A New Type of Tax Fraud

When a Tax Notes Today tax news update arrived this morning in my email inbox, I had to stop and read again the title of one of the items in the digest. Why? Because it read, "Tax Crime Roundup: Attorney Admits to Paying IRS With Sham Checks." What?

So I found the Tax Notes article and from there worked my way to the Department Department of Justice news release. According to the news release, the attorney in question had signed and submitted 14 fake certified checks to the IRS in November 2024 and January 2025, in the total amount of $294,454.52. the attorney also submitted payment vouchers directing that amount to income tax liabilities for the years 2013 through 2022 other than 2019 and 2021. The checks used a routing number associated with the Federal Reserve Bank and a bank account number that was the attorney's social security number. My guess is that those checks bounced, quickly and high.

The attorney also used a fake cashier's check in the amount of $129,710.51 to purchase a new electric utility truck in October 2024 from a company. The routing and bank account numbers on the check were those of the company from which the truck was being purchased. It's unclear whether someone at the company noticed this when taking the check or the bank caught it when the company deposited the check. Either way, the company quickly learned that the check was fraudulent and repossessed the truck. The attorney then filed a lawsuit in November 2024 seeking the immediate return of the truck, along with costs and attorneys' fees. The complaint falsely claimed that the company unlawfully took the truck and had no rights in the truck. The attorney also submitted a fraudulent Form 1099-A showing that the company had borrowed $129,710.51 from a trust managed by the attorney. In December 2024, the attorney served a notice of default and praecipe for a default judgment against the company, again seeking possession of the truck and damages from the company.

After the Department of Justice National Fraud Enforcement Division brought charges, the attorney pled guilty to one count of tax evasion and one count of mail fraud. The attorney is yet to be sentenced, and faces a maximum possible term of 25 years' imprisonment.

Perhaps the attorney is not the first person to use fake checks to pay taxes. But it's new to me. It's the first time I've learned of this sort of behavior. Sometimes people write checks to the IRS that bounce because of insufficient funds, but the check itself does not use fake routing and account numbers.

What happened? This wasn't a case of a momentary lapse in judgment. It was a carefully planned sequence of events. It wasn't carelessness. It wasn't mistake. Worse, it was bold and outrageous. To attempt the purchase of a vehicle with a fraudulent check written on the seller's account, and then to sue for return of the vehicle after the seller repossesses it after discovering the fraud is beyond bold and outrageous. It is shockingly horrendous. My guess is that the attorney was in financial distress for any one or more of various possible reasons. The fact that there were outstanding income tax liabilities from as far back as 2013 suggests a financial problem. When I first read the press release I wondered why an attorney would purchase an electric utility vehicle, but now I'm thinking perhaps the attorney planned to resell it to acquire money. I also wonder why the attorney didn't realize that the fake routing and bank account numbers he used on the fake checks would be discovered almost instantly once those checks were processed or deposited by the recipients.

The attorney is licensed to practice in Pennsylvania. I looked at his entry with the Disciplinary Board of the Supreme Court of Pennsylvania and there is nothing listed under Pending Proceedings. And though he is a graduate of the first law school at which I taught, he attended long after I moved on to Villanova.

Among the practice areas described in his online biography is criminal defense. All in all, a very sad and distressing situation.

Can the Broken Federal Tax Revenue Process Be Fixed?

For almost as long as I've been writing on MauledAgain, I have pointed out the foolishness of cutting IRS funding. To cite just three examples, consider Another Way to Cut Taxes: Hamstring the IRS, So Cutting IRS Funding Won’t Decrease Revenues? Yeah, OK., and Cutting Off the Tax Revenue Nose to Spite a Political Face. I'm not alone. Others have been making the same point for a much longer time. Recently, in $15 Trillion on the Table in 2029: Ordinary Taxes to Meet an Extraordinary Fiscal Moment, Kimberly Clausing and Natasha Sarin address the growing federal budget deficit and offer solutions, including an $80 billion investment in IRS capacity that would raise roughly $1.3 trillion in revenue "in revenue already owed under current law."

Why does it matter that IRS funding and the number of its employees is significantly reduced? When IRS funding and employees are cut, the number of audits that can be performed is reduced. The amount of assistance provided to taxpayers is reduced. People have figured out that this means the chances of being caught when underreporting tax liabilities, whether through understating income or overstating deductions and credits are reduced. Though some taxpayers and tax return preparers who understate tax liabilities are caught, for each one who is there are many more who win the "audit lottery." Even though some tax return preparers who go so far as to commit fraud are identified and convicted, there are others who take the risk knowing that the odds of being caught are less than 100 percent.

Why is this a problem? Reduced IRS resources reduces federal government revenue. In turn that increases the deficit. Deficit increases provide cover for politicians who want to cut federal programs, even to the point now of wanting to cut Medicare and Social Security payments.

Why do politicians want to cut federal programs? Though there are some programs they dislike for ideological reasons, there are many other programs that they want to shift to the private sector. After all, it is the private sector that funds their campaigns and wants to take over and then own and operate federal programs. The private sector sees these programs as enterprises that can be turned into profit centers. For example, they see monetary rewards in charging people for weather forecasts and so long as the federal government provides that information it takes a large potential customer base away from the private sector.

Why does the private sector want to increase its profits? It wants to continue the trend that has shifted increasing amounts of income and wealth into the top 0.1 percent and top 0.5 percent, which increases income inequality. The private sector claims that increasing the income and wealth of the super-rich benefits everyone else but by now many people are waking up and realizing that supply-side economics and trickle-down theories are jus that, theories that worked for the advocates of those approaches to public finance but that as a matter of practical reality left everyone else worse off.

Unless the political climate changes, any proposal to increase IRS funding will go nowhere. Without an increase in IRS funding, the nation faces either the catastrophic consequences of federal deficits that are too high or cuts in programs that will make the economic plight of most Americans even worse. Or both. That's what happens when the federal tax revenue process is broken and doesn't get fixed.

A Well-Intentioned and Sensible Tax Fraud Reduction Suggestion: Great in Theory, Unlikely in Practice

Yesterday, the General Accounting Office published a a report on tax fraud revenue losses. The report estimates that tax fraud accounts for between $116 billion and $304 billion annually. This estimate does not include the portion of the tax gap attributable to behavior other than tax fraud, such as failure to file and pay taxes. The report estimates the total annual tax gap as $696 billion. I think that amount is low, because decades ago the tax gap estimate was about $600 billion and it's difficult to conclude that it has remained the same as the population has increased, gross domestic product has grown, and noncompliance has risen thanks to real and perceived inadequate IRS oversight of tax compliance and a general surge in cultural acceptance of lawlessness.

The report contains this suggestion: "We recommended that the IRS address these issues."

Seriously? At a time when the IRS workforce has been gutted and its funding significantly cut, how does the GAO expect the IRS to fund a new effort? Who will staff the recommended program? What other areas of IRS activity will be cut in order to deal with tax fraud?

The GAO recommendation, as well-intentioned and sensible as it is, amounts to nothing more than a band-aid, if that. Major surgery is required, and surgery is far more than the hacking and cutting that has been the hallmark of current federal fiscal policy. While press releases are shared explaining the indictment, prosecution, conviction, and sentencing of tax return preparers committing fraud, that is just a drop in the bucket, a mere show of enforcement against what often is called "small fry." A few hundred thousand dollars here, a few million dollars there, doesn't add up to hundreds of billions of dollars. Is it any wonder that the tax revenue lost to tax fraud and other tax gap causes continues to go untouched?

A recommendation that is great in theory meets practical reality. And as usual, theory loses.

What Happens When A MauledAgain Commentary Goes Unread?

