Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

LET'S MAKE A DEAL! (SWAP 5 YEARS IN PRISON FOR 129)

January 08, 2004

In the old game show "Let's Make a Deal," contestants regularly faced a dilemma: to keep the prize they had already won, or to trade it for an unknown prize - potentially better, but potentially much worse - behind one of three doors.

Plea bargaining resembles this game: a defendant who rejects a plea bargain to go to trial may go free if the jury sees things his way, but the result can be much worse if the jury finds the prosecutor more persuasive.

Richard Simkanin picked the wrong door.

When we last checked in with Mr. Simkanin, he was awaiting sentencing after pleading guilty to one felony tax count. Mr. Simkanin had ceased withholding income and employment taxes on the employees of his business, asserting that there was no legal requirement to do so. The plea bargain required him to post the plea agreement on his web site, where he had previously posted anti-tax items.

The plea agreement turned out to have an error. The maximum penalty for the count in the agreement is five years, but the agreement had said it was only three years. The judge permitted Mr. Simkanin to withdraw the agreement, and the case went to trial.

"GOOD FAITH" BELIEF IN THE IMPLAUSIBLE: A HELPFUL DEFENSE?

Mr. Simkanin based his defense on the Supreme Court's Cheeks decision, which holds that a good faith belief that you aren't violating the tax laws is a defense against tax crimes. Following the Supreme Court's decision, Mr. Cheeks was allowed to argue that he really believed he wasn't subject to the income tax laws; he was again found guilty.

When Mr. Simkanin went to trial in November on 12 felony counts, the judge declared a mistrial after the jury deadlocked.

The IRS reloaded for a new trial, charging Mr. Simkanin with 27 felony counts and four misdemeanor tax violations. The jury yesterday found Mr. Simkanin guilty on 25 felony counts and four misdemeanor counts. They deadlocked on two other counts.

UNHAPPY ARITHMETIC

Mr. Simkanin now faces a maximum of five years in prison on each of the 25 felony counts, and a year for each misdemeanor. The door Mr. Simkanin chose now could get him a 129-year sentence. The 5-year maximum in the original plea agreement is no longer available.

Maybe that's why they're called plea "bargains."

"TAX HONESTY" MOVEMENT

Mr. Simkanin's unhappy result is a defeat for the "Tax Honesty" movement. This movement, as one account gently puts it, "questions the validity of the nation's tax laws." More accurately, they "question" the validity of the tax laws like Cub fans "question" the wisdom of Steve Bartman's attempt to catch that 8th-inning popup. The Tax Honesty folks "questions" had no more effect on the result than those of the Cub fans.

It's unlikely, though, that Mr. Simkanin's convictions will change the minds of folks who have somehow convinced themselves that the tax laws are invalid.

      Bookmark: del.icio.us • Digg • reddit