by Brian Mahany
Remember the Nannygate scandal? The scandal originated in 1993 when President Bill Clinton nominated Zoe Baird to be the United States Attorney General. That nomination didn’t last long; reporters quickly learned that Baird and her husband had hired two illegal immigrants from Peru to care for their child. They also didn’t withhold social security taxes from those workers’ pay.
Shortly thereafter, Clinton chose federal judge Kimba Wood but she too disclosed that she had hired an undocumented alien for child care. Since then dozens of nominees for top political appointments have seen their confirmations derailed after problems with undocumented aliens or taxes or both surfaced.
The public may seem pretty apathetic to the activities of politicians but when senior officials don’t pay taxes, the public demands justice.
It’s not just here in the U.S. Senior officials in Sweden, England and other countries have had to step down when tax problems surfaced. The latest problem appears to be in France where Budget Minister Jerome Cahuzac resigned after being charged with tax evasion and money laundering. What is astonishing about this case is Cahuzac was well known as a crusader against tax fraud right up to the time of his resignation.
Although the full extent of Cahuzac’s alleged crimes are not yet known, we do know that he was charged with having an unreported foreign bank account. A charge that he publicly denied at first. Like the U.S., French citizens must declare foreign financial accounts to the government.
Said one political leader in France, “This is another example of the decay of the political system that is in power, and which must now leave.”
We agree. It’s hard to expect ordinary taxpayers to pay their fair share if our elected and appointed leaders refuse to pay theirs. The IRS operates largely on a system of voluntary compliance. No one likes to pay taxes but we like it even less when our neighbor or business competitors don’t pay theirs.
Tax evasion is a serious federal felony. Most states also have criminal laws on the books for those that don’t pay state and local taxes too. For every dollar not collected, essential services go undelivered or equally bad, you and I must make up the shortfall. The so called “tax gap” is the amount of money not reported and paid each year by millions of Americans.
The IRS operates a whistleblower program that allows tipsters to remain anonymous and collect a portion of whatever is collected from cheating taxpayers. While the program probably won’t pay in small cases like the nanny paid under the table, wealthy taxpayers and businesses that cheat on their taxes should expect to get caught. Whistleblowers are often neighbors, ex-spouses and disgruntled employees. Sometimes they are simply everyday people that have become fed up with people they know who refuse to pay taxes.
If you know of a fraud against the government and taxpayers – state or federal – give us a call. Awards are generally available to the first person supplying information. If you have believe you have a claim, let us know right away.
Mahany Law – America’s Tax and Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. IRS Whistleblower services available nationwide.
Need more information? Visit our IRS Tax Fraud Whistleblower page. We also invite you to uur Due Diligence blog which features a search engine. For more information on specific tax topics, just use the “tax” tab or type in key words such as “IRS” in the search bar. We have many informative articles on our site.