You may be aware that the IRS has been going
after people with overseas accounts. I have little sympathy for deliberate tax
evaders, but the IRS approach can be described as erratic. Very ordinary people
are terrorized with outrageous penalties while bigger fish are allowed to swim
away.
Therefore, I was very glad to see the
resolution of the case against Mary Estelle Curran.
Let us start by saying that Mrs. Curran is
very wealthy. Her husband inherited money from an aunt who lived in Monte
Carlo. He left the money in a Lichtenstein foundation. There were never any additional
deposits into this account. Over the years, the account grew into a sizeable
sum, which Mrs. Curran inherited after his death. She then had to learn money
management, as her husband had done that for more than 40 years.
This was not chump change: she inherited over
$40 million.
She is not a natural object for our sympathy,
right?
Not so fast. Having money does not make one guilty
any more than being left-handed does.
She asked her accountants and lawyers in
Europe how to handle and report the money. Unfortunately, she did not inform
her U.S. accountants. She kept this up for several years.
The IRS eventually came out with an amnesty
program, and Mrs. Curran decided to do the right thing. She contacted her European bankers, who put
her in touch with a U.S. tax lawyer. She gave the attorney all the information for
voluntary disclosure with the IRS.
It took about a month to review and assemble
the information and contact the IRS. Would you believe that – in that month - UBS
had provided approximately 250 names to the IRS? By the time she submitted her
disclosure, the IRS had already had her name for approximately 3 weeks.
The IRS had a rule: if they found out about you
before you disclosed, you were not eligible for the voluntary disclosure
program. There was a glitch, though: Mrs. Curran had submitted her disclosure
seven days before the start of the amnesty program. Too bad, screeched the IRS.
No amnesty for you!
Mrs. Curran goes to Court on criminal charges.
She pleads guilty to tax evasion and filing false tax returns. She was fined
over $26 million for failing to remit approximately $670,000 in tax to the IRS
over the years.
OBSERVATION: How
much Kool-Aid does one have to drink to think that a fine of $26 million is
fair balance for $670,000 in unpaid taxes? If the government applied this ratio
to all the earned income tax credit cheats and tax refund thieves we could
balance the federal budget. The IRS was not interested in just bringing a noncompliant taxpayer into compliance. No, it had an agenda.
Mrs. Curran could have even have gone to jail.
Her niece – who is blind – offered to serve jail time in place of her 79-year
old aunt.
Here is her attorney pleading before the Court:
... 38,000 people
went through the three offshore voluntary programs after her and received immunity
from prosecution. They were also treated and penalized far different than her.
They were penalized mainly at the rate of 20 percent for the FBAR violation of
the largest amount of money in the account. She was penalized 50 percent.”
She has been
prosecuted criminally, indicted and arrested, and those 38,000 were not. And
she has been adjudicated a felon, and all those 38,000 people did not suffer
that designation.
Every one of
these 38,000 people were given a second chance..., yet Mrs. Curran never
received a second chance at all.”
U.S District Court Judge Kenneth Ryskamp was
presiding. Here is the Judge and an IRS (i.e., Justice Department) attorney:
JUDGE: Based upon
those facts, did it ever occur to the government that this case ought to be
dismissed and let this thing go?
IRS: No, your
Honor.
IRS: Your Honor,
there is a certain level of randomness to the level of government
prosecution...
JUDGE: ... (her) lawyer
detained it (the disclosure), and she would have qualified under it (the IRS
program).
IRS: ... the
government has to draw bright lines as to where...
JUDGE: I don’t
know if the government has to do anything. It seems to me that the government
has a lot of discretion and the government decided to make a felon out of this
woman.
IRS: ... there
were numerous articles in the Wall Street Journal, in the New York Times about
the government’s investigation of foreign bankers.
JUDGE: This case
is totally out of scope of all your other cases where people are skimming, were
trying to hide funds. I mean, there was an inheritance over there, and al lot of
reasonable people would think you don’t have to report this.”
The Court passes sentence:
A term of
imprisonment would be unnecessarily harsh.
It is the finding
of the Court that the defendant is not able to pay a fine.
It is the judgment
of the Court that the defendant, Mary Estelle Curran, is placed on probation
for a period of one year.”
The Court was clearly miffed by the IRS’s
behavior.
I’m now revoking
probation. Probation is terminated. You were on probation for about five
seconds there.
The law requires me
to put you on – if I don’t put you in jail – I’ve got to put you on probation. It
doesn’t say how long you have to stay there.”
Wow!
The Court continued:
I would urge you
to file a petition for a pardon with the executive branch. You can tell them
the Court thinks this woman’s felony should be removed. And if the government
doesn’t join it, then it’s just spiteful.”
Judge Ryskamp is
now famous with tax practitioners. He can count me a fan.
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