Trust Fund, Broken Trust

Harry Lamar Curtis III owned Information Advisory Group LLC, a cybersecurity and IT company based in Houston. He was also a former certified public accountant. 

According to the Department of Justice, Curtis was required to withhold and pay over employment taxes from employee paychecks, including federal income taxes, FICA taxes, and employer matching amounts. As part of his plea, Curtis admitted that he failed to file business tax returns for Information Advisory Group since 2016 and improperly withheld $1,647,142 that was due to the IRS. He also admitted he had not filed individual tax returns for himself since 2008. 

In this episode of Final Notice, Jason explains why payroll tax cases are different, why withheld taxes are not business operating cash, and what business owners should do if payroll tax problems begin to stack up. 

The episode covers payroll tax compliance, unfiled business returns, unfiled personal returns, trust fund exposure, IRS-CI referral risk, civil tax resolution options, and why attorney-client privilege matters when payroll tax facts become serious. 

Key Takeaways: 

• Payroll taxes are not business cash. When a business withholds taxes from employee wages, that money must be paid over to the government. 
• File the returns even if the business cannot pay in full. Unfiled returns make collection and resolution harder. 
• Payroll tax debt needs immediate triage. The business must become current on new deposits before old debt can be addressed effectively. 
• Trust fund payroll taxes can create personal exposure for responsible persons, including owners and decision-makers. 
• A civil resolution plan may include compliance cleanup, installment agreements, penalty abatement, payroll controls, restructuring, or winding down the business. 
• Privilege matters when payroll tax issues involve years of non-filing, withheld taxes, missing deposits, or potential false statements. 

Suggested Timestamps:

00:00: Cold open, a former CPA, $1.6 million, and missing returns 

00:30: Branded intro, Final Notice: Real Tax Cases. Exposed. 

00:45: Who Harry Lamar Curtis III was 

01:30: Information Advisory Group LLC and the Houston connection 

02:15: What payroll taxes are and why they are different 

03:15: Business returns missing since 2016 

04:00: Individual returns missing since 2008 

04:45: How payroll tax cases get built from records 

06:00: Why payroll tax debt often starts as cash flow stress 

07:00: What Curtis should have done instead 

08:15: File returns, stop the bleeding, and get current 

09:15: Trust fund exposure and responsible persons 

10:15: Civil resolution options for payroll tax debt 

11:15: Why privilege matters before the facts get worse 

12:00: Final lesson, payroll taxes are not a float 

12:30: Close and call to action 

Resources Mentioned: 

• DOJ case source: https://www.justice.gov/usao-sdtx/pr/houston-business-owner-sent-prison-failing-pay-over-16-million-taxes 
• IRS-CI plea source: https://www.irs.gov/compliance/criminal-investigation/houston-business-owner-admits-to-failing-to-pay-over-1-point-6-million-in-taxes 
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com 

Transcript

SPEAKER_01 0:06

You're listening to Final Notice. Real tax cases exposed with Jason Carr. Each week we break down real Department of Justice tax fraud prosecutions and reveal what should have been done to avoid them. And now here's your host, Jason Carr.

