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TAXPAYER OF THE YEAR NOMINEE (PAY NO ATTENTION TO THE MERCEDES BEHIND THE CURTAIN)

December 06, 2002

The judge sets forth the facts pretty well. From the "Findings of Fact" of United States of America v. Crystal Foster, et.al.:

"1. On or about July 30, 2001, Crystal Foster filed a Federal individual income tax return (Form 1040) for the year 2000 with the Internal Revenue Service (IRS) Center in Philadelphia, Pennsylvania. (Government Exhibit 1)

"2. The return filed by Crystal Foster shows wages of $3,429.00, with no tax liability. (Government Exhibit 1)

"3. Line 64 of the return "other payments," has an "x" marked in the box for Form 2439. (Government Exhibit 1)...

"...5. Crystal Foster attached Form 2439 to her return, indicating her name, address and social security number on the form, and listing total or distributed long-term capital gains payments of $500,000.00 and an overpayment of $500,000.00. Ms. Foster's return stated that $500,000.00 should be refunded to her."

In short, Ms. Foster claimed a $500,000 bogus refund. The IRS, ever alert, noticed that she failed to give the name of the mutual fund which she said had paid $500,000 of taxes on her behalf. Ms. Foster helpfully supplied an imaginary mutual fund to go with the imaginary $500,000 credit. Satisfied, the IRS issued Ms. Foster a check for the $500,000 refund, with interest. The check was promptly cashed.

At some point, an IRS computer noticed that both the credit and the mutual fund were imaginary. Ms. Foster apparently was reluctant to write a check to IRS for $500,000, plus interest.

The IRS decided it really wanted the money back, so it sued Ms. Foster. The IRS lawyer pointed out that the check was issued October 29, 2001. On November 1, 2001, Ms. Foster put down $25,000 cash on a 1999 $40,900 Mercedes. The IRS also traced transfers of $100,000 from Ms. Foster's account into her husband's bank account and $50,000 each into accounts of two of her friends.

The District Court sided with the IRS and ordered the car sold by federal marshals. Ms. Foster appealed - and actually found a lawyer to take her case. The grounds for appeal? "...insufficient admissible evidence on which the court could find that Crystal had received and cashed the refund check."

Well, if you are going to lose anyway (she did), you might as well go down with a grand futile gesture.

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