Rhode Island Businesswoman Admits to Failing to Pay More Than $1.2 Million Dollars in Payroll and Individual Taxes

PROVIDENCE, RI – The president of a Rhode Island electrical service business today admitted to a federal judge that she failed to pay over to the Internal Revenue Service (IRS) more than $1.2 million dollars in payroll taxes deducted from employees’ paychecks, and in individual income taxes when she falsely claimed on joint individual tax returns that employment taxes were withheld and paid to the IRS, when, in fact, no such payments were made to the IRS, announced United States Attorney Zachary A. Cunha.

Gail M. Hynson, 59, president of Hynson Electrical Services, Inc. pleaded guilty to ten counts of failure to account for and pay over payroll taxes and three counts of filing a false tax return. She is scheduled to be sentenced on January 14, 2025. The defendant’s sentences will be determined by a federal district judge after consideration of the U.S. Sentencing Guidelines and other statutory factors.

“This defendant made a conscious choice to try and divert her payroll tax obligations as a business owner into her own pockets,” remarked U.S. Attorney Cunha. “Crimes like this impact not just the workers whose employer payroll taxes went unpaid, but all of our communities, which suffer when the taxes that benefit the common good go unpaid. Today’s conviction should send the clear message that this office will hold tax cheats accountable.”

“Gail Hynson chose to steal from the IRS to enrich herself, when she failed to pay over the taxes she withheld from her own employees.” said IRS CI Special Agent in Charge Harry T Chavis Jr. "Based on Hynson’s actions, her employees could have been at risk to pay their payroll taxes twice, until her egregious activity was uncovered -- first through their withholdings, that were stolen by Hynson, and second when they filed their income taxes and had no withholdings reported. However, if, as here, the IRS discovers that an employer withheld these payroll taxes (also known as "trust-fund taxes"), but failed to pay them over to the government, the employee is credited with having paid the taxes, and the government may not require any additional payment from the employee." 

As reflected in charging documents and information presented to the court, from 2016 to 2020, Hynson Electrical Services, Inc. employed approximately 13 employees. Beginning in the 3^rd quarter of 2018, and continuing through the 4^th quarter of 2020, the business withheld employment taxes from its employees’ paychecks, to include federal income taxes, and Medicare and Social Security taxes, but never turned the funds over to the IRS. Additionally, during that time, the company failed to file Employer Quarterly Federal Income Tax Returns with the government.

Acting in her capacity as company bookkeeper, Gail Hynson created W2s for her and her husband for tax years 2017, 2018, and 2020. Information contained on the W2s, and incorporated on their personal joint tax returns, reflected that a total of $18,418 in employment taxes had been withheld from their paychecks and paid to the IRS, when in fact she knew that no money had been paid over to the government.

The case is being prosecuted by Assistant United States Attorney Ly T. Chin.

The matter was investigated by the Internal Revenue Service Criminal Investigation.

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