A Michigan business owner’s payroll tax fraud guilty plea involving approximately $1.7 million in unpaid employment taxes is an important reminder for small businesses: payroll tax responsibilities should never be overlooked.
Whether you handle payroll yourself or use a third-party payroll provider, understanding your tax obligations and regularly verifying payments can help protect your business from financial losses, penalties, and legal trouble.
Michigan Business Owner Pleads Guilty in $1.7 Million Employment Tax Case
On October 20, 2026, the U.S. Department of Justice announced that Roxanne L. Huneycutt, a business owner from Fenton, Michigan, pleaded guilty to conspiring to defraud the United States.
According to federal prosecutors, Huneycutt operated a series of staffing companies that recruited temporary employees for businesses. These companies were responsible for managing payroll and employment taxes.
Between 2012 and 2024, the companies failed to pay approximately $1.7 million in employment taxes to the IRS.
Prosecutors also reported that Huneycutt changed company names and locations and filed paperwork concealing her ownership of the businesses. She is scheduled for sentencing on February 18, 2027.
The case highlights why business owners need reliable payroll practices, accurate records, and financial oversight.
Read the official Department of Justice announcement.
What Payroll Taxes Are Michigan Employers Responsible For?
When your business hires employees, it generally takes on responsibilities beyond paying their wages.
Depending on your business and employees, these obligations may include:
- Federal income tax withholding: Withholding the appropriate amount of federal income tax from employee wages.
- Social Security and Medicare taxes: Withholding the employee portion and paying the required employer portion.
- Federal unemployment taxes: Paying applicable federal unemployment taxes.
- Michigan income tax withholding: Withholding and remitting applicable state income taxes.
- Michigan unemployment insurance taxes: Meeting applicable state unemployment insurance requirements.
Businesses must also submit required payroll tax filings and make payments according to applicable deadlines.
Missing payments or filing deadlines can result in penalties and interest.
Does Outsourcing Payroll Eliminate Your Tax Responsibilities?
Generally, no.
Many Michigan small businesses hire payroll service providers to calculate wages, process direct deposits, prepare tax forms, and submit payroll taxes.
These services can save time and help businesses manage complicated payroll requirements.
However, the IRS warns that employers generally remain responsible for federal employment taxes even when a third-party payroll service provider handles the payments.
If your provider fails to send required tax payments, your business may still owe unpaid taxes, penalties, and interest. Certain specialized third-party arrangements have different liability rules.
Learn more about outsourcing payroll duties and employer responsibilities from the IRS.
7 Payroll Tax Warning Signs Small Business Owners Should Watch For
Recognizing potential problems early can help your business avoid costly payroll tax mistakes.
1. Missing or Late Tax Payments
A payroll provider should be able to explain when taxes are due and confirm when payments are submitted.
Unexpected delays, missed deadlines, or unexplained payment discrepancies deserve immediate attention.
2. Difficulty Obtaining Payroll Records
Your business should have access to payroll reports, tax filings, payment confirmations, and other relevant records.
A provider that repeatedly refuses to share this information may be cause for concern.
3. Unexpected IRS or State Tax Notices
Never assume a tax notice is an administrative mistake.
If your business receives a notice about unpaid employment taxes or missing returns, verify the information directly with the appropriate tax agency.
4. Unexplained Changes in Payroll Withdrawals
Review the amounts withdrawn from your business accounts for payroll, benefits, and tax payments.
Investigate amounts that differ significantly from your approved payroll reports or expected tax obligations.
5. Frequent Changes in a Provider’s Business Information
Unexpected changes in company names, ownership, addresses, or banking instructions warrant verification.
Although legitimate companies sometimes reorganize, unexplained changes may indicate a problem.
6. Unclear Tax Filing Responsibilities
Before working with a payroll provider, understand exactly which tasks the company will perform.
Confirm who prepares payroll tax returns, who submits payments, and how your business receives confirmation.
7. Pressure to Ignore Tax Notices or Verification Requests
A trustworthy payroll provider should help resolve legitimate questions about your company’s payroll taxes.
Be cautious if a provider discourages you from reviewing tax records or contacting the IRS.
How to Verify That Your Payroll Taxes Are Being Paid
One of the most useful steps business owners can take is independently checking their federal payroll tax payments.
The IRS recommends monitoring payments through the Electronic Federal Tax Payment System (EFTPS).
Visit EFTPS.gov to learn how to enroll and review federal tax payment activity associated with your business.
Business owners should also:
- Regularly reconcile payroll reports with business account transactions.
- Review federal and state payroll tax filings.
- Confirm tax payments with the appropriate tax agencies.
- Maintain copies of payroll reports and payment confirmations.
- Investigate missed payments and unexpected notices immediately.
For Michigan tax withholding information, visit the Michigan Department of Treasury.
Choosing a Payroll Service Provider for Your Michigan Business
Before trusting a company with your payroll operations, ask questions about its experience, security practices, reporting capabilities, and tax filing procedures.
Find out whether the provider handles federal, state, and local tax filings, how it confirms payments, and what happens if a problem occurs.
Your provider should make it easier to understand and review your payroll activity, not harder.
Explore Payroll Services at People Driven Credit Union
Managing employee payroll and business tax requirements can take valuable time away from running your company.
People Driven Credit Union offers Payroll Services through Inova, with features including:
- Federal, state, and local payroll tax filing, depositing, and reporting.
- Quarterly and annual payroll tax returns.
- Employee W-2 and applicable 1099 reporting.
- Direct deposit and other employee payment options.
- Online employee and manager access.
- Payroll reporting and time management tools.
Reliable payroll administration, combined with regular oversight, can help your business stay organized and address potential problems before they become larger issues.
Ready to simplify payroll management?
Learn more about PDCU Payroll Services, call our Business Services team at 248-263-4100, or contact Business Services online.
Frequently Asked Questions About Payroll Tax Fraud
Payroll tax fraud generally involves intentional deception or wrongdoing related to payroll tax reporting, withholding, or payment. Examples can include deliberately withholding employment taxes without remitting them or submitting fraudulent payroll tax information.
Generally, yes. The IRS states that employers typically remain responsible for federal employment tax obligations when using ordinary payroll service providers. Certain specialized arrangements have different rules.
You can use the Electronic Federal Tax Payment System (EFTPS) to independently review federal tax payments. You should also reconcile payment records with your payroll reports.
Contact the IRS promptly, review your payroll records, and consult a qualified tax professional. You may also need to contact Michigan tax authorities if state withholding payments are affected.
Yes. People Driven Credit Union offers Payroll Services through Inova, including payroll processing, tax filing and reporting, employee payment options, and additional payroll management tools.
This article is for educational purposes and does not constitute tax or legal advice. Business owners should consult a qualified tax professional regarding their specific obligations.
John Scharff is the Digital Marketing Lead at People Driven Credit Union, where he helps create clear, practical financial content for members and the communities PDCU serves. He focuses on making financial topics easier to understand, from loans and savings accounts to digital banking, fraud prevention, and everyday money management.
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