On Friday July 6, a federal jury in Covington convicted a local lawyer on three counts of filing false tax returns. The charge was that he had under-reporting his income.
The convictions came after four years of prosecution following an armed raid on the lawyer’s offices in April 2008. At that time agents of the IRS, FBI and DEA along with other law enforcement officials, armed with machine guns, burst into the attorney’s offices and while holding his staff at gunpoint seized his records and computers.
At the same time other groups of armed government agents raided his home and went to his bank seizing records and several hundred thousand dollars in cash.
In the last four years, the government returned all of the cash to the lawyer. Why? Well, for starters it is no more illegal to hold hundreds of thousands of dollars in cash than it is to hold one hundred dollars in cash.
You might ask, “why would the attorney have so much cash on hand”? His explanation at trial was that his grandfather had lost everything he had during the depression when his bank failed and he couldn’t withdraw his life savings in time. The lawyer admitted that he kept some of his money in bank accounts but that he had been slowly putting away his savings in cash for nearly 30 years as his “nest egg”. He explained that while others had put their money in retirement accounts only to see those accounts lose half their value in recent years, this was his retirement. He was preparing for an uncertain future.
There being nothing illegal about his cash holdings, the IRS returned all of the cash they seized cash to him.
But for four year they kept up the prosecution which reportedly cost the government perhaps as much as $2 million in taxpayer money. And what was the result?
The result is that the lawyer will likely be sentenced to serve time in a federal prison, which you might note will also be at taxpayer expense.
In addition he will likely lose his license to practice law which means that he will no longer be the high wage earner he has been for thirty plus years which will cost the government even more money in lost revenue on his earnings.
According to various reports the lawyer asked the government how much they claim he owed them and yet they never supplied him with a figure.
The government could have charged the lawyer for back taxes, levied a substantial penalty and of course since they already had their hands on more than enough cash to obtained payment, could have settled the matter pretty much on their own terms. But they did none of these things. Why?
What could possibly have been the purpose of this four year prosecution which was obviously very expensive in more ways than one?
For the answer to this question, go back to where I asked you to stop a minute and assess your reaction to this case and how it made you feel. Over powering prosecutions like these serve only one purpose, to make an example out of people for the rest of us to see. In other words, cases like this make us fear our government.
Of course the lawyer denied that he had failed to report any of his income. In addition to his law practice he ran several businesses and his books were handled by a book keeper, his tax returns prepared by a CPA and he testified that he trusted these professionals to do things right. But of course the government stood firmly on the law that says no matter who prepares your taxes, your signature means that you have affirmed the accuracy of everything reported on those returns and if any of it is wrong you have committed perjury.
It is hard to tell how much money this lawyer spent defending himself, but one thing is clear; we have all now been taught to shudder at the thought of the government coming after any of us.
What is the solution? A lot of politicians these days like to say they favor a “fairer/flatter tax”. But things don’t seem to be getting any better.
In fact things have just gotten a whole lot worse. The Supreme Court has declared that the penalties under ObamaCare are really a tax which of course will be enforced by the IRS. The IRS has just added thousands of new agents. We hear annual reports how the IRS is ramping up its enforcement efforts and with thousands of new agents and a whole new set of laws to enforce things just got a whole lot scarier.
Is there a plan is to make American citizens fear the government more and more each day? It should be the other way around. As Thomas Jefferson said "When governments fear the people, there is liberty. When the people fear the government, there is tyranny."
The time has come to eliminate the IRS, to pass “The Fair Tax” thus removing the need for citizens to file burdensome tax returns under penalty of perjury. The “Fair Tax” would streamline collection, eliminate loopholes, spread the tax burden equally over the entire population and result in a steady stream of revenue to the government throughout the year.
And the fair tax would eliminate the fear of government agents bursting into your private property wearing bullet proof vests, carrying machine guns aimed at your head and shouting orders at you. That’s how this case of lawyer, Larry Lawrence started and it will end with him going to prison.
And after considering that he is headed to prison, isn’t it fair to ask “for what”? Was all of this really worth a few dollars in unpaid taxes? No matter how much he owed it had to be a drop in the bucket compared to the federal budget.