An Akron federal court sentenced 51-year-old Tammy Butdorf to 18 months in prison after federal prosecutors proved she pocketed hundreds of thousands of dollars in employee tax withholdings to bankroll personal luxuries.
The scheme lasted six years.
From 2015 through 2021, Butdorf ran the books and managed office operations for her husband's Ohio electrical contracting firm. Her explicit job duties required deducting federal income taxes, Social Security contributions, and Medicare payments from workers' paychecks before wiring those sums directly to the government. Instead, she siphoned more than $494,000 in mandatory quarterly payroll taxes into private accounts, according to filings released by the U.S. Attorney’s Office for the Northern District of Ohio.
Investigators from the Cleveland field office of the Internal Revenue Service Criminal Investigation (IRS-CI) pieced the paper trail together. They tracked routine business payroll deductions that never reached federal collection accounts.
Butdorf steered the cash straight to herself and her husband.
Federal agents documented that the diverted money paid for a residential condominium in Florida, private camp membership dues, and expenses at an exclusive shooting club. The illicit payroll withholdings also covered bills for family holidays and everyday domestic spending. Federal tax statutes mandate that payroll handlers hold employee withholdings in trust, strictly apart from operational capital. Tapping those funds for personal assets constitutes a federal crime.
Assistant United States Attorney Megan R. Miller led the prosecution in Akron federal court, working alongside the Department of Justice's National Fraud Enforcement Division. Following her conviction for failing to remit employee taxes, a federal judge ordered Butdorf to serve 18 months in federal prison, followed by a mandatory term of supervised release.
The court also hit Butdorf with a full restitution order, requiring her to repay every dollar of the unpaid $494,000 tax balance accumulated over the six-year run.
Failing to pay employment taxes puts workers' future Social Security and Medicare benefits at risk while handing non-compliant businesses an unfair competitive advantage over law-abiding firms.
U.S. Attorney's Office for the Northern District of Ohio
| Case Parameter | Official Status |
|---|---|
| Accused | Tammy Butdorf, 51 |
| Court Jurisdiction | U.S. District Court, Akron, Ohio |
| Total Diverted Tax Withholdings | Over $494,000 (2015–2021) |
| Sentence Imposed | 18 months federal imprisonment |
| Post-Incarceration Terms | Court-ordered supervised release |
| Financial Penalty | Full restitution order to the Internal Revenue Service |
Butdorf will surrender to the Federal Bureau of Prisons to begin serving her 18-month sentence on a date designated by the court.
| Lead Investigating Agency |
| IRS Criminal Investigation (Cleveland Office) |
| Lead Prosecutor | Assistant U.S. Attorney Megan R. Miller |