Former Business Owner Sentenced to Prison for Criminal Employment Tax Violations

     PHOENIX – Gregory S. Ott, 65, of Prescott, Ariz., was sentenced by Senior United States District Judge Fredrick J. Martone to 12 months in prison for evading the payment of federal employment taxes he collected from numerous small business owner clients. Ott had previously pleaded guilty to evasion of payment of tax.

     “The collection and payment of Federal payroll taxes is an important duty of all law-abiding business owners.  In this case, the defendant willfully diverted client funds for his personal use.  IRS-Criminal Investigation will continue its efforts to detect and investigate this type of tax fraud,” stated IRS-Criminal Investigation Special Agent in Charge Ismael Nevarez Jr. 

     Ott owned and operated Xpress Pay, Inc., a professional employment organization in Scottsdale that contracted with small business owners to provide payroll services including the preparation of federal employment tax returns and the payment of employment taxes owed by these small businesses to the IRS.  Ott and Xpress Pay collected the taxes directly from their clients by accessing the clients’ bank accounts.  Instead of making the required federal tax payments to the IRS in full, Ott transferred substantial amounts of money to his personal bank accounts and used the money to pay his own expenses.  In 2010, Ott’s conduct resulted in a $568,279.00 tax loss.

     In addition to the prison sentence, Ott was ordered to serve 3 years of supervised release upon his release from prison, pay a $10,000 fine, perform 150 hours of community service, and to fully cooperate with the IRS in the determination and collection of taxes, penalties, and interest due and owing.

     The investigation in this case was conducted by the Internal Revenue Service-Criminal Investigation.  The prosecution was handled by Assistant U.S. Attorneys Monica Edelstein and Bridget Minder. 

CASE NUMBER:           CR-14-08133-PHX-PGR

RELEASE NUMBER:   2016-25_Ott

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