Posts Tagged ‘Antnony Nitti’

Tax Roundup, 10/12/2012: Megafauna Friday! Also: reversing the tax documentation process.

Friday, October 12th, 2012 by Joe Kristan

Not a Registered Tax Return Preparer

Never defraud a mammoth.  Feds Charge Colleyville Pharmacist and Wife In Mammoth Tax Fraud Scheme (






You use the information from the supporting documents to prepare the returns, not the other way around.  A former IRS agent-turned-preparer is in trouble after mixing up this basic rule of tax return preparation, reports the Hartford (my emphasis):

A former IRS agent abruptly pleaded guilty to tax fraud Thursday, moments after a federal prosecutor accused him in an opening statement to jurors of claiming deductions that included the price of treats for his dog and a ring he was stuck with after a broken engagement.

Thomas Thorndike, 62, of Milford operated the profitable tax preparation and financial services business Cornerstone Financial Services in Woodbury after leaving the IRS.

Why was his business profitable?

Assistant U.S. Attorney Christopher M. Mattei told jurors Thursday that Cornerstone was a high volume, high profit business. During tax season, he said, Thorndike collected as much as $12,000 a day by preparing 40 returns daily, one every 15 minutes. The secret to high-volume was big refunds, Mattei said.

Impressive productivity.  How did he get the big refunds?

But Mattei said the audit showed that many refunds were based on unsupportable deductions for mileage and donations of old clothing. A Waterbury police officer reported commuting 4,000 miles to work in 2006. A high percentage of Thorndike clients reported giving between $3,000 and $4,000 in clothing to Goodwill Industries during the same year and had receipts purportedly signed by the same Goodwill employee.

Just an overworked Goodwill employee?  Maybe not:

When Thorndike learned the IRS was examining the returns, Mattei said he instructed clients to manufacture phony supporting documents.

Oops.  That’s definitely against the rules.  Many people think the charitable deduction for used clothing is a freebie deduction.  It’s not.  You need to document the deduction, and the clothing has to be at least in good used condition.  As this case shows, overdoing it can attract IRS attention.  And if you don’t have the documentation to start with, you can’t invent it later.


Tax Policy Blog  Chart of the Day: Payroll Taxes and Refundable Credits:



Water is wet, too. IRS Audits Deter Corporate Tax Avoidance. (TaxProf) 

A coveted heh for the Tax Update.

Brutal Assault on Reason Watch: 

Anthony Nitti,  Reactions to the Biden – Ryan Debate

TaxGrrrl,  Vice Presidential Debate, 2012 – Live Blog

David Hirsanyi,  Democrats Are the Real Tax Ideologues  (

Howard Gleckman,  Can Romney Cut Taxes for the Rich Without Reducing Their Share of Taxes? Yes, but….  (TaxVox)

Jason Dinesen,  IRS Releases FAQ for Same-Sex Married Couples:

It’s refreshing to see the IRS publish this FAQ. The IRS does a lot of things wrong, but on the topic of same-sex marriage, the IRS has been surprisingly open-minded.

Now if only the Iowa Department of Revenue would publish a similar FAQ — or give us SOMETHING.

Better specify that “something.”


Kay Bell,  Double check dependents, filing status

Jack Townsend,  Another Plea Related to Offshore Activity

Martin Sullivan,  Business Overstates Its Case on International Taxation

Courtney A. Strutt-Todd,  Using Tax-Exempt Bonds as a Way to Finance Your Next Project (Davis Brown Tax Law Blog)

Going Concern,  City of Detroit’s Finance Department Makes Case for Most Hysterically Pitiful Internal Control System in Recent Memory