MauledAgain

Just two generations ago, federal income tax rates ranged from 14 percent to 70 percent. Now they range from 10 percent to 37 percent.

Just two generations ago, the top one percent of Americans owned 23 percent of the nation's wealth. Now the top one percent owns 37 percent of the nation's wealth.

If the trend continues or, as expected, accelerates, it won't be long before federal income tax rates range from 1 percent to 10 percent and the top one percent owns 60 pecent or more of the nation's wealth.

It's sad that the people who are the unhappiest about their own economic situation continue to encourage and support policies that make their own economic situations increasingly worse.

It's a wonder what the lack of education cand do to a person. It's also a wonder what a bad education can do to a person. What's sad is what it does to everyone else.

This show comes from The People’s Court and carries the title, Being One Wicked Aunt. The plaintiff sued her biological aunt who raised her, alleging that the defendant aunt committed tax fraud and stole the plaintiff’s tax refund check. The plaintiff explained that the defendant filed state and federal income tax returns on which she claimed the plaintiff’s daughter as a dependent.

The defendant alleged that the plaintiff committed tax fraud, pointing out that she, the defendant, did not know that a tax refund had been direct deposited into her, the defendant’s, bank account. She further alleged that the plaintiff stole information from the defendant and used it to claim the defendant’s two children on the plaintiff’s tax returns, using the social security numbers of the two children that the plaintiff had stolen from the defendant. She also counterclaimed for unpaid rent, the cost of damages that happened to the defendant’s car when the plaintiff was driving it, and the cost of oil changes the plaintiff failed to procure for the car.

The plaintiff explained that she did not know how to do her tax returns so she asked her aunt for help. She alleged that she gave her aunt all her information and that her aunt put her two children on the plaintiff’s tax returns that the aunt prepared for the plaintiff. The judge asked the plaintiff why the defendant did not claim her two children on her own return and the plaintiff replied that she did not know, and when the judge asked if the defendant had talked with the plaintiff about it, the plaintiff replied in the negative. The judge then asked the defendant if she filed tax returns for that year and the defendant replied that she had not, and added that she had not prepared the plaintiff’s tax returns. The plaintiff also alleged that when the defendant prepared the plaintiff’s returns, she routed the refunds into the defendant’s bank account.

The judge asked the defendant if the refunds went into her account, and the defendant explained that she found out in October of 2016 when the plaintiff told the defendant that the IRS had deposited money into the defendant’s account. The judge asked the defendant if the plaintiff prepared her own returns how would the plaintiff know the routing and account numbers for the defendant’s account, and the defendant replied that the plaintiff had stolen the information when she was living in the defendant’s home. In response to a question from the judge, the plaintiff explained that when she told the defendant about the refunds being deposited into the defendant’s account the defendant at first wanted to make things right but after being give a December deadline to pay the plaintiff stopped responding to the plaintiff.

When asked about the plaintiff living in the defendant’s home, the defendant replied that the plaintiff was supposed to pay rent but didn’t. She admitted there was nothing in writing. The plaintiff denied having agreed to pay rent. When asked about the car, the plaintiff alleged that the owner of the car, the defendant’s son, the defendant’s daughter, and the defendant’s boyfriend also drove the car, but the judge explained that both instances of damage the car occurred when the plaintiff was driving the car. The plaintiff admitted to not getting oil changes for the car.

The judge held that there was “no dispute” that the tax refund money belonged to the plaintiff. The judge held that the defendant did not prove that the plaintiff had agreed to pay rent. After confirming that title to the car is in the defendant’s name, the judge held that the defendant was entitled to recover the cost of repairs to the car and the cost of the oil changes that were not done.

It is puzzling to me that the judge concluded the plaintiff was entitled to a refund that was generated on a tax return that included as dependents two children who were not children of the plaintiff. My guess is that the judge simply decided to have the refund transaction go through as it would have gone through had whomever prepared the return used the plaintiff’s bank account information rather than the defendant’s. That would leave the situation in the hands of the IRS when and if its screening process identified two children who had been on the defendant’s previous returns showing up on the plaintiff’s returns.

Reader Morris commented, “In my opinion both parties had unclean hands. The judge should have dismissed the case,” and asked, “Does the judge have an ethical or legal requirement to report this case to the IRS?” I disagree that both parties had unclean hands. No one admitted tax fraud. The plaintiff claimed that the defendant prepared the return and put the defendant’s daughters on the plaintiff’s return. The defendant claimed that the plaintiff prepared her own return and put the defendant’s daughters on the return. The judge did not determine who was telling the truth. She simply concluded that a refund payable to the plaintiff should have gone to the plaintiff. Whether that refund was correctly computed was not an issue in front of the judge. It’s possible one or the other of the parties was telling the truth, so it’s not necessarily the case that both had unclean hands.

There is no evidence that tax fraud was committed because the returns were not entered into evidence. There were allegations, but no evidence, just as there was no evidence with respect to the rent claim. For all we know, the defendant’s daughters were not claimed on the plaintiff’s return (though they probably were). There is no evidence of who prepared the plaintiff’s returns. The judge probably suspected that the plaintiff did what the defendant alleged, and by granting the plaintiff the recovery for the tax refund made it impossible for the plaintiff to allege to the IRS, if ever asked, that she did not receive the refund. But suspicion is not something that the judge is required to report, though there is nothing stopping the judge (or someone on the staff of the court or show) from sending to the IRS the link to the show. It’s unclear whether the judge and the staff are precluded from using information obtained during the show when there is no legal obligation to share it.

But as the judge noted, this was a sad case. As the show host noted, it was a tragic case. It was sad and tragic in many ways. I suspect it is possible that the moving force behind whatever may have been done on the plaintiff’s tax returns may have been someone that was not a party to the case, but I’ll leave that for readers to decide for themselves.