Accountant Acquitted, But You Still Have To Pay Your Taxes
Paul Petrino was recently acquitted of income-tax evasion charges after he filed returns for 36 clients claiming that salaries cannot be legally taxed. According to Newsday, his defense was "based on arguments from the tax-protester movement, which questions the validity of the federal income tax laws."
Petrino told his clients that wages and salaries are not taxable because they are a return for an individual's labor -- "his blood, sweat and tears," according to Petrino's attorney, Robert Fink.
He is reported to have listed his clients' salaries on the line on the income tax form that called for it -- Line 7, but then declared the exact amount as a loss on the line for other income -- Line 21.
Fink called the verdict a victory for the average man "over the overwhelming power of the federal government, the Justice Department and the Internal Revenue Service."
Unfortunately, the IRS has since required Petrino's clients to pay the tax on their salaries.
Comments (5)
Brad Dexter
An accountant after my own heart. As a CPA I'm chagrined at the average nabob in the profession who don't seem to have the ability to delve into philosophical questions of the profession. Perhaps many just like the ruled-line aspect of the profession, and have no desire to want to question anything. The long and the short of it, most CPA's in this day and age are of the pale bureaucratic type and less the robust thinker type. I guess the mass of laws and regulation expanded the profession to a point where critical thinkers are overwhelmed by the lemmings needed to pad bureaucracies and consultancy shops.
I have experienced many times drilling into the basic rationale of GAAP or tax law, or many of the fallacies that make up approaches in the industry, only to be glared at with the obvious meaning of "shut up and eat your free doughnut and muddle through this mandatory Continuing Ed session like the rest of us - don't make waves." I dispair how little impact accountants have in society when accountants are about the only people who have any conception of equity and its calculation, or at least SHOULD be able to if accountancy wasn't merely an arm of the ever expanding government bureaucracy.
Published: May 5, 2006 9:33 AM
David J. Heinrich
quote:
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"Petrino's technique unraveled when a colleague of one of his clients heard the person bragging at work about how he had paid no taxes on salary and the colleague reported the co-worker to the IRS, according to court records."
(1) When doing something that the State doesn't like, one should shut one's mouth and not brag profusely, and certainly tell no-one other than closely trusted individuals.
(2) The colleague who reported the co-worker to the IRS is a piece of slime. Analagous to individuals in Nazi Germany who would report those harboring Jews to the nazi officials.
Published: May 5, 2006 11:12 AM
billwald
US district court is a court of limited jurisdiction which the govt will ignore and not appeal. Does a citizen have sufficient interest and standing to appeal the case?
Published: May 5, 2006 11:21 AM
Reactionary
bill,
The government has no right of appeal from a not guilty verdict, since a reversal and retrial would violate the constitutional protection against double jeopardy.
And no, you don't have standing to do what the government is forbidden to do.
Published: May 5, 2006 11:28 AM
David J. Heinrich
This is a sneaky and sly way the IRS and State can prevent any unconstitutional laws from truly being challenged. They simply refuse to appeal lower level cases that they can appeal (although not in this case), so the issue never gets to the higher levels.
Published: May 5, 2006 11:36 AM