Taxable Talk

There are some things it's just impossible to do. One of those is to sign a tax return when you're dead. Of course, the Tax Code allows for a deceased individual's final return. The individual who signs the return is usually the spouse or the Executor/Administrator of the Estate, and that individual signs noting their authority.

But what if you have no authority, and get the not-so-brilliant idea of filing tax refunds for some individuals who won't complain? After all, if they're dead they're not going to call the IRS. Unfortunately, someone else might just prepare that return...like the actual former spouse. Or worse, the taxpayer might have died in a previous year. And even the IRS might wonder why a dead man filed a tax return.

Well, someone actually did just what I described. Candy Atohi, formerly of Linwood, New Jersey, decided to file 28 tax returns claiming refunds for individuals who were dead. She also filed a tax refund for herself that was wrong and another phony refund claim for her sister. All told, she sought over $100,000 in refunds that she wasn't entitled to.

Ms. Atohi pleaded guilty last week to one count of of making a false claim for a refund and one count of knowingly transferring without legal authority the identity of a deceased individual. She'll likely spend some time with the people who reside at ClubFed and have to make restitution.

This is one scheme that was truly Bozo, and Ms. Atohi is a likely nominee for our 2007 Tax Offender of the Year.

Having returned from a trip to Connecticut, I needn't have worried that the tax fraud artists would be missing. They're out in force this morning.

First, from Clarksville, Tennessee comes a woman who had a bookkeeping business. She named it "Nunya Business." I'm not sure that's a great name, and it became less of a good name when she decided to try a new career as an embezzler. She managed to get $63,000 from her clients. She decided that one good crime deserved another, so she failed to report that income on her tax return. And she left off another $160,000 for good measure. She agreed to plead guilty, and she'll likely be spending 30 months at ClubFed.

Meanwhile, the City of Brotherly Love has had its own corruption problems. Joseph Moderski, a Bryn Mawr, Pennsylvania business consultant, will be spending 37 months at ClubFed. He got ensnared in a city hall corruption investigation. Earlier this year, he got 14 months for a "pay to play" scheme at Philadelphia's airport. He pleaded guilty in July to defrauding the city and his ex-employer...and not paying $764,000 in taxes. Besides the jail time, he must make restitution of $1.3 million to the IRS.

Finally, in Florence, South Carolina, a doctor has probably learned that if you make up phony deductions and get caught, the jail you're sentenced to is very real. Dr. Erik Dehlinger worked in an emergency room in Florence. He heard about Anderson's Ark & Associates. They promised to make his tax liabilities disappear through phony expenses and false loan deductions. Instead of disappearing, his tax liabilities still exist, along with interest and penalties...and a probable fine and a short stay at ClubFed. Joe Kristan wrote in 2002, "If it sounds too good to be true, it almost always is." I agree completely.

The bigger they come, the harder they fall. So goes the cliche, and so also go the owners of Circle Industries in Alpharetta, Georgia.

Gerald Marchelletta, Sr., and Gerald Marchelletta, Jr., own Circle Industries. They specialize in drywall construction, and worked on the Olympic Village in Atlanta and the Atlantis Hotel & Casino in the Bahamas. They and their bookkeeper, Theresa Kottwitz, decided that rules were unimportant and they would deduct personal expenses on their business tax returns.

Now, we're not talking about a few pens and pencils here, or a couple of bags of cement. The news story states that testimony in their trial showed that the owners each built million dollar homes with this money. Other personal expenses charged to their business included clothing, landscaping at a New York home, and visits to Atlanta's Gold Club.

Now, I don't know if the trips to the Adult Entertainment club led to the investigation that resulted in the charges in this case. It wouldn't surprise me, though, if that were the case. Somehow, strip clubs and tax evasion go together. But I digress....

US Attorney David Nahmias called this, "This was a case of pure greed, in which the defendants tried to defraud the United States Treasury of over $1 million." Given federal sentencing guidelines, the trio, when sentenced early next year, will have plenty of time to reflect while at ClubFed.

Poor Wesley Snipes. As you may remember, Snipes will soon be on trial for allegedly filing a false claim for an income tax refund. As Joe Kristan of Roth Tax Updates reports, Mr. Snipes lost the lead in Spike Lee's new World War II film. His passport has been seized pending the trial.

If found guilty, Snipes will likely lose a lot more roles as he'd probably be spending some time at ClubFed.

I must admit that I laughed when I read this story. From Canton, Georgia comes the tale of Larry Black. Mr. Black decided to set up a booth at a check-cashing store in suburban Atlanta. He said he was a CPA. He then took the personal information he obtained, and filed phony tax returns where he got most of the refunds, and his clients got small amounts.

What was his take? A measly $46,000. Oh, and 15 months at ClubFed, plus likely restitution to the US Treasury. It hardly seems worthwhile....