Two bites at the apple were two too many for a New Mexico man. Evading $25 million in federal taxes is bad enough, but illegally collecting $225,000 in farm subsidies on top of that seems like piling on. From a Department of Justice Press Release:
Bill Melot, a farmer from Hobbs, N.M., was sentenced to serve 14 years in prison today to be followed by three years of supervised release for tax evasion, program fraud and other crimes, the Justice Department, Internal Revenue Service (IRS) and U.S. Department of Agriculture’s (USDA) Office of Inspector General announced today. Melot was also ordered to pay $18,469,998 in restitution to the IRS and $226,526 to the USDA.
Melot was previously convicted of tax evasion, failure to file tax returns, making false statements to the USDA and impeding the IRS following a four-day jury trial in Albuquerque, N.M. According to court documents and evidence presented at trial and at sentencing, Melot has not filed a personal income tax return since 1986, and owes the IRS more than $25 million in federal taxes and more than $7 million in taxes to the state of Texas. In addition, Melot has improperly collected more than $225,000 in federal farm subsidies from the USDA by furnishing false information to the agency.
He had been sentenced to only five years, but the appeals court decided he needed some more time before putting in another crop.
For a little farmer, Mr. Melot got around:
Additionally, Melot maintained a bank account with Nordfinanz Zurich, a Swiss financial institution, which he set up in Nassau, Bahamas, in 1992, and failed to report the account to the U.S. Treasury Department as required by law.
If the government’s sentencing memorandum is to believed, Mr. Melot isn’t down with this whole paying taxes thing, filing a blizzard of “baseless” motions and attempting to conceal assets. For example:
Defendant’s disregard for this Court commenced immediately… Within 24 hours of his release, between August 21 to August 24, 2009, Defendant and his immediate family were observed purchasing 19 money orders for $1000 each at a Moneygram counter, which is located at the Walmart in Hobbs, New Mexico.
a. Each money order was for $1,000.
b. Each money order listed “Bill Melot” in the memo line. The money orders also each listed Defendant’s home address, 2805 E. Rose Road.
c. Each money order was payable to Mueller, Inc., a Ballinger, Texas company, which builds outdoor sheds.
Videos from Walmart showed Defendant wearing the same clothing that he wore when he was released from custody. The money orders, along with an additional $5,260.94 in cash, were used to pay off the balance due on a metallic shed for Defendant’s farm, which he claimed not to own in his statement to Pretrial Services. The purchase of this barn flatly contradicted Defendant’s earlier claim of near indigence
The appeals panel seems to have believed the prosecution, as Mr. Melot got the full sentence requested.
Russ Fox has more at Really Big Tax Evasion Leads to Really Long Sentence at ClubFed.
Oops. It appears the Iowa legislature accidentally repealed the state sales tax on heavy equipment purchases in 1998, reports Siouxcityjournal.com:
The inadvertent change – which slipped by the department, the legislative code editors, and lawmakers and their staffs in the vetting process — didn’t come to light until last summer, when an attorney contacted the department about the Iowa Code section. At that time, legal staff at the department and the Iowa Attorney General’s office determined that the 2008 action had “rendered that tax obsolete,” Daniels said.
“It was not the department’s intention, nor do we believe that it was the Legislature’s intention, to remove that tax or repeal that tax,” said Daniels, whose agency has asked lawmakers in Senate Study Bill 3117 to restore the sales tax on heavy equipment retroactive to July 1, 2008.
Sound tax policy tells the legislature to expand the exemption, rather than repeal it. The heavy equipment will normally be used in business, and business inputs shouldn’t be subject to sales taxes. It just shows that the General Assembly can occasionally get it right, but will immediately take corrective action when it finds out.
William Perez offers An Overview of the Income, Deductions, Tax and Payment Sections of the Tax Return
Kay Bell comes through with 6 steps to help you become the best tax client. She omits step number seven: pay your preparer promptly. No matter how good you are with the first six steps, omitting step seven disqualifies you from the “best” list.
And despite its original intent, if the idea is to encourage taxpayers to work more, the current iteration of the EITC fails miserably. As you earn more, your benefits go down, not up. At some point, the incentive to work more is mitigated by the specter of a lesser credit.
It’s a poverty trap.
TaxProf, The IRS Scandal, Day 277
Sounds like a good reason to me. Broken Tax Code Offered as Reason for Reform (Annette Nellen)
Peter Reilly, Benefit Of Clergy – Why Special Tax Treatment For Ministers Needs To Go. Constitutional Does Not Equal Sound Tax Policy”
Stephen Olsen, Summary Opinions for 02/07/2014 (Procedurally Taxing). It’s a roundup of tax procedure cases and posts.
Jack Townsend, Germany Moves Against Offshore Bank Evaders
An unwarranted meattax approach: Scientist Proposes Discouraging Meat Consumption with New Tax (Joseph Henchman, Tax Policy Blog).
Career Corner. No Shirt, No Shoes, No Accounting Degree, No Probl– Actually, Small Problem (Going Concern).