Located in Ohio - I was told years ago that if vacation time is earned based on a prior years' service (ie, 1 week after a year) an employer has to pay it no matter the circumstances of termination. Is this true or not?

It is not.

Just out of curiousity, If you work for a company that claims accrued vacation as an expense on their taxes, would that not constitute tax fraud on their part if they did not pay it out?

"Just out of curiousity, If you work for a company that claims accrued vacation as an expense on their taxes, would that not constitute tax fraud on their part if they did not pay it out?"

Not tax fraud, necessarily. Tax fraud requires a certain element of intent...

It is definitely an error in how they are preparing their taxes though, in any event. Could subject them to fines. Most likely just would have to pay penalty + interest if this were discovered.