Seven years ago, in Double Trouble, Tax Advice Style, I reacted to a June 2019 Investopedia article brought to my attention by reader Morris, who had a question about the tax rate used in describing charitable contribution tax savings. I pointed out that the correct rate to use is the marginal tax rate, keeping in mind that the marginal rate can be a split rate if the charitable contribution deduction causes the taxpayer's taxable income to drop from one bracket into a lower one, and pointing out that because of other interactions in computing taxes (such as the charitable contribution deduction making itemized deductions a better choice than the standard deduction), the best way to calculate the tax savings is to compute tax liability without the deduction, then to compute tax liability with the deduction, and then to compute the difference, which is the tax savings attributable to the deduction. And then, as I pointed out:

When I read the article, I also spotted another claim. The article asserts that, “On the plus side, the proceeds from a garage sale are not taxable,” and quotes a CPA as saying, “Garage sales are considered the sale of personal property, and you do not have to claim the money you received from the sale.” That is so not true. Though most items sold at a garage or yard sale generate a loss, because they bring in less, and often much less, than what the seller paid for the item, there are times when an item fetches a price greater than what the seller paid. Though the losses are usually not deductible because the item is not a business or investment property, the gains are included in gross income. The notion that sales of personal property are not taxed is not one for which there is statutory authority in the Internal Revenue Code.

From scanning more than a few websites that make similar claims, though with different articulations, it appears that the true statement, “You generally are not required to report sales of items at garage or yard sales” gets smooshed into the misleading statement, “You are not required to report sales of items at garage or yard sales.” The loss of the word “generally” is critical. Why does it disappear? Twitter-type character limits? Preferences for short sound bites? Unwillingness to follow through with questions prompted by the word “generally”? Misunderstanding? Whatever the cause, it creates a misleading claim that can be dangerous when it causes someone to fail to report gain from selling an item at a garage or yard sale.

Recently, while watching a Young Sheldon video and noticing some transactions that raised tax questions, reader Morris also noted that in the episode in question Sheldon claims that garage sales do not produce taxable income. This caused reader Morris to remember the MauledAgain post from seven years ago. He wrote to me that "They updated the story and the author still is mistaken and so is reviewer, fact checker, and CPA. Obviously they did not read your article of about 7 years ago."

Indeed, he is correct. The article that I analyzed seven years ago was, according to the web page, updated on October 16 of last year. Not only does it contain the same incorrect language about the tax consequences of garage sales, it also continues to suggest that the tax savings from making a deductible charitable contribution is the amount of the contribution multiplied by the taxpayer's effective tax rate.

It is, of course, possible that the author, reviewer, fact checker, or CPA read the MauledAgain blog post from seven years ago, decided I was wrong, and made no changes to the article's discussion of charitable contribution tax savings and the tax consequences of garage sales. Yet, if they had done so, I would have expected a message from one or more of them after they read the article.

Is it not possible that others read the article, noted the errors, and commented in some way? It would shock, and distress, me if reader Morris and I were the only ones who recognized the errors. Is it possible that the author, reviewer, fact checker, and CPA simply held fast to what has been written? Yes. Did they? I don't know.

It is difficult to eradicate misinformation. It spreads quickly, especially when its message is one that people want to hear regardless of its veracity and people do not have the skill, desire, or time to verify what they are reading or hearing. In this instance, the problem is compounded. The author, who is not a tax expert, quotes a CPA who misstates the tax law, and the reviewer, also a CPA, leaves the article as written, as does the fact checker, who also is not a tax expert. Though often we are advised to get a second opinion from an expert even when we rely on experts, in this instance the author relied on two CPAs, quoting one and having another review the article. If nothing else, this situation demonstrates how difficult it is to tamp down misinformation before it spreads.

I am going to guess that more people have read the Investopedia article in question that read the MauledAgain blog post from seven years ago or the one I am posting today. And so the answer to the question, what happens when a MauledAgain commentary goes unread, at least by those who would benefit from reading it, is simply nothing. The misinformation is not removed and is not replaced with correct explanations.

And finally, no, I am not going to try to track down contact information for the author, reviewer, fact checker, and quoted CPA. Chasing down every source and repeater of misinformation is impossible even if several million people join in that task. Whether intentional or accidental, the creation and repetition of misinformation is a symptom of deeper flaws, ones that need to be addressed through other means that focus more directly on the underlying causes. Whether that will ever happen remains to be seen. I'm not optimistic.

Internal Revenue Code Meets IRS Code and IRS Tax Code: The Outcome Isn't Reassuring

In my last post, Tax Precision Not Involving Numbers: A Closed Captioning Fail and the Oxymoronic "IRS Code", I described my dislike of the imprecision reflected in the use of terms such as "IRS Code" and "IRS tax code":

The speaker refers to "IRS Code 274(e)(4)." As I pointed out in Is Tax Ignorance Contagious?, "First, there is no such thing as an IRS code. There is an Internal Revenue Service. There is an Internal Revenue Code. The IRS does not create nor does it own the Internal Revenue Code." Apparently, not enough people read MauledAgain, because the error continues to be repeated. Fifteen years after pointing out the non-existence of the "IRS Code," I had to address the use of "IRS tax code." I did so in Tax Season Brings Out a Question (Which I Try to Answer), But It Also Brings Misinformaiton, in which I explained that "another problem is the use of the phrase “IRS tax code.” Why? Because there is no such thing. There is an “Internal Revenue Code” for which the acronym is IRC. The acronym for the Internal Revenue Service is IRS. Yes, there is only a one-letter difference between the two acronyms but precision matters. For those interested in my previous reactions to the use of the oxymoronic phrase, “IRS Code,” see Is Tax Ignorance Contagious? * * *."

About a week later, reader Morris shared some research he did after he posed the question, "How many references to the phrase IRS Code on the Internet?" This is what he discovered:

An exact real time total of references for the phrase "IRS Code" across the internet cannot be fixed, as search engine indexes fluctuate continuously. However, major search engine indexes currently return between 15 million and 30 million indexed web pages containing the exact phrase.

"IRS Code" Estimated index pages 15 million to 30 million common context general discussion, tax blogs, news, and transcript code lookups

"Internal Revenue Code" "IRC" 35 million to 50 million formal legal documents, statutory references, academic papers , and U.S. Code database entries

"IRS Tax Code" 10 million to 20 million layperson explanations, personal finance articles, and tax prep software guides

My reaction should not surprise those who read MauledAgain. I replied to reader Morris"

"Sad, isn't it? It shows how quickly information AND misinformation can spread across the planet. It's our childhood game of telephone on steroids.

That the correct terminology gets about the same (35 to 50 million) as the two incorrect terminologies (25 to 50 million) is sad. It's possible that there is double counting, as it would not be surprising to find websites that use BOTH incorrect terminologies.

And it's understandable (though a sign of educational deficiencies) that the incorrect terminology appears in layperson explanations but to find them on tax blogs, and tax prep software guides is deeply disappointing.

And, of course, I thanked him for his contribution which indeed I think will be of interest to readers who share my affinity for precision.

Precision matters. If you've seen "Unstoppable" – yes, a train reference – you may remember that precision was spotlighted twice, first, when early in the film the the character Ned Oldham, a railroad welder, explained that welding always requires precision, and near the end, after Ned drives his pickup alongside the train matching its speed so that Will Colson can jump into the truck bed and then jump into the locomotive cab, he is asked how he was able to accomplish what he did, Ned simply replied, "Precision." If you haven't seen that movie, it's worth 98 minutes. Throughout the film, viewers see why precision matters.

It's Internal Revenue Code. Or, if brevity is necessary, IRC. That's all. That's precisely what it is.

Tax Precision Not Involving Numbers: A Closed Captioning Fail and the Oxymoronic "IRS Code"

Reader Morris brought my attention to a youtube video explaining Internal Revenue Code section 274(e)(4). His question did not address the substance of that provision. Instead, he pointed out that "IRS Code 274E4 should be Internal Revenue Code Section 274{e)(4)." It wasn't until I looked at the video that I understood what had caught his eye.

If closed captioning is turned on for the video, when the speaker says "274(e)(4)" the closed captioning shows "274E4" which clearly is incorrect. Because the closed captioning lacks the ability to understand Internal Revenue Code section structures, it simply repeats what it hears. And in doing so, it generates an incorrect text.

I explained to reader Morris that when we are discussing section 274(e)(4) we indeed say, "274e4" or, if you prefer the uppercase, "274E4." But that is not what we write when we are writing about that provision. Indeed, when I taught the introduction to federal taxation course, in the early weeks of the semester I would make it a point to say "section 274 open parentheses e close parentheses open parentheses 4 close parentheses." When I began using Powerpoint slides, having "274(e)(4)" visible to the students while I emphasized the need for precision in writing statutory provisions, it became much easier to get the point across to the students.

