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THE TAX TRAVAILS OF THE THIEVING POLITICIAN

November 29, 2007

George N. "Nick" Wilson was a state senator in Arkansas. He pleaded guilty to racketeering charges for taking kickbacks and defrauding government programs. As part of the plea agreement Mr. Wilson agreed to pay restitution of the money.

Mr. Wilson was a law-abiding taxpayer, as crooks go. He apparently reported $187,382 of graft income in 1994 and another $185,707 in 1995. When he paid the restitution, he filed a claim for a refund of his 1994 and 1995 taxes under the "claim of right doctrine." This doctrine, embodied in Code Sec. 1341, is designed to help taxpayers who have received income that they later find that they have to return - for example, a miscomputed bonus or contract payment.

A federal judge ruled this week that Mr. Wilson is out of luck. To qualify for the "claim of right" rule, A taxpayer has to believe he has an unrestricted right to the funds. As the judge put it:

This Court finds that the Wilsons' reliance on § 1341 must fail in light of Wilson's guilty plea on March 2, 2000, to the RICO violations in Count I of the Superseding Indictment. In pleading guilty, Wilson admitted to knowingly defrauding various state and federal agencies beginning in 1993 and he agreed, in his plea agreement, that the fraud schemes set forth in the racketeering acts were to be combined for sentencing purposes. Wilson further agreed to pay restitution to the governmental agencies he defrauded and his obligation to repay past income as restitution for his criminal acts required in this case that the corresponding income had been earned from the criminal acts. It is clear, then, that the monies received were a result of criminal activity and Wilson cannot establish that he believed that he had an unrestricted right to the income listed in 1994 and 1995.

Pity the poor politician/thief. If he doesn't report his graft income, the IRS can put him away. If he does report it, but gets caught and has to cough up the loot, he is still out the taxes. Awww...

Cite: Wilson, ED-Arkansas, No. 4:06-cv-01628

Tags: nick wilson.tax crime.

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