Cuomo aiding businesses with tax situation

Nick Rees Mar. 4, 2010, 2:00pm


ROCHESTER, N.Y. (Legal Newsline) - Rochester-area business owners allegedly defrauded by a payroll company will receive special assistance following an agreement by New York Attorney General Andrew Cuomo with state and federal tax entities.

The Rochester-based Paybooks Inc., and Jeffrey Sykes, its president, were sued in 2009 by Cuomo's office for failure to forward more than $2 million in client payments to tax authorities. The company's actions caused hundreds of local businesses to be subjected to tax penalties and interest, Cuomo said.

On a case-by-case basis, the New York State Division of Tax and Finance and the Internal Revenue Service have agreed to waive certain penalties and interest payments on penalties for affected consumers. Personnel have been assigned by both the IRS and the State Division of Tax and Finance to aid businesses in dealing with tax issues that resulted from Paybooks' alleged fraud.

"The owner of this company allegedly pocketed money meant to pay the taxes of hundreds of small businesses throughout the Rochester region," Cuomo said.

"Now, it is tax time, and many of these businesses are having problems trying to figure out their actual tax liability. We have now coordinated with the State Department of Taxation and Finance and the IRS to help guide these businesses through the tax system, so they will not be victimized a second time."

Payroll services were provided by Paybooks to approximately 1,100 small businesses in the greater Rochester area. Complaints against the company by business owners began in May 2009 regarding the company's failure to file federal and state withholdings and unemployment taxes. Some of the unpaid taxes dated back to the third quarter of 2008.

Cuomo's office had received 385 complaints against Paybooks as of March 1, totaling at least $1.81 million.

An investigation by Cuomo's office found that customers' money had been used by Sykes for personal and operating expenses.

A court order was obtained by Cuomo when filing the 2009 lawsuit that froze Paybooks' assets.

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