The creator of the video and the speaker, who may be the same person, is not at fault for the appearance of "274E4" on the screen when closed captioning is turned on for the video. It's a flaw that demonstrates why artificial intelligence still has a long way to go.

But the speaker in the video is at fault for something reader Morris didn't mention and that I noticed only after watching the video twice. The speaker refers to "IRS Code 274(e)(4)." As I pointed out in Is Tax Ignorance Contagious?, "First, there is no such thing as an IRS code. There is an Internal Revenue Service. There is an Internal Revenue Code. The IRS does not create nor does it own the Internal Revenue Code." Apparently, not enough people read MauledAgain, because the error continues to be repeated. Fifteen years after pointing out the non-existence of the "IRS Code," I had to address the use of "IRS tax code." I did so in Tax Season Brings Out a Question (Which I Try to Answer), But It Also Brings Misinformation, in which I explained that "another problem is the use of the phrase “IRS tax code.” Why? Because there is no such thing. There is an “Internal Revenue Code” for which the acronym is IRC. The acronym for the Internal Revenue Service is IRS. Yes, there is only a one-letter difference between the two acronyms but precision matters. For those interested in my previous reactions to the use of the oxymoronic phrase, “IRS Code,” see Is Tax Ignorance Contagious? * * *."

Precision matters. And when it matters, failure to be precise can be annoying. It can be troublesome. And it can be catastrophic. It's best to get into the habit of being precise when the imprecision is merely annoying so that when the time comes when the lack of precision can be catastrophic adherence to precision is guaranteed.

Dampening Tax Payment Unhappiness By Exploring All Options

In Pennsylvania, bills for the real property tax that supports schools are arriving. If social media posts are any indication, people are unhappy. They are unhappy because the tax has increased compared to last year. That happens every year. Some people also are unhappy because they do not want to pay for the education of someone else's children. Responses by others that public education is a societal benefit because it produces employees who have at least minimal skills and citizens who understand how civilizations prosper or fail are brushed aside. Most of the objections come from people who argue that they paid school taxes when their children were in school, paid those taxes for many years, and are now entitled to be free of these taxes because they have "paid enough."

Many of the people objecting to paying the taxes propose that no one over the age of 65 should be required to pay school taxes. Some go so far as to suggest that "freedom from taxes for anyone over 65" should apply to all taxes.

This is not the first time I have addressed the proposals to eliminate all taxes, or any taxes, for people over 65. Twenty-two years ago, in Killing the Geese, I explained:

The cry that real property taxes hurt the elderly is as misleading as the silliness the late Rep. Claude Pepper rode to fame. His mantra that "the elderly are poor" led to a shift in government outlay allocation that has left us with a nation in which poverty is rampant among children. The simple fact is that a person's age should no more be used as a measure of their economic status as should their hair color or lack thereof. And, of course, there are people who cannot be classified as "elderly" for whom real property tax increases are a serious burden, though most young poor don't have the opportunity to own real property.

Most of the people who post on social media complaints about the burden of paying real property school taxes don't share their economic situation. It's quite possible all of them are facing financial challenges and that individuals facing real property school taxes that are not a burden aren't posting complaints. But I doubt it. It's obvious from discussions about taxes during the past many decades, if not centuries, that most people do not like paying taxes and that includes not only the poor but also those who are comfortable financially and those who are wealthy, ultrawealthy, and megawealthy.

Stereotyping by age is wrong. It is wrong when dealing with taxes because it is wrong to assume that all people over the age of 65 lack the financial resources to pay taxes. It is wrong when dealing with the ability to drive a vehicle, because retesting should be done for everyone at some point rather than assuming all people in their 40s and 50s do not pose risks when driving vehicles. It is wrong when dealing with retirement, because some people over the age of 65 are more than adequate and often excellent at what they are doing, just as some people in their 30s, 40s, and 50s are no longer, if they ever were, capable of fulfilling their employment responsibilities.

A few years ago, Pennsylvania addressed the tax relief issue by enacting a real property tax rebate for property owners who have attained the age of 65 and have income of $48,110 or less. In computing income, only one-half of social security benefits are taken into account. The rebate ranges from $380 to $1,000, which doesn't make a big dent in most real property tax bills but it helps. Supplemental rebates ranging from $190 to $500 are available to people living in Philadelphia, Pittsburgh, or Scranton, and for people whose income is $32,070 or less and whose property taxes exceed 15 percent of their total income. The rebate program is available not only to people age 65 or over, but also to surviving spouses who have attained the age of 50 to people with disabilities who have attained the age of 18.

What surprised me, in reading social media posts and responses, is the number of people eligible for the rebate who were unaware that it exists. It is a sign of tax complexity that provisions helpful to taxpayers can go unnoticed. So if you are reading this and know someone who might qualify, please let them know.

Here's the twist. The rebate is claimed by filing a separate form, the PA-1000. It can be filed online or by mail. There are deadlines, usually December 31 of the year following the year in which the tax applied. Perhaps this is why the rebate is overlooked by people.

Here's a suggestion. Why not make the rebate part of the personal income tax form? Pennsylvania provides a tax forgiveness credit on the personal income tax form. The core requirement is that the person's eligibility income not exceed a specified amount, which varies by filing status and number of dependent children. Yes, it's complicated. But it's rarely overlooked because there is a line on the personal income tax form for the credit. Would it be difficult to add a credit line for the property tax rebate and making the PA-1000 an attachment just as the tax forgiveness credit form is an attachment? Yes, I know that the rebate is funded from lottery proceeds and the tax on slot machines but certainly existing technology makes it easy for the Department of Revenue to make the accounting entries and adjustments to deal with where funds are sourced and where they go.

How Not to Report Dividend Income for Income Tax Purposes

Internal Revenue Code sections 61(a)(7) and 301(c)(1) require dividends, as defined in section 316, to be included in gross income. Depending on a taxpayer's other income and deductions, dividends included in gross income increase the taxpayer's taxable income.

As described in a recent Department of Justice press release, failure to include dividends in gross income can have serious adverse consequences for the taxpayer.

According to the press release, the taxpayer owned 50 percent of a business that sold internet access to members of the Armed Forces and civilian contractors stationed on Kandahar Airfield in Afghanistan. The taxpayer also owned 50 percent of another business that sold internet access to members of the Armed Forces stationed at Guantanamo Bay in Cuba. In 2013, these two businesses began paying significant dividends to the taxpayer. What did the taxpayer do? The taxpayer stopped filing federal income tax returns. Three years later, the taxpayer filed a false affidavit with the U.S. Citizenship and Immigration Service, attaching unfiled copies of federal income tax returns and falsely attesting they were filed.

In 2019, the taxpayer received letters from the IRS on account of the unfiled returns. The taxpayer hired a tax attorney and tax return preparers and falsely told them that the dividends he had received between 2013 and 2018, amounting to more than $3.8 million, were nontaxable loans. He told the professionals he had retained that he did not know the other shareholders of the businesses, which was untrue. Relying on this false information, the tax professional prepared income tax returns that underreported income and tax liability. The taxpayer filed those returns. As a result, the taxpayer failed to report about $4,620,000 in come and underreported tax liability of roughly $1,570,000.

The taxpayer was indicted and pleaded guilty to one count of tax evasion. The taxpayer faces up to five years of imprisonment, supervised release, restitution, and monetary penalties.

Though tax law is complicated, some aspects are rather simple. Wages are gross income. Interest is gross income. Dividends are gross income. Though business arrangements can be complex, some transactions are simple. Dividends are a distribution of corporate income. They are not loans. They are not distributed to shareholders with an accompanying promise to repay after a set period of time while incurring interest obligations on the recipient.

The motivations for tax fraud can be both easy and difficult to understand. A person who is barely making ends meet and who received a small amount of additional gross income that generates additional tax liability that reduces the net amount received to something even smaller may be tempted to find a way to avoid those taxes because there are children to feed and rent to pay. But a person who receives millions of dollars of income but who chooses to commit fraud to avoid paying taxes is operating on a different level. Even after paying the taxes, that person puts millions into their bank and investment accounts. Yes, it is possible that the person receiving millions of dollars of income has millions of dollars of debt to repay, though almost always that debt arises from bad decision making and ought not become a burden imposed on taxpayers who are paying their tax liabilities.

