Lumps of Coal for Christmas Tax Evaders

There’s been lots of fraud over the past few days. People seem to be forgetting that cash sales are just as taxable as other sales.

Let’s start in New York City. The New York Yankees may be one of baseball’s most successful franchises, but one former employee has learned the hard way that tips are taxable income. David Szen is the Yankees’ former Traveling Secretary (he arranged for charter buses, hotel rooms, etc.), and, as is customary in baseball, received tips from players and coaches. All fine and good, until he forgot to note the tips on his tax return. Oops. He admitted his wrong-doing last week and pleaded guilty to tax evasion. He’ll make restitution of just over $10,000 and may face a short stay at ClubFed or a fine.

Staying in the Big Apple, an art gallery owner found out the hard way that sales tax laws apply to big ticket items, too. Michael Weisbrod owns the Weisbrod Chinese Art Gallery. They feature Chinese objects, such as the beautiful jade horse:

Unfortunately, the gallery forgot to collect sales tax on its purchases, and the owner pleaded guilty to both personal and corporate state tax fraud. The amount of the fraud could be as high as $1.1 million, so that’s a lot of fraud. Sentencing is scheduled for April.

Next, from Lansing, Michigan comes the story of a former nightclub owner who decided to double his work on how he kept his books. One set of books wasn’t enough for Thomas Donall—he kept two. One was accurate; the other didn’t show the cash that he skimmed off the top. He provided the inaccurate one to his tax preparer. All was fine until the IRS discovered the double books. Mr. Donall was sentenced to a fine of $25,000 and two years probation. He must also make restitution of $180,000.

Finally, we head south to Dawsonville, Georgia. Robert Merickle ran East Coast Marketing (aka Blue Haven Pools). He used to methods to lower his tax bill: cash sales didn’t make it onto the books and personal expenses did. Neither of those methods is legal, and when the government found out, trouble ensued. Mr. Merickle pleaded guilty to tax evasion, and faces up to three years at ClubFed plus restitution. As U.S. Attorney David Nahmias said, “Those who choose this criminal course of action [tax evasion] face federal prison time, which is far worse than paying the tax that was owed.”

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