Best of TaxLetter: But I Used The Short Form

David Reynolds made HUD renovations in Milwaukee. He submitted false supplier invoices, forged some invoices, and split only 1/3 of the proceeds with suppliers (instead of 50-50), explaining that he needed a larger share to take care of someone from the City. His Form 1040EZ, accurately reported W-2 income on line 1 and interest income on line 2. The indictment charged him with filing a false tax return. By signing that the return was "true, correct, and complete", Reynolds failed to report embezzlement income.

The Court held that his signature on the return attests that "taxable income" is derived arithmetically from lines 1 and 2, which indeed properly reported wages and interest. Form 1040EZ provides no space for reporting any other income. The literal truth reflected on Form 1040EZ was a defense to perjury, even if the information on the form was highly misleading and he was actually ineligible to file Form 1040EZ.

The right charges would have been tax evasion and failure to supply information required by law. So, his conviction for filing false tax returns was reversed. Since he had also been convicted of conspiracy, making false claims against the government, embezzling federal funds, and theft from a governmental program, the case was remanded for re-sentencing of the 4-year plus $54,000 sentence. (No. 70)