Accused of Filing Numerous Fraudulent Returns But Pleading to Filing One: What Deal Awaits the Person Accused of Filing One?

Recently I have questioned how sentences are determined in tax fraud cases. In How Much Prison Time Should Be Imposed on a Tax Return Preparer Convicted of Preparing and Filing Fraudulent Returns?, I pointed out that a tax return preparer's sentence for preparing fraudulent returns amounted to 30 hours in prison for each fraudulent return, and in terms of the tax revenue loss, one day in prison for each $2,917 in federal taxes unpaid by the preparer's clients as a consequence of the preparer's fraud. In So Is Tax Fraud Less Reprehensible Than FEMA Fraud, I questioned why two defendants, one convicted of FEMA fraud and the other convicted of tax fraud, each causing about the same amount of economic loss to the U.S. Treasury, received very different sentences, five years in prison for the FEMA fraud and 18 months for the tax fraud. In A Tax Fraud Sentencing More Than Two Decades After the Fraudulent Events, I questioned why those who are convicted of tax fraud crimes that create revenue losses in the millions get short prison terms.

Yesterday, the Department of Justice issued a press release that brings to center stage another aspect of how the criminal justice system produces questionable outcomes in tax fraud cases. According to the press release, a Florida man filed "numerous false tax returns on behalf of himself and purported trusts he controlled." He cause the trusts to file returns showing significant income and tax withholding payments to the IRS, which generated large refunds. However, the trusts did not receive the claimed income and did not make the claimed tax payments. So the trusts were not entitled to the refunds. The man also filed tax returns for 2023 that omitted his employment income. All of the returns he filed claimed more than $4.2 million in unjustified refunds.

The man pleaded guilty to one count of filing a false tax return. This guilty plea brings a maximum penalty of three years in prison.

If sentenced to three years in prison, the defendant will be subject to a term twice the 18-month sentence imposed for tax fraud but only three-fifths of the five-year sentence imposed for FEMA fraud mentioned in So Is Tax Fraud Less Reprehensible Than FEMA Fraud.

What puzzles me is how someone who filed "numerous tax returns" can be permitted to plead guilty to one count of filing "a" false tax return. What deal is offered to the taxpayer who faces conviction for filing ONE false tax return? Is that taxpayer permitted to plead guilty to filing one-twenty-fifth of a false tax return? Or is the best that the taxpayer can obtain is the same guilty plea for filing one false tax return but on sentencing face a maximum prison term of, say, 6 weeks?

I understand that guilty pleas reduce the workload in the criminal justice system, not only for courts but also for the prosecutors and the defense attorneys. I understand that prosecutors prefer guilty pleas when there is a greater-than-negligible risk that a trial would bring an acquittal. I understand that when the risk of conviction is more than minimal, defense attorneys prefer their clients to plead to lesser charges with far fewer consequences that what would be faced if convicted.

The volume of literature on the positive and negative effects of plea bargaining on the criminal justice system is enormous. Yet nothing has improved, public perceptions that erode the criminal justice system remain, and inequities in outcome continue. Pleading down to one count of filing a false tax return might make sense when the accused has filed two or three or four, but when there have been "numerous" fraudulent filings, why not work out a plea to filing three or four false returns instead of one? Then the person accused of filing one false return won't face the inability to work out a plea to filing one-twenty-fifth of a false return.

A Tax Fraud Sentencing More Than Two Decades After the Fraudulent Events

Earlier today, the Department of Justice published a press release announcing the sentencing of a taxpayer who pled guilty to tax evasion. The taxpayer evaded taxes by purchasing real property, vehicles, and cashier's checks in the name of a business used to conceal the property's beneficial ownership and source. The taxpayer did this to avoid enforcement f a previous tax judgment against his personal assets. The taxes were due for "1999 and including 2001." The total amount of taxes, interest, and penalties owed to the U.S. Treasury was $2,467,523.44. The taxpayer was sentenced to 24 months in prison, followed by 36 months of supervised release. The taxpayer was also ordered to pay $2,467,523.44 in restitution.

The taxpayer pled guilty on April 2 of this year. The sentencing took place this month.

Two things strike me. First, why did 25 years elapse between the latest of the taxable years in question (2001) and the year in which the guilty plea was entered and sentencing imposed (2026)? Is justice delayed always justice lost? Perhaps not, but it makes no sense that it takes 25 years to deal with this sort of situation. Well, perhaps it does, considering the facts outlined in this account of the adventures of the taxpayer and his spouse, which I will those who are interested in more details check out for themselves. Still, the wheels of justice do seem to move more slowly than most people would prefer.

Second, it appears as though the prison term is the amount of evaded taxes divided by 100,000 and converted to months. That might simply be coincidence. In How Much Prison Time Should Be Imposed on a Tax Return Preparer Convicted of Preparing and Filing Fraudulent Returns?, I questioned the sentence in a tax fraud case. I reacted to the imposition of an 18-month prison sentence on a tax return preparer who prepared and filed about 463 fraudulent returns, causing a tax loss to the U.S. Treasury of $1,575,250. Though dividing by 100,000 and converting to months doesn't quite match 18, I continue to wonder why crimes that create losses in the millions get such short prison terms.

When Tax Law Needs to Know What Is a Slot Machine

Pennsylvania imposes a tax on slot machines equal to 34 percent of gross terminal revenue and a local share assessment. Businesses operating so-called skill devices have not been paying the tax because they claim that the devices are not gambling devices. The dispute between the Commonwealth of Pennsylvania and the operators reached the Supreme Court of Pennsylvania, in In Re: Three Pennsylvania Skill Amusement Devices et al; Appeal of Commonwealth of Pennsylvania.

The Court concluded that the skill devices are slot machines, subject to the tax (and also subject to criminal law provisions applicable to slot machines). It reasoned that the device meets the general definition of a slot machine in the Gaming Act. It pointed out that in 2017 the legislature added "skill slot machine" and "hybrid slot machine" to the definition of slot machine, and that the devices in question are "plainly either a 'skill slot machine' or a 'hybrid slot machine.'" The Court explained that, even setting aside the statutory language and "resorting instead to a judicial gloss," the device meets the "ordinary English definition, a 'coin-operated gambling machine that pays off according to the matching of symbols on wheels spun by a handle,' or an electronic version of such a device." Finally, even though some degree of skill is, or hypothetically can be, a component of playing the device, the 2017 legislation provides that no amount of skill removes the device form the ambit of a slot machine.

As I have pointed out in previous commentaries, the practice of tax law extends beyond reading, understanding, and interpreting tax statutes. It extends beyond computations. It very often involves defining terms that exist outside of the tax law. What is a gift? What is a scholarship? Who is a brother-in-law? What is a household? What is candy? The list is long. And that list includes, what is a slot machine?

I could easily wander into the world in which people debate whether something is gambling or the exercise of skill. It is easy to identify pure gambling: the roll of dice, the pushing of a button on a slot machine, the placing of a bet on how many points an NBA player will have with 22 minutes remaining in a game. These are instances in which the outcome is beyond the person's control. On the other hand, it is easy to identify pure skill: making a dress from a bolt of fabric, solving a sudoku or crossword puzzle, fixing a flat tire. Yet there are so many situations that are a blend of both: playing poker, where the drawn cards are beyond the player's control but the decision to draw more cards or to fold manifests the player's skill, placing a bet on the kicking a field goal in windy conditions with the wind beyond the kicker's control but the approach and leg swing within the player's control, placing a bet on whether a baseball will be hit well enough to be a homerun but facing the risk that the wind keeps it from leaving the park. The manufacturers of the devices in question tried to shift them out of the gambling category by adding a skill element. The Court described how this worked:

The legally relevant skill element comes into play whenever a spin in the base game produces a loss, or the player “wins” an amount less than the wager, specifically less than 105% of the amount wagered on a given spin. The player then is given the opportunity to use an additional feature called “Follow Me.” “Follow Me” is a memory test reminiscent of the game “Simon.” The player is presented with a three-by-three grid of colored dots, which flash in a random sequence that the player must recall and reproduce. The entire exercise consists of twenty-five rounds, with each round adding another step that the player must remember. By the end of “Follow Me,” the player must correctly reproduce a sequence of twenty-five steps. Upon successful completion of this task, the player receives 105% of the amount wagered in the base game. Thus, using the “Follow Me” feature, a successful player can avoid realizing a loss on any given play of the base game.

