Wisconsin man pleads guilty to failing to file employment tax returns and to failing to pay employment taxes

Date: Nov. 19, 2024

Contact: [email protected]

United States Attorney Gregory J. Haanstad announced that on November 19, 2024, U.S. District Judge Lynn Adelman accepted the guilty plea of William S. Gallagher to one count of failure to truthfully account for and pay over employment taxes to the Internal Revenue Service (IRS), in violation of 26 U.S.C. § 7202.

On October 22, 2024, a federal grand jury returned an indictment charging Gallagher with twelve counts of failure to truthfully account for and pay over employment taxes for each quarter in tax years 2018 through 2020. According to the indictment and plea agreement, Gallagher was the owner and manager of a swimming pool service and retail company in Lake Geneva, Wisconsin.

The company, H2O Wisconsin, LLC, or Poolblu, employed approximately 15 workers. Gallagher was required to withhold federal income taxes, Social Security taxes, and Medicare taxes from his employees' wages, hold those amounts in trust, and pay them over to the IRS. Additionally, Gallagher was responsible for filing quarterly tax returns (Forms 941) reporting these amounts to the IRS.

Gallagher was further required to pay the employer's matching portion of Social Security and Medicare taxes. For each quarter in tax years 2018 through 2020, Gallagher willfully failed to truthfully account for and pay over these taxes. Dating back to 2014, the loss to the IRS totaled over $606,000.

Sentencing is scheduled for January 30, 2025, at 10:00 a.m., before Judge Adelman. At sentencing, Gallagher faces up to five years in prison and up to a $250,000 fine. He also faces up to three years of supervised release after completing any period of imprisonment.

The IRS Criminal Investigation (IRS-CI), investigated the case, which Assistant United States Attorney John P. Scully is prosecuting.

IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.