Taxable Talk

Another year, and many, many worthy candidates for the 2010 Tax Offender of the Year. To be considered for the Tax Offender of the Year award, you must do more than cheat on your taxes. It has to be special; it really needs to be a Bozo-like action or actions.

Coming in second for the second straight year was the 111th Congress. I’m trying to think of something they did right, but I’m having trouble doing so. Yes, they passed an AMT patch, and yes, they finally addressed the Bush Tax Cuts, but there was no need to wait until December and cause at least one-third of individuals to be unable to file their tax returns until late February. As for the negative actions of the 111th, they are so numerous that I’m convinced this Congress will go down in history as one of the worst ever.

Coming in third was Wesley Snipes. Last year I wrote about how he showed remorse, and was now looking at paying his tax debts. However, in 2010 he went back to the ‘old’ Wesley Snipes, and began spouting off all sorts of vitriol. In any case, for the next 35 months he’ll be enjoying a stay at ClubFed.

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Several years ago, some unknown taxpayer was audited. He had used a “pure trust” and was told by the seller of the trust that it magically allowed him to avoid paying income taxes. The IRS informed the unlucky taxpayer that such was not the case; the taxpayer paid his taxes and the file went into the bureaucracy.

It stayed there until the IRS discovered that these “pure trusts” were being used by multiple taxpayers. The IRS launched an investigation, and discovered they were being peddled by Tony and Micaela Dutson. The Dutsons were doing quite well selling these shams, especially since they, too, didn’t pay any income tax on their own profits. The Dutsons were selling these instruments from at least 2002; the IRS obtained an injunction in 2006 barring the Dutsons from further selling of these fraudulent trusts. (The Dutsons began their activities in Oregon, but moved to the Phoenix area in 2003.)

Meanwhile, the Oregon Department of Revenue notified the IRS that Mrs. Dutson, an attorney, had received money from the state for helping indigent clients; somehow she failed to file a state tax return. Mrs. Dutson resigned from the Oregon Bar in 2002.

Eventually, the IRS began criminal investigations of the Dutsons. And then the Bozo activities began. (Yes, trying to peddle sham trusts is a Bozo action, but that pales with respect to what the Dutsons then tried to do.)

First, they told their clients to file lawsuits against the IRS. They charged their clients $3,500 each for filing these frivolous lawsuits. The Dutsons neglected to tell their clients that these lawsuits were frivolous after the first of them was thrown out…for being frivolous.

Next, the Dutsons filed a lien against several IRS employees in California. Now, if you were going to file a baseless lien, would you file it for a reasonable amount or would you just shoot the moon and aim for a nice, Bozo sum of $1 Trillion ($1,000,000,000,000)? Yes, the Dutsons filed that $1 Trillion lien. Needless to say, that lien was soon thrown out as completely baseless.

Well, if you don’t succeed you should try, try again. And the Dutsons did file another lien, against one John Snow for only $108 Million. If you don’t remember the name John Snow, he was Secretary of the Treasury under President George W. Bush. That’s chutzpah, but the second lien soon met the same fate as the first.

The Dutsons also believed in filing tax returns…just not their own tax returns. They managed to file 30 bogus returns seeking $185 million in refunds.

Eventually, the Dutsons were accused and indicted on numerous tax charges. They were found guilty in June on nine counts, with the charges spanning ten years. As noted in the DOJ Press Release, the Dutsons made $1 million and paid no tax. Though the Dutsons were due to be sentenced in September, it appears there sentencing has been delayed. They are looking at lengthy terms at ClubFed plus restitution.

While I always hope that next year–2011–will bring a year free of Bozo Tax Offenders, it’s far more likely that I’ll again have several worthy candidates for the Tax Offender of the Year.

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That’s a wrap on 2010. I wish everyone a Happy, Healthy, and Safe New Year.

Tags: TaxOffenderOfTheYear

This entry was posted on Friday, December 31st, 2010 at 4:53 am and is filed under Tax Fraud. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.