The Court pointed out that the "Follow Me" feature is "not mentioned or explained in the device’s general instructions, and the feature can be accessed only by clicking a cryptic and unexplained prompt—“Touch Here to Follow Me”—which appears for only a few seconds after a losing spin, and only after the option to play the base game returns." The Commonwealth argued that the device "discourages the use of the feature because 'Follow Me' is tedious and unreasonably difficult; deliberately slows gameplay by imposing multiple 'intermissions' between rounds where nothing happens for approximately fourteen seconds; takes approximately twelve minutes to complete in total, compared to mere seconds to play the base game; and awards only a few cents in excess of the player’s lost wager (at most twenty cents, on a maximum bet of four dollars). The Commonwealth also argued that "'Follow Me' is 'an obvious fig leaf, included to cloak the game’s primary purpose as a gambling device,'” and "that 'Follow Me' isn’t there for the players; it’s there for the lawyers.” The Court's conclusion that the devices are slot machines did not require it to evaluate whether the skill required to play "Follow Me" was genuine or a "fig leaf" because its conclusion would be the same no matter the degree or genuineness of the skill inherent in playing the device.

The Court suggested that if the operators of the devices did not like the outcome, they need to understand that the legislature created the definitions and only the legislature could change the definition so that the devices would not be taxed as slot machines or treated as slot machines for criminal law purposes. I'm willing to bet that the manufacturers and operators of these devices, along with the businesses who have them on their premises, will approach the legislature for some sort of relief. For them, it's a gamble worth taking.

Every Once in a While They Get the Wrongdoers: Tax Debt Relief Scammers Caught and Punished

In a press release issued the other day, the Federal Trade Commission announced that it and the State of Nevada have settled charges it brought against the operators of a tax debt relief scheme. Under the proposed order, the defenders will not only surrender more than $8 million in cash and surrender other assets but will also be banned from debt relief services, tax preparation services, telemarketing, and impersonation of individuals, governments or businesses.

According to an earlier press release, the defendants operated multiple companies through which they falsely claimed the could settle taxpayers' back taxes for "pennies on the dollar" or only a "fraction" of what the taxpayers owed. These claims often were made before the defendants and their companies analyzed a taxpayer's financial and tax situation. The FTC and the State of Nevada alleged that the defendants mailed deceptive and threating letters that impersonated federal, state, and local governments to solicit calls from the targets of the letters. When taxpayers called, operators answering the call on behalf of the defendants and their companies also made false claims about tax debt relief. Taxpayers were also reached by telemarketing calls made by the defendants or their companies. Taxpayers were told that they were being investigated by tax authorities such as the IRS or that their accounts had been "red flagged" by those authorities or marked as "high risk." When taxpayers agreed to pay for the services offered by the defendants and their companies, the defendants and their companies did little, if any, of what they promised, and rarely, if ever, obtained the promised results. When taxpayers dissatisfied with what was done (or not done) asked for refunds of what they paid they were ignored.

The FTC charged the defendants and their companies with impersonating the government including local, state, or federal tax authorities, making false promises that they could reduce consumers’ tax debt, and violating the FTC’s Telemarketing Sales Rule requirements by making misrepresentations in telemarketing calls. The FTC alleged that the conduct in question violated the FTC Act, Gramm-Leach-Bliley Act, the Telemarketing Sales Rule, and the Impersonation Rule. The State of Nevada alleged that ATS’s conduct also violated Nevada law. The FTC filed a complaint against the individual defendants and nine affiliated companies.

Under the proposed settlement, the individual defendants will be required to pay $77.7 million, the amount they took from taxpayers from February 2022 to 2025. Except for the approximately $8 million cash and other surrendered assets, the full judgment is suspended based on the defendants’ inability to pay. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition. The settlement becomes binding once approved by the court.

Tax debt relief scams are just one tiny portion of the many scams that afflict people every day. Scams ultimately are designed to move money and assets from gullible, careless, or inattentive victims to those who want to make a "quick buck" the easy way. If it's not a call by someone pretending to be the IRS or a state revenue department claiming that the person owes taxes and needs to pay, it's someone pretending to be a grandchild looking for a payment from a grandparent, or someone pretending to represent a health care provider trying to get a Medicare number in order to siphon funds from the federal government, or someone offering some service in an attempt to get identifying information in order to drain a bank account or open credit in the victim's name. For every wrongdoer identified and stopped by law enforcement, there are dozens who go uninvestigated, or unidentified, or unpunished. Would these scammers not be better targets for the use of law enforcement resources rather than somw of what is currently being targeted?

Memorial Day: Honoring Those Who Died for Freedom While Rejecting Those Who Fight for Anti-Freedom -- A Revisit

Sometimes I decide that what I have written doesn't need to be modified. So it is with what I wrote on Memorial Day last year. The cicumstances that influenced what I wrote have continued. If anything, they have become worse and more alarming. What did I write a year ago? This:

Freedom, it seems to me, is an oft-misunderstood concept. In 2023, in Indeed, Freedom Is Not Free, I explained why freedom is not the same thing as unregulated behavior. Last year, in Freedom To Do or Freedom From or Both?, I concluded that there are two sides to freedom, "freedom to do"and "freedom from."These concepts are mutual, because "freedom to do" is simply "freedom from" regulation, authority, and social constraint, and "freedom from" is simply "freedom to do" whatever is being escaped.

So many of the articles, commentaries, broadcasts, social media postings, cartoons, and memes that address Memorial Day proclaim respect, appreciation, and gratitude for those who fought and died to protect "our freedoms." In other words, they fought FOR freedom. They fought to DEFEND freedom. But against whom or what have they fought? Freedom needs protection and defense only if there is something that opposes freedom. There are all sorts of names for what opposes freedom, ranging from repression through authoritarianism to totalitarianism, and many hours and words have been devoted to debates over which of these words properly describe what stands in the way of freedom. But does it matter? All of these movements, ideologies, and worldviews can be lumped together under the term "anti-freedom." Memorial Day is a day to honor those who fought against and died fighting anti-freedom.

Does it not make sense that the best way to honor those who fought and died defending freedom against anti-freedom is to follow a path that does not lead to, and does not wander through, the anti-freedom desert? Does it not make sense that following a freedom path requires those who are alive and benefitting from freedom do their part in standing up to anti-freedom when its ugly head reappears, as it has over the millennia during which humans have lived? Does it make sense to behave in the same manner as those against whom the defenders of freedom fought and sacrificed their lives in doing so? Of course not. It makes no sense to throw away all that was saved, protected, and cherished by those who fought and died, because to do so means that their lives were sacrificed in vain. Do we want them observing this nation and asking themselves, and asking us, "Why did we bother?"

Yet there are those who claim to be "freedom lovers," many of whom join in Memorial Day tributes of one sort of another to our fallen heroes, whose behavior is frighteningly similar to that of those who posed the threats against freedom that sparked the battles and wars in which the heroes fell. How does one explain this incongruity? The answer rests in that tension between "freedom to do" and "freedom from" that I described in Freedom To Do or Freedom From or Both?. A simple example of this tension is the conflict between "freedom to do" 90 miles per hour on the highway and another person's "freedom from" injury and death while driving. As I wrote in that post,

What makes the analysis particularly difficult on Memorial Day is a troubling tension between "freedom from" and "freedom to do." On Memorial Day we remember and honor those who died to give this nation "freedom from" authoritarianism, dictatorship, repression, and ethnocentrism. Yet we also seem increasingly complacent when those who benefitted from the sacrifice of those we honor claim to have the "freedom to do" the very same behaviors the suppression of which was the purpose for which those we honor fought and died. It is particularly disturbing when people who profess a deep admiration for those who gave their lives to protect the nation from those enumerated evils are at the same time supporting people and policies that nurture and enlarge those same evils in this nation. What was the point of so many sacrifices to eliminate authoritarianism, dictatorship, repression, and ethnocentrism when there are people who want those same attributes to become the linchpin of this nation's existence?

And now, a year later, it isn't just a matter of those who are "increasingly complacent" but those who are "supportive" of those whose behavior, policies, and decisions are less aligned with the freedom for which many died and more aligned with the ideologies and goals of those who wear the hat of "anti-freedom."

