, "they're not going to have immediate collection issues," he said.
Police in Bel Air are investigating whether the reported amounts of state and federal tax withholdings of AccuPay's clients coincide with the amounts paid, and whether money withdrawn from businesses' accounts to pay taxes were the amounts remitted to the IRS and Maryland comptroller.
Police have not determined how many clients AccuPay had, but said potential victims could number in the hundreds.