Rule 23 of George Washington’s Rules of Civility has a lot going for it:
When you see a Crime punished, you may be inwardly Pleased; but always show Pity to the Suffering Offender.
Yet even the Father of His Country might have had a hard time suppressing a smile over a federal tax sentencing in California yesterday. From the Contra Costa Times:
A former San Ramon family law attorney was sentenced to two years in prison Monday for evading taxes and illegally eavesdropping on a client’s estranged spouse with the help of a now-incarcerated private investigator who set up divorcing men for drunken-driving arrests.
Mary Nolan, 62, of Oakland, already relinquished her law license and paid $469,000 in back taxes Sept. 27 after she pleaded guilty to four counts of tax evasion and one count of illegal eavesdropping.
Nolan represented the ex-wives of two men who were arrested after [the private investigator’s] attractive female employees lured them into drinking and driving. Those convictions were expunged after the scheme became known in 2011, when Butler and jailed former Contra Costa Narcotics Enforcement Team Commander Norman Wielsch were caught selling drug evidence and admitted to pimping and robbery, among other crimes.
Oddly, the sentencing judge not only failed to impose the 33-month sentence requested by the prosecution, but he also seemed to think the tax charge was more serious than the honey-trap thing, reports Concord Patch:
Breyer told Nolan during the sentencing today, “To eavesdrop on conversations that clearly weren’t intended for an adversary to hear is a
very unfair thing to do.”
But he said he was especially concerned about the failure of Nolan, as a lawyer, to pay the taxes due.
“What I find most troubling is the fact that you were a lawyer. Lawyers have that special responsibility not just to know the law but to follow it,” he told Nolan.
Yes, evading $400,000 of taxes is a bad thing, whether or not you are a lawyer. Still, ruining lives setting up and framing people to win divorce cases strikes me as worse than making the IRS work hard for its money. Maybe when you’re a federal judge, things start to look a bit funny.
Well, technically “a bunch” isn’t “a smidgeon.” ‘Not Even a Smidgeon of Corruption’ at IRS, Obama Says. (Tax Analysts, $link). If so, it sure is funny how Lois Lerner was so quick to invoke her 5th amendment right against self-incrimination.
TaxProf, OMB: EITC Is 4th Most Error-Prone Federal Program, With 22.7% Error Rate. If it makes you feel better, the three worse ones are all Medicaid or Medicare. Makes you want the government and IRS to pay in a bigger role in health care, for sure.
Minnesota: Come for lovely winter weather, and stay for the annual tax hit! The Minnesota Center for Fiscal Excellence has computed the annual cost for a high-earning individual of life in the tundra. It’s not cheap:
Of course, beautiful Iowa doesn’t have a lot to crow about, as it looks good only by comparison with Minnesota. While the hypothetical taxpayer could only buy a nice new sedan annually for the savings of moving from Minnesota to Des Moines, she could buy some really nice wheels every year with a move to Sioux Falls.
The IRS Fact Sheet provides “The amount of the compensation will never exceed the amount received by the shareholder either directly or indirectly. However, if cash or property…did go to the shareholder…the level of salary must be reasonable and appropriate.” This language would seem to indicate that there is no requirement that compensation be paid to a shareholder-employee provided the shareholder also foregoes distributions. Even with that bit of guidance from the IRS, it is prudent advice to encourage a profitable S corporation to start making reasonable salary payments to its shareholder-employees as soon as it has the means to do so.
Unfortunately, the IRS has shown that it will attempt to force a salary even when the means are lacking.
Paul Neiffer, You Can File Income Tax Returns Now (Maybe)
Jeremy Scott, Making Tax Reform a Partisan Issue (Tax Analysts Blog):
And it isn’t hard to see why. Linking tax reform to the debt ceiling risks making it a partisan issue. Forcing Congress to take up reform is a GOP victory, because it causes Democrats to give up on a clean bill. So Democrats, many of whom are sympathetic to the tax reform process, will have to oppose tax changes because Republicans have politicized the debate, defining tax reform as a win for their side.
Ah, the majesty of government.
Lyman Stone, New Study: High Excise Taxes Drive Cigarette Smuggling in Boston, New York, Providence (Tax Policy Blog). That has to be the most predictable news of the day.
Sad news from Kay Bell: “The time has come, however, to put the Tax Carnival on hiatus.” It’s a lot of work to put one together. Thanks, Kay, for all of the help you’ve given tax bloggers over the years with the Carnival of Taxes. So until she feels like reopening the Carnival, let’s have one last ride on the Midway.
Going Concern, Here Is a Short List of People Less Deserving of Bonuses Than IRS Employees. Hard to argue with the list, especially the first two, but I would throw in the other branches as well.