I've written several times that freedom has its limitations, and that it comes at a price. The price is not only the sacrifice of those who fought and died protecting it, but the recognition of those who benefit from freedom that there are limits to what freedom permits someone to do. Freedom does not provide permission to be, or support, anti-freedom. By definition, freedom cannot be, cannot support, and cannot abide, anti-freedom.

Yet though I did not change those words, I will add a sequel. In college I took a course called "American Civilization" by the late, esteemed Professor Anthony N. B. Garvan. At the end of a semester in which he took that class on a journey through the many phases of American culture as manifested in behavior, belief, art, and other expressions, he closed on the last day of class, back in the 1970s, by predicting that America's culture was changing yet again, shifting into what he called the "me generation." And yes, that came to pass. A shift from valuing the benefits of living in an interconnected, mutually supportive society to an emphasis on the rights and privileges of individuals that weakened the emphasis on the responsibilities of individuals. Empathy lost space to selfishness. Accountability and transparency were surmounted by lies and cover-ups. Generosity became disfavored as greed took center stage. "How can I help" was heard less often than "What's in it for me?" The delicate balance between rights and responsibility, between empathy and self-care, between generosity and greed toppled. Those heroes who sacrificed their lives to protect freedom were able to do so, not because they were consumed by greed, by selfishness, by "what's in it for me?" but because they understood the value of empathy, of resposibility, of accountability. Those heroes were part of a military that could not have succeeded, let alone survived as a cohesive force, had it been lacking in resposibility, cooperation, and empathy. And that military was supported by a civilian population that shared those same values, and there were heroes among them, also. They shared the same values.

What remains is to understand how and why the culture shifted to too many afflicted by self-centeredness, greed, and prevarication. What remains is to figure out what, if anything, can be done to rebalance the culture. I leave that to others who are learned and expertised in sociology and political science. But I leave those questions to those who read this short essay, to ponder, to reflect, to observe, to think.

May it be that those heroes we honor did not die in vain. May they never need to ask "Why did we bother?"

What Solves the Affordability Challenge? Eliminating Taxes or Raising Wages?

According to this report from yesterday, Jeff Bezos, one of the world's wealthiest individuals, has proposed eliminating federal income taxes for low-income individuals. My guess is that his reasoning ultimately rests on the notion that if federal income taxes are eliminated for low-income individuals it will reduce the number of people interested in and supporting the movement to "tax the rich." Of course, Bezos framed his proposal by suggesting that eliminating federal income taxes on low-income individuals will increase the chances of "bringing themselves up" during "hard times."

Bezos gave an example of what he claims to be federal income taxes getting in the way of people improving their financial situation. "A nurse in Queens who makes $75,000 a year pays more than $12,000 a year in taxes. Does that really make sense? How about we start by having the nurse in Queens not pay taxes? That's $1,000 a month that could help with rent or groceries or anything." It is not clear where Bezos gets the $12,000 figure. In 2026, a single individual with $75,000 in wages and no other income, who claims the standard deduction and is not entitled to any credits, has a federal income tax liability of $7,670. What is the other $4,330? State and local income tax? Sales tax? Gasoline tax? Is Bezos advocating that anyone with $75,000 or less in gross income pay no taxes and not simply no federal income tax?

If Bezos is focusing on the federal income tax, he appears to be ignoring the fact that roughly 76 million households paid no federal income tax in 2025. Thirty percent of these households had income exceeding $75,000. Unlike the person earning $75,000 with no deductions or credits, many households paying no federal income tax take advantage of deductions and credits, including, for example, the earned income credit. Though it makes sense for the truly impoverished to be spared paying federal income tax, it enhances the sense of civic duty and societal responsibility to require individuals who are not truly impoverished to contribute something to the cost of belonging to a civilization. Perhaps the challenge for the nurse in Queens is the inadequate salary, which if raised, even though generating more tax liability, would also generate more take-home pay.

Bezos explained that, " The bottom half of income earners in this country pay only 3% of the taxes." His percentage is close. It's actually 3.3 percent. He continued, " It's only 3%. We can find 3%." So let's guess where that 3 percent would be found. Would it be an increase in the taxes paid by the top one percent? I doubt it. The top 2 through 10 percent? Perhaps. The top 11 through 30 percent? Possibly. But the best bet would be it comes in the form of more cuts in federal spending. More cuts to Medicaid. More cuts to Affordability Care Act financing. More cuts to other programs that help the truly impoverished who, even after taking home 100 percent of their pay spared from federal income taxes, do not have enough financial resources to afford the necessities of life.

The issue isn't so much taxation as it is the failure of wages to keep pace with inflation and productivity. The federal minimum wage has stagnated for many years. The economic benefit of productivity increases, generated as much by labor as by capital investment in machinery and technology, has flowed to the owners of capital and not to the workers. A tax rate of zero means nothing when the income is zero or extremely low.

The Federal Fuel Tax Suspension Reverse Lottery

Everyone knows how a lottery works. A bunch of people each pay a small amount of money for a chance to be one of the few winners of much larger amount of money.

Considering the low chances of winning, many people pass on the chance to win a lottery. Other people jump at the chance, convinced they have some sort of edge especially when it involves picking numbers.

What's a reverse lottery. A bunch of people each receive a small amount of money (in escrow to make it work) for a chance to be one of the few losers of a much larger amount of money.

Considering the low chances of losing, some people would readily accept the small amount of money. Others would refrain from participating, unwilling to incur even that small risk of being required to pay back much more than they were given.

How is all of this relevant to a federal fuel tax suspension?

First, a federal fuel tax suspension is a reverse lottery. By not paying the federal fuel tax, purchasers of gasoline and diesel are in effect being given a small amount of money each time they fill their tank. How much? It depends on the amount of fuel a person uses. Someone who uses 30 gallons of gasoline a month would be given, in effect, $5.52 per month.

Second, a federal fuel tax suspension would decrease federal fuel tax revenues by roughly $3.5 billion each month. This means the Highway Trust Fund would stop receiving income. This means the Highway Trust Fund would be required to stop making payments for highway construction and maintenance and for public transit.

Third, when the Highway Trust Fund stops making payments for highway construction and maintenance, the number of unrepaired potholes will increase and other deterioration will go unfixed. Construction will come to a halt. Some workers will lose jobs. Some drivers will hit potholes, incurring significant expenses. Not all workers will lose their jobs. Not all drivers will hit potholes. Those who do lose jobs or hit potholes have "won" the reverse lottery. They received $5.52 per month. They lose their income. They pay for expensive repairs to their vehicles.

But there also is a big difference between a reverse lottery and a federal fuel tax suspension. A reverse lottery, like a typical lottery, is voluntary. Participate if you wish, step away if you're not interested. But a federal fuel tax suspension is a mandatory, involuntary reverse lottery. Every driver, every worker participates. There's no opt out, permitting someone to pay the federal fuel tax in exchange for retention of a job, immunity from hitting a pothole, or reimbursement for the cost of repairing the damage to a vehicle caused by a pothole.

A similar analysis applies to suspension of state fuel taxes. About two months ago I addressed a similar fuel tax suspension proposal in Pennsylvania, in Does a Temporary Tax Suspension Solve the Underlying Problem?, pointing out other adverse consequences of a fuel tax suspension and explaining that the suspension does not solve the underlying problem. I concluded with this advice:

Yes, increased gasoline and diesel prices are frustrating, harmful to most drivers' wallets, and detrimental to the economy. [The proponent of the fuel tax suspension] is trying to solve a problem caused by someone else. Perhaps it would be better if we insisted that those who cause a problem or break something be the ones who fix the problem or make the repairs. If someone else solves the problem, those afflicted by the problem are less likely to identify those who caused the problems and less likely to take steps to ensure that those same people don't cause yet another problem.

Hopefully people are not conned into thinking, "Oh, you politicians suspended the fuel tax and lowered what I'm paying and that is wonderful so I will continue supporting all of you" but rather realize, "Oh, this is a short-term benefit and in the long run it's going to cost me more, perhaps much, much more, so let's stop with the band-aids, fix what all of you broke, and stop all of you from breaking anything else."

What Sort of Tax or Fee Should Fund Local Street and Sidewalk Maintenance?

