Best of TaxLetter: How Not To Handle An IRS Audit

William Martin asked one of his employees to purchase marijuana or cocaine and place it in the IRS agent's car, but the employee refused. He gave another employee a check for $100 to accomplish this end. But the employee instead spent the money for truck parts. An IRS inspector discovered Martin trying to open all the doors and the trunk of the agent's car.

The agent assessed $25,000 in taxes. Martin then filed a complaint with IRS's problem resolution office in Jacksonville, Florida. He charged the agent with harassing and threatening him and his employees, frequently missing appointments, failing to return files, and arriving for one audit under the influence of drugs.

On appeal, his conviction for aiding and abetting the crime of possession with intent to distribute controlled substances was reversed. There was no "other person" involved, so Martin couldn't be guilty of "aiding and abetting" himself. But the judges upheld his conviction for trying to obstruct and impede the administration of the Internal Revenue Code by filing the false complaint about the agent. That carries a maximum of $3,000 fine and one year imprisonment. (One dissenting judge felt that filing a complaint that turns out to be false should not be a crime.) (No. 47)