Case Study: Fraud Protection for Medical Practice

Prior Payroll Company Priority Pay
Number of Employees 4
Payroll Frequency Weekly
Cost per Year $1,560
Number of Employee States 1
BMA Small Business Payroll Fee $840
Client’s Total Savings with BMA $720
Savings Percentage 46%

CLIENT’S PROBLEM—Payroll Tax Fraud:

A small medical practice with four employees contacted BMA after receiving notices from the Internal Revenue Service regarding tax deficiencies for non-payment of payroll taxes.  Unbeknownst to the practice’s principal, his payroll-processing firm had been steadily impounding his business’s payroll taxes.

In other words, the payroll firm withdrew the taxes from the medical practice’s checking account and deposited them into its own separate checking/investment account. Hence, the IRS never received the required taxes from the doctor’s “trusted” payroll bureau!

The total amount of unpaid taxes exceeded $10,000. Technically, the medical practice did provide the required tax money to the payroll firm. But because the IRS never received the $10,000 in taxes, the doctor’s business was still responsible for covering those missing tax dollars, PLUS penalties and interest. Unfortunately, the practice can’t recover the original $10,000 it paid its previous payroll firm. Then there’s the additional $10,000 in penalties and interest it must now pay to the IRS…

Because it took approximately one year before the IRS discovered the accrued tax non-payment, this medical practice’s owner had no idea his payroll taxes weren’t being paid as required.


BMA has never resorted (and never will) to tax impounding. Because all funds remain in our clients’ accounts and under their sole control, tax fraud is a non-issue. Additionally, all disbursements from a client’s bank account are clearly identified on the bank statement. When you partner with BMA Small Business Payroll, all of your payroll funds can be reconciled, and every penny can be accounted for.