Portland, Oregon, has a problem. Its streets, sidewalks, street lights, and related infrastructure is deteriorating at a rapid rate. The reason is insufficient revenue from the local gasoline tax an decreases in federal and state funding. So, according to this story, shared with me by reader Morris, the town council is proposing a fee that would be imposed on property owners. The monthly fee would be $12 for a home, $8.40 for an apartment unit, and $61 for commercial properties. A similar proposal failed ten years ago. Other cities in Oregon have imposed similar fees.

The city estimates it needs $6 billion to bring its street and sidewalk infrastructure to fair condition. The proposed fee would raise about $47 million annually. It takes many years of $47 million to raise $6 billion. More than 127 years.

The town explains that "The fee is meant to charge people based on their street usage," and that the lower rate for apartment units is because, "according to the city, apartment residents take fewer trips." That conclusion is highly questionable.

Several of the people who oppose the proposal claim that it is a tax that needs voter approval to be put into place. It is structured as a fee, though the greater the disconnect between the person paying the fee and the person's use of the roads and sidewalks, the more the charge resembles a tax. Landlords explain that the fee would force an increase in rents, an outcome not wanted by landlords or tenants. Business owners in Portland, already facing high taxes, see the fee as yet another hurdle for them to keep operating. Others want the local gasoline tax to be allowed to expire before any other fees or taxes are enacted.

So who should pay for maintaining streets and sidewalks? Though I support the mileage-based road fee, it is difficult to implement at the local level. One reason is that annual or semi-annual odometer readings are recorded by states and not localities. Another is that odometer readings are much more correlated with in-state driving than they are with in-town driving.

So who should pay? Maintenance of streets should be financed by those who use the streets. Someone who lives in a home or apartment in a city does not necessarily own a vehicle and thus does not use the streets. It is true that they receive services, such as postal and other deliveries, from individuals and businesses that use the street, though those service providers can take their street use costs into account when charging for deliveries. What's the best way to measure the street use by those who use the street, especially if a mileage-based road fee cannot be implemented locally? A gasoline tax is flawed, because city residents can purchase gasoline outside the city limits. Would toll gantrys work? They are expensive to install and would be needed everywhere. What about making use of the many traffic and traffic light cameras that read license plates? That's certain to raise all sorts of objections. Perhaps the answer is to consider that Portland streets are used not only by Portland residents but also by non-residents, and that the state should assume responsibility for the maintenance and repair. And the state can fund the costs through, no surprise, the mileage-based road fee.

Sidewalks (or as some call them, pavements) are a different matter. They are not used, or at least are not supposed to be used, by vehicles. They are used by pedestrians, who may or may not even own a vehicle. In the places where I have lived that have sidewalks, it was the responsibility of the property owner to keep the sidewalks in proper maintenance. Ordinances require that the sidewalk be cleared of snow and ice within a specified number of hours after the storm ends. Surely there is no reason that this approach cannot be adopted by Portland.

The challenge facing Portland demonstrates the difficulty of deciding who bears the burden of funding things that benefit society generally when trying to measure each individual's or business's benefit is difficult if not impossible. Balancing what is fair with what is necessary surely requires some degree of compromise. Compromise, though, has been increasingly difficult to attain in current social, political, and economic climates.

Finding the Connection Between Philadelphia's Proposed Rideshare Tax and the Funding of Public Schools

As reported in numerous stories, including this one, the Mayor of Philadelphia has proposed raising an earlier proposed 20-cent tax on a rideshare to a $1 tax. The revenue would be used to fund Philadelphia's public schools. When I tried to learn the justification for using a tax on rideshares to fund the schools, all I could find is that it would raise millions of dollars for a school system in desperate need of funding.

Debate seems to focus on whether the rideshare companies would pay the tax or whether it would be passed along to passengers. When a city council member pointed out that the legislation required the rideshare companies to collect the tax from passengers, the city's Finance Director argued that the companies "can then decide how they want to pass that on... increased their fee or hold riders harmless."

What I haven't discovered is any discussion about the justification for charging rideshare companies or rideshare passengers a tax to fund public schools. Do rideshare companies and their passengers obtain a greater benefit from the public schools than do other companies and other individuals? Do rideshare companies and their passengers impose a greater burden on the public schools than do other companies and other individuals? I cannot find anyone advocating this proposed tax addressing these questions.

Readers of MauledAgain know that I had similar objections to the city's soda tax. As I wrote in Will a Revisit of Philadelphia’s Soda Tax Bring Me an Invitation?, " As I pointed out in some of my commentaries, if the soda tax was truly about improving health, the tax should and would be a tax on sugar and similar substances and not just beverages. Instead, the tax is about revenue, and the large amount of sugary beverages sold in Philadelphia was, and to some extent still is, low-hanging tax revenue fruit."

The proposed rideshare tax strikes me as another way to collect revenue from an easy target despite the lack of a link between those paying the tax and what it funds. It will negatively impact rideshare passengers, either directly or indirectly, especially those who use rideshare services because they cannot afford to own their own vehicle. It will tempt the city to raise the tax until it begins encouraging rideshare companies or their drivers to pull out of the city.

When "Death and Taxes" Meet AI

Ten days ago, in Using AI When Preparing Tax Returns: Avoid the Trap, I explained why I am not a fan of AI. I consider AI not ready for prime time when it comes to analysis that requires wisdom, judgment, real-life experience, critical thinking, or common sense. Perhaps it will never be ready for prime time. I based my reticence not only on my personal interactions with AI but also on careful consideration of how AI accumulates the data it uses in its processing. AI engines use data scraped from the internet. It fails miserably when it comes to distinguishing between factually correct and factually incorrect data. It doesn't do a good job deciding whether a word in one clump of data should be matched with the same word in another clump of data.

In my commentary ten days ago, I wrote in the context of taxation. I pointed out that AI doesn't do a good job distinguishing between, for example, the text of a Code section published on the internet in 2015 that is still good law and the text of a Code section published on the internet in 2015 that is no longer good law because it has been repealed, amended, or otherwise set aside.

I did not close the door on the possibility that someday AI will function with the critical thinking skills, wisdom, judgment, experience, and perspective that expert humans bring to the table. Unquestionably, that day isn't today. That day may never arrive. Though "AI" is probably useful with simple tasks that computers do well, such as computation or mere data compilation without analysis or judgment, it isn't ready to answer questions that can be answered properly only with the skills that "AI" does not possess.

This evening I was made aware of the threat that AI poses to situations far closer to life and death than taxes. According to a Nature.com article, a team at the University of Gothenburg led by a medical researcher invented a skin condition that they called bixonimania. They described it as eyelids turning slightly pink when they are rubbed when eyes become sore and itchy from staring at screens and being bombarded by blue light. The team uploaded two fake studies to a preprint server. The team did this to see how AI would handle false information. Very quickly AI platforms treated the invented diseases as real. This caused the fake studies to be cited in other literature, demonstrating that researchers are using AI results without checking the cited studies.

Worse, the team filled its publications with obvious hints and clues that they were posting fake studies. The lead author was a fake person with the name of Lazljiv Izgubljenovic, identified as working at a university called Asteria Horizon University in Nova City, California. Both the university and the city do not exist. One of the published studies tanked "Professor Maria Bohm at the Starfleet Academy." Both papers attributed funding to “the Professor Sideshow Bob Foundation for its work in advanced trickery, . . . part of a larger funding initiative from the University of Fellowship of the Ring and the Galactic Triad.” The papers included statements that "this entire paper is made up” and “Fifty made-up individuals aged between 20 and 50 years were recruited for the exposure group.”

Anyone who doubts "AI" simply grabs, mixes, and regurgitates what it finds without subjecting its accumulated data to scrutiny characterized by wisdom, judgment, experience, critical thinking, and common sense now has all the proof necessary to indicate the danger posed by "AI," even setting aside the explosion in environmentally risky data centers needed to process this massive too-often-reckless movement of data.

The Nature.com article gives examples of how various AI platforms are handling this fake disease bixonimania. Take a look. It's frightening. One platform's spokesperson replied to an inquiry about the platform's treatment of the fake desease as "an emerging term," with this statement: We don’t claim to be 100% accurate, but we do claim to be the AI company most focused on accuracy.” Is that a phrase tax return preparers should post on their web sites and add to their sign on the storefront window?

