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TODAY'S DILEMMA: DO YOU FIRE A THIEF WHO HELPS YOU CHEAT ON TAXES?
March 31, 2005
Finding that your bookkeeper is stealing from you is rough. It's rougher still when that bookkeeper has been maintaining your "secret list" of income that hasn't been reported to the IRS.
That didn't faze Orange County, California divorce attorney Albert M. Graham. He called the cops, fired the bookkeeper, and sued her, recovering much of the embezzlement. He also sued his accountant for failing to detect the embezzlement. Perhaps coincidentally, the Tax Court today ruled that Mr. Graham is liable for fraud penalties for understating his federal tax liability.
THE MORAL: Hard to say. Something about honor among thieves, maybe.
Cite: Graham v. Commissioner, T.C. Memo. 2005-68
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