While the story didn’t even make a big local splash, last week the Commercial reported on an alleged criminal enterprise of substantial proportions. Last Wednesday, federal prosecutors announced grand jury indictments accusing six Pine Bluff area residents of a tax refund scheme totaling $1.7 million.
The indictment accused the six people — five from Pine Bluff and one from Altheimer — of conspiring to defraud the Internal Revenue Service by filing 2008 federal income tax returns in their names and in the names of others without their knowledge to claim refunds they were not entitled to receive, according to a release from the U.S. attorney’s office in Little Rock.
The six were allegedly responsible for the filing of 251 tax returns, which falsely claimed the first-time homebuyers credit, and the refunds claimed totaled more than $1.7 million, according to the indictment.
Without assuming anything about the guilt or innocence of the accused, the alleged crimes are mind boggling. While the Internal Revenue Service tends to view intentional misrepresentation on one’s income tax filing as a dichotomous switch (i.e. you’re a cheat or you’re not), the crimes listed in this indictment are more like being pregnant with one baby versus having octuplets.
In short, the charges allege these six individuals filed tax returns like Chicago cemeteries vote. It strains reason that anyone would imagine getting away with such crimes. All of this goes to a discussion conducted over and over again in these pages on the subject of deterrence. A person might rationally calculate that they could get away with a few bad acts, particularly if there were no paper trail. Most petty street crimes fall into this category. In fact, you might even reason that you could get away with a lot of “little” crime if you were sufficiently cunning. Crime statistics seem to bear out that reasoning — not that this is good, noble or something to which we should aspire, simply that it happens. Stealing a hundred packs of chewing gum, while illegal, unethical and stupid, has a fairly high escape/completion probability. For one thing, gum is low value, not rigorously tracked and its theft not aggressively prosecuted. No city police department has a special gum theft unit just waiting for the convenience store to light up the Bat Signal.
Independent reporting for Pine Bluff & Jefferson County since 1879.
Contrast that with the IRS who has thousands of employees whose sole job is to examine tax records for anomalies and a whole division of highly trained criminal investigators (including people who are like specialists in forensic accounting) just champing at the bit for moments such as these.
The IRS knows that many people take certain “liberties” with their paperwork. This isn’t that. This is criminal hubris. This is flaunting the authority of the whole system. This is mooning a Sunday school class and daring the preacher to catch you.
Back in 1963, Mortimer Caplan, then Commissioner of the IRS, summed things up in an interview with Time Magazine. Of his agency Capalan said, “There is one difference between a tax collector and a taxidermist — the taxidermist leaves the hide.”
Given the potential penalties the indicted individuals face if convicted, Caplan’s words will undoubtedly ring true.