As risky as it is for taxpayers and tax return preparers to ask AI to prepare or help prepare tax returns, it is even riskier for individuals and medical professionals to rely on AI platforms when diagnosing symptoms. Though the University of Gothenburg research team generated misinformation for purposes of testing AI platforms, there are millions of individuals carelessly or deliberately publishing false information. If it gets published, it gets scraped by AI engines. So beware. Beware of fake tax law, fake medical illnesses, fake weather reports, fake this, that, and the next thing. Death gets lumped with taxes in that "death and taxes" idiom, but the damage done by AI when it comes t taxes pales in comparison to the danger it poses when life and death are in play. Research. Think. Question. Analyze. Verify. Review. Beware. It's not just your tax return that is at risk.

Using AI When Preparing Tax Returns: Avoid the Trap

The headline I asked ChatGPT for tax help—experts say I fell into a classic trap almost says it all. The story elaborates on what happened to the author of the story.

The author is one of many taxpayers who prepare their own returns. For years he had a rather simple return, because his income was reflected on a W-2, and he had nothing else happening in his life that would have created any complexity on the return. But in 2025 he purchases some employer stock through an employee stock purchase plan, and then sold most of the stock to generate cash for his wedding expenses.

Knowing that the tax rules for the sale of employer stock aren't very simple, he turned to ChatGPT. He reports that his first question brought an answer as to how the sales are treated for tax purposes, broken down into "digestible bullet points." He uploaded his Form 1099 from the brokerage firm that processed his stock sales. ChatGPT then told him that he needed to use a number different from what the brokerage reported, though it isn't clear from the article whether that number was gross sales, net sales, basis, or something else. He was instructed to examine his "last few W-2s to see that they included a certain line item." He was also told by ChatGPT, "“This is a very simple return with one stock plan wrinkle. You do NOT need a CPA.”

Fortunately, at that point he contacted a CPA that he knew. The CPA, after being brought up to speed, concluded that the author "had gotten possibly correct but also incomplete information." The analysis of the W-2 forms was "quite important" in determining if the brokerage indeed was using the correct numbers. It turned out that, according to the CPA, some of the numbers in the Form 1099 seemed to indicate that the author had engaged in transactions that he "may not have made." The CPA suggested that ChatGPT has not provided any information about this issue probably because the author had not asked. A high quality tax professional would know to provide information that is relevant even if the client fails to ask, because most clients don't know that they need to ask or what to ask.

The author concludes that the advice he obtained from ChatGPT "seemed so sound and was so breezily delivered that [he] was ready to file and risk having made a mistake." The author spoke with an accounting professor who shared, "AI will convince you that the sky is green. It is so convincing. The professor cited a time when a chatbot incorrectly answered one of the tax questions he gives his students. He continued, “It gave me this response that the mechanics were perfect, but I had to take a step back and say, ‘Well, you’re wrong.’”

An AI strategy company founder informed the author, “But by default, large language models are trained to be helpful assistants. Oftentimes you’re going to run into hallucinations.” Hallucinations is a fancy word for wrong answers.

The author's conclusion? He sums up advice from experts: "[Y]ou’d be wise to tread very carefully before using AI to help with your taxes." He quotes the AI strategy company founder, “If you make a mistake while using AI to do your taxes, it could get you in trouble with the IRS. And a valid excuse isn’t, ‘The AI made me do it.’” So true.

The author then shares what "pros say to keep in mind" when using AI as a tool to prepare tax returns. I'll let you read the article because my advice would simply be, "Don't." My experience with "AI" is that it's not ready for prime time. I asked one AI site "who is James Edward Maule?" and the answer was so amazingly incorrect I wondered if the "I" in "AI" should be changed from intelligence to ignorance. Why is AI still insufficient? AI engines use data scraped from the internet. It doesn't do a good job distinguishing between factually correct and factually incorrect data. It doesn't do a good job distinguishing between, for example, the text of a Code section published on the internet in 2015 that is still good law and the text of a Code section published on the internet in 2015 that is no longer good law because it has been repealed, amended, or otherwise set aside. It doesn't do a good job deciding whether a word in one clump of data should be matched with the same word in another clump of data. It reminds me of first-year law students who focus on the words of a case at face value rather than considering the context in which those words are being used.

Perhaps someday "AI" will function with the critical thinking skills, wisdom, judgment, experience, and perspective that expert humans bring to the table. But that day isn't today. That day may never arrive. In the meantime, "AI" is probably useful with simple tasks that computers do well, such as computation or mere data compilation without analysis or judgment. But "AI" surely isn't ready to answer questions that can be answered properly only with the skills that "AI" does not possess.

"Pot [Tax] for Potholes" Is Just Another Cute Slogan with Ugly Results

Back in October, in An Unfair and Unwise Tax to Fund Roads, I commented on the Michigan wholesale tax on the sale of marijuana from growers and processors to retailers. This tax surely is passed on to the retail purchasers. The proceeds of the tax are used to fund part of the cost of improving Michigan's roads. Reader Morris, who alerted me to the enactment of this tax, asked, “Is the Michigan Marijuana tax to fund the roads a better tax policy than a vehicle mileage fee?” My answer was a resounding no. As I wrote to Reader Morris, “Some marijuana users use roads, others don’t. A lot of road users don’t use marijuana. What’s next? Taxing people who buy peanut butter to fund schools?”

The other day Reader Morris alerted me to a proposal in Tennessee to tax marijuana, a proposal resting on the assumption that the state will legalize the use of marijuana. Two Tennessee legislators have suggested using the revenue to fund road maintenance and repairs. The author of the cited article analyzes how much revenue would be raised and points out that it would be insufficient to fund all road costs. That's not the problem with the proposal.

Reader Morris asked me, " Is the Tennessee pot tax for potholes any fairer or wiser to fund state roads?" Again, my answer is no. He also pointed out, "Obviously the Tennessee lawmakers did not read your blog post below," referring to the October post mentioned above. Well, perhaps they did read it, though I doubt it. Or, as Reader Morris suggests, they didn't read it. Had they, or their staff, done adequate research, they would have found the post and shared with their constituents and the anticipated marijuana purchasers in Tennessee their justification for requiring those users to fund highway repairs and maintenance. The author of the cited article notes that "The phrase 'pot for potholes' may capture attention." This sort of slogan, which the author of the article points out flies in the face of numbers that suggest a more limited reality, is a sad continuation of sound bites and tweets that spare human brains the sort of exercise that keeps them in shape for necessary critical thinking. Sounds cute, produces ugly results.

I repeat the challenge I raised in the October post,

Anyone who can show me a rational link between the sale of marijuana and the deterioration of roads is invited to educate me. Perhaps there are government expenses that can be rationally linked to the sale, or perhaps use, of marijuana. Perhaps something involving government funding of specified health care services. But why should people who may not be using roads bear the burden of financing those roads while far greater numbers of people who do use the roads aren’t subject to the marijuana wholesale tax? And anticipating reactions, for those who think I am defending, advocating, or involved in the sale, distribution, and use of marijuana, or am working on behalf of marijuana lobbies, I am not. I am simply pointing out the disconnect between the tax and the intended use of the revenues it produces, just as I would react the same way to a tax on candy, shoes, computers, clothing, or pet supplies to fund roads.

As I have repeatedly explained, the answer, when it comes to financing the maintenance and repair of roads, bridges, and tunnels is the mileage-based road fee, which I has been the subject of my commentaries for almost 17 years, and which also is supported by a growing number of individuals and organizations. For those interested in the mileage-based road fee, including how it works and refutations of arguments offered against it, take a look at my commentaries, including Tax Meets Technology on the Road, Mileage-Based Road Fees, Again, Mileage-Based Road Fees, Yet Again, Change, Tax, Mileage-Based Road Fees, and Secrecy, Pennsylvania State Gasoline Tax Increase: The Last Hurrah?, Making Progress with Mileage-Based Road Fees, Mileage-Based Road Fees Gain More Traction, Looking More Closely at Mileage-Based Road Fees, The Mileage-Based Road Fee Lives On, Is the Mileage-Based Road Fee So Terrible?, Defending the Mileage-Based Road Fee, Liquid Fuels Tax Increases on the Table