The Department of Justice issued a press release setting out a cautionary tale of what not to do, outlining a litany of affirmative act comprising the charged conduct against a former IRS Revenue Officer.
A North Carolina Revenue Officer is a collections agent of the IRS, whose principal duties are to collect and to determine the collectability of taxes against specific taxpayers – taxpayers against whom it has previously been determined that taxes are owed. This is compared to a Revenue Agent, whose primary duty is to determine how much you owe. As a shorthand, at the start of my career I remembered the difference as agents investigate and officers enforce.
This particular Revenue Officer ended up on the wrong side of the law, however. Most interestingly, the conduct to which he admitted doing is a laundry list of affirmative acts for the evasion of collection or payment of taxes, acts which took place after he owed the tax to make it harder or impossible for the IRS to collect. He filed returns stating he owed taxes each year that weren’t necessarily false, but his acts had to do with the avoiding of paying those taxes. According to the press release, these acts include:
- Not paying self-assessed taxes since at least 1998.
- Creating over 10 nominee bank accounts in the names of his children to hide hundreds of thousands of dollars.
- Submitting false Form 433-A to the investigating revenue officer that did not reveal all of his nominee bank accounts.
- Filing, in bad faith, a Chapter 13 bankruptcy petition
- Filing a bad faith cash offer in compromise.
- Filing a bad faith request for discharge and an application for subordination of his federal tax lien.
- Transferring funds out of nominee accounts to avoid impending IRS levies.
- Otherwise appearing to live in relative luxury with a 4,300 square-foot home, a timeshare in Florida and a BMW.
- Admitting to the revenue officer and his mortgage holder that he did not keep money in bank accounts because he feared a levy or garnishment.
In addition, the press release notes the former Revenue Officer also used his stepson’s identity, without his knowledge, to apply for a Preparer Tax Identification Number, which he then used to file over 900 income tax returns for clients, as well as his own income tax returns. He also submitted, under penalties of perjury, at least 120 Forms 2848, Power of Attorney and Declaration of Representative, on behalf of clients that falsely stated he was an enrolled agent after the IRS revoked his authorization to represent taxpayers.
All the above would be enough for the Department of Justice to go after any taxpayer. When it is a former Revenue Officer, you can bet that the government will come down with all its might.
Daniel W. Layton is the author of this post and is a former prosecutor. He is the principal of Tax Attorney OC.