It’s time once more for that prestigious award, the 2012 Tax Offender of the Year. To be considered for this 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 third this year is the Miccosukee Tribe of Indians in Florida. The Miccouskees run a successful casino near Miami. While the tribe itself is exempt from taxes (they’re a sovereign nation), the members of the tribe are not. The Miccouskees allegedly decided to ignore that little aspect of the law. Their attorney apparently advised them that wasn’t a good idea. So did the Miccosukees start withholding taxes on distributions to its members? Or did they sue their attorney for malpractice? And did they also allegedly not forward federal income tax withheld from patrons’ winnings to the IRS?
The Miccosukees can’t win in 2012; these are still all allegations and nothing has been resolved. However, they are very strong contenders for the 2013 Tax Offender of the Year award.
Coming in second place is last year’s winner, the United States Congress. While I’m tempted to put them in first place–after all, there’s an excellent chance I won’t be filing any personal tax returns until late March–I can’t. There’s still a day for everyone to get on the same page, and this will have an impact in 2013, not 2012. True, the US Senate has not passed a budget in years (President Obama’s proposed 2012 budget received no votes from either the House or the Senate), and the Tax Code keeps getting more and more convoluted; however, most of the changes that are coming are the result of the passage of Obamacare. I already awarded the 2011 Tax Offender of the Year to Congress for that (and their other acts of ineptitude).
Steven Martinez used to work for the IRS. After leaving the IRS, he became a tax preparer. Mr. Martinez had a unique method of filing tax returns. He first prepared the returns, showing his clients owed money to the IRS and the Franchise Tax Board (California’s income tax agency). He then had his clients make out checks to a client trust account rather than the IRS or FTB. He also had estimated taxes made out through that account.
Of course, since I’m writing this you know where the money ended up: home improvements for himself, a beach house in Mexico, usage of a private airplane, investments (more than $2 million), and for $2 million of payments on credit cards and loans.
After preparing those returns showing clients owing money, Mr. Martinez prepared a second set of returns. These showed the clients owing either a small amount of money or no tax at all. He then submitted those returns to the IRS and FTB.
Sooner or later this fraud was bound to be discovered. A taxpayer would obtain a transcript of his return and notice the differences between what was filed with the IRS (or FTB) and what his copy of the return showed. Or perhaps some unlucky taxpayer was audited and the copy of the return that the taxpayer had and the return the IRS had would not match.
He committed Social Security fraud and identity theft by preparing false tax returns with the IRS. He mailed those returns to the IRS; that’s mail fraud. He used nominee bank accounts to conceal $2 million of income. Yes, he also prepared false tax returns for himself.
All of the above is definitely Bozo behavior. However, what I’ve written is just the beginning of the story. Mr. Martinez was indicted on April 15, 2011 for 49 counts of fraud, money laundering, and identity theft.
After being indicted, there are a number of possible strategies. Getting a good attorney would be the first thing I’d want to do. I’d look at the defense I have to the charges (if any). Perhaps a plea bargain is in order. Maybe I should hire a hit man to kill the prosecution witnesses.
Wait a second: Did I just bring up the idea of finding a hired killer to eliminate the prosecution witnesses? I did. After all, if you’re accused of 49 felonies, what’s a few more anyway? And yes, Mr. Martinez did exactly that.
Luckily for all concerned, the man that Mr. Martinez solicited to commit the murders called the FBI; a second meeting between the would-be assassin and Mr. Martinez was taped by the FBI. Mr. Martinez told the man that “he could make him rich for the rest of his life, $100,000 cash, if he eliminated the lady in Rancho Santa Fe and the lady in La Jolla.” Mr. Martinez also helpfully told the supposed hit man to use two different pistols and buy a silencer.
In the end, Mr. Martinez pleaded guilty to not only the tax fraud charges, but murder-for-hire, witness tampering involving attempted murder, and solicitation of a crime of violence. Mr. Martinez is truly deserving of the 2012 Tax Offender of the Year award.
That’s a wrap for 2012. Hopefully, 2013 will be a fruitful and prosperous year for everyone.