Your salary is taxable, of course. What about your bonus? Of course, that’s taxable. One business owner in Texas thought that wasn’t the case.
Robert Earl Carter is the owner and Chief Executive Officer of Enterprise Advisory Services Inc. From their website, it’s clear they specialize in government work, including contracts at NASA.
When you work with the government, you have to open your books to them. Apparently Mr. Carter forgot about that portion of dealing with the government. It also appears that the NASA Inspector General saw something on the books of EASI.
Back in 2009 Mr. Carter received a bonus check at year-end for $195,000. There’s nothing wrong with that, but there’s a lot wrong with calling it a “reimbursement.” It’s likely that caught the Inspector General’s eye, and that caused a referral to the IRS Criminal Investigation (CI) unit. And when CI discover another $309,821 of bonuses were paid to a company controlled by a family member who returned $286,821 to him one month later an indictment followed. Mr. Carter pleaded guilty two months later.
With a plea deal, you can hope for a sentence less than the maximum. That wasn’t the case yesterday.
It seems that Mr. Carter donated $500,000 of art to Texas Southern University. Mr. Carter claimed that deduction on his 2005 tax return, with carryover deductions extending to 2010. There was one minor problem: Texas Southern hadn’t received any art. Yes, to make a charitable donation you do have to actually donate something. Oops.
Judge Keith Ellison wasn’t amused by this faux pas. He found that Mr. Carter had not accepted responsibility for his criminal conduct and that his sworn testimony regarding the art wasn’t credible; he was sentenced to the maximum three years (36 months). He also was ordered to pay a $75,000 fine.
As always, it’s easier to just pay your taxes in the first place…but that usually doesn’t register with the Bozo tax contingent.