SPEAKER_00 0:28

A former CPA, a Houston cybersecurity company, more than $1.6 million in payroll taxes withheld from employee wages and not paid over to the IRS. And according to prosecutors, he had not filed his own individual tax return since 2008. Today's case is about Harry Lamar Curtis III. Curtis was the owner of Information Advisory Group LLC, a cybersecurity and IT company based in Houston. He was also a former certified public accountant. That combination matters. This was not someone who stumbled into payroll tax rules with no background. This was someone trained in accounting, someone who owned a business, someone who, according to the government, had employees, withheld taxes from their wages, and then failed to pay those taxes over to the IRS. Payroll taxes are different. When a business withholds federal income tax, Social Security tax, and Medicare tax from employee paychecks, that money is not the business owner's money. It is held for the government. The business is supposed to collect it, hold it, report it, and pay it over. Curtis admitted that he improperly withheld $1,647,142 that was due to the IRS. Prosecutors said those amounts include federal income taxes, FICA taxes, and employer matching amounts. And that was not the only problem. As part of his plea, Curtis admitted that he had failed to file any business tax returns for Information Advisory Group since 2016. He also admitted he had not filed any individual tax returns for himself since 2008. Let that sit for a second. A former CPA, no personal returns since 2008, no business returns since 2016, payroll taxes withheld from employees and not paid over. On April 28, 2026, U.S. District Judge Sim Lake sentenced Curtis to 18 months in federal prison, followed by three years of supervised release. In this case, there was no dramatic undercover meeting, no informant, no fake invoice stuffed in a desk drawer, no casino chips, no offshore account with a name that sounds like a bond villain. This case is actually much more ordinary, and that's what makes it useful. Payroll tax cases are built from records, quarterly payroll filings, missing returns, employee wage withholding, bank activity, IRS account transcripts, business records. The government does not need a cinematic moment when the math is sitting in the files. If you run payroll, there is a paper trail for every pay period. Your employees receive wages, taxes are withheld, W-2s get issued, payroll providers keep records, banks show whether tax deposits were made. IRS systems show whether required employment tax returns were filed and whether deposits hit that account. When those pieces do not match, the issue is not invisible. It is waiting. Curtis pled guilty on november sixth, twenty twenty five. IRS criminal investigation conducted the investigation, and Assistant U.S. Attorney Brad Gray prosecuted the case. That tells you the matter had moved well past notices, penalties, and collection letters. And that's a point I want business owners to understand. Payroll tax debt usually starts as a cash flow problem. The business gets tight, a client pays late, a contract falls through. The owner thinks, oh, I'll catch up next month. Then next month becomes next quarter. Then the IRS notices start. Then the unfiled returns stack up. Then someone decides to keep operating while using employee withholdings as working capital. That is where the line gets dangerous. The IRS may work with a business that is behind, but when a business withholds taxes from employees and does not pay those taxes over, the government views that differently. The money came out of someone else's paycheck. The government views it as theft. So what should Curtis have done if he had walked into my office before the criminal case? First, file the returns. That sounds basic because it is basic. But in tax resolution, basic things matter. If you cannot pay, you file anyway. A late filed return is better than an unfiled return. An assessed balance is easier to work with than years of missing compliance. For a business with payroll issues, that means getting the employment tax returns filed. Forms 941, annual wage forms, business income tax returns. Whatever is missing, get it identified and filed. Second, stop the bleeding. A business that is behind on payroll taxes cannot keep running payroll the same way and hope the problem fixes itself. You either get current on new deposits immediately, move to a payroll provider with controlled tax deposits, restructure payroll, reduce headcount, or make hard business decisions. The IRS is more likely to deal with old tax debt if the current tax deposits are clean. If new payroll taxes keep going unpaid, the IRS sees an ongoing problem. Third, separate the trust fund portion from everything else. Payroll tax debt has layers. Part of it is the employee withholding portion. Part of it is the employer share. Part of it is penalties and interest. The trust fund portion can create personal exposure for responsible persons. That means owners, officers, signers on bank accounts, payroll decision makers, and sometimes bookkeepers or controllers can be pulled into the analysis. That is why payroll tax cases need triage early. Fourth, build a civil resolution plan. There are legal ways to deal with payroll tax debt, installment agreements, penalty abatement arguments, compliance cleanup, business restructuring, in some situations selling assets, financing the liability, or winding down the business may be the cleanest answer. None of those options are fun, but they are better than using withheld taxes as an operating line of credit. Fifth, privilege matters. The goal in cases like this is to keep a tax problem in the IRS civil tax resolution lane whenever possible. But when the facts include unfiled returns, payroll tax withholding, false statements, missing deposits, or years of noncompliance, you want legal privilege before you start emailing explanations all over the place. A business owner should not casually create a written record that makes a bad fact pattern worse. And if you're a tax professional listening to this, this is also a client screening lesson. When a business owner tells you payroll taxes are behind, ask how many quarters. Ask whether returns were filed. Ask whether deposits are current now. Ask who decided which bills got paid. Ask whether employees received W-2s. Ask whether the owner has filed personal returns. And document your advice. Because payroll tax problems do not age well, they compound. The lesson from the Curtis case is simple. Payroll taxes are not afloat. They are not emergency working capital. They are not a bridge loan. They are not the business owner's money. If you withhold taxes from employees, pay them over. If you're already behind, file the returns, get current going forward, and build a resolution plan before the IRS builds a criminal case. Harry Lamar Curtis III was sentenced to 18 months in federal prison for failing to pay over taxes withheld from employee wages. The government said the unpaid amount was $1,647,142. That is a very expensive way to learn that withheld means held for someone else. I'm Jason Carr, tax attorney. If you want to make sure you never end up on this podcast, you know where to find me. Cartaxlaw.com. Link is in the show notes. This has been Final Notice. Real tax cases exposed.

SPEAKER_01 8:10

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