South Carolina is on a tear and they just stepped up their game
If you have been paying attention the past few months you may have noticed that the state of South Carolina has been on a bit of a tear actually locking people up for various tax offenses. Just scroll back through the posts on this blog this summer and you will find multiple instances of average Janes & Joes suffering the indignity of having their names published in the local paper for being arrested for tax offenses and needing to come up with bail money to get released from the local hoosegow.
In the past the public was normally treated with an annual spectacle of some semi-prominent individual (frequently a lawyer) who got caught on the wrong side of the law and was dragged out into the public square and humiliated as a warning to the rest of us that this is what happens to tax cheats. A big deal was made of it for a day or two and then everything returned to normal until next year when another public flogging would occur.
This was the pattern until earlier this year. Suddenly the pace quickened. The number of announced arrests turned into a torrent. Rarely did a week go by this summer when at least one and frequently several individual arrests were announced. I posted many of them here in this blog, but the frequency was just too much to post them all. It used to be a big deal when one of these arrests were made. Suddenly, there were so many arrests announced that it was newsworthy only if somebody wasn’t arrested. Typically these arrests were your garden variety knuckleheads who faked a W-2, failed to file at all or claimed a ridiculously large deduction or some such nonsense.
That was the way it was until today when the South Carolina Department of Revenue announced an arrest for “Conspiracy” (see the immediately preceding post). This is new and it represents a major new approach to the state’s tax law enforcement efforts. As Barney Fife might say, “Andy, this is big.”
From my vantage point, the threat of “conspiracy to commit tax fraud” was something I oftentimes used to rebut tax clients who wanted me to help them cook their numbers so that a particular outcome would be guaranteed. The conversation would go something like this: “I need X amount of dollars in tax refunds this year, tell me what numbers I need to put on my return to make sure that happens.” I usually could get that kind of conversation shut down simply by explaining how that could constitute “conspiracy” and then asking why I should risk going to jail so you can have a bigger refund. But in all honesty I never really expected that I would ever see conspiracy cases made. A conspiracy case requires evidence that is usually quite difficult to produce. Well, apparently, the South Carolina Department of Revenue didn’t get the memo. I am not sure how the state plans to prove conspiracy in court but they apparently feel confident enough of their evidence to actually make an arrest.
Those of us who try to play this game by the rules welcome the stepped up enforcement by any taxing authority, whether it be state or federal. But as citizens we all have a stake in making sure the authorities provide fairness and due process to those charged with tax crimes. It will be interesting to see how this and any similar cases play out in court. In the mean time, as always, I recommend that you get those back taxes caught up quickly. If we can help don’t hesitate to give Tax On Wheels, LLC a call at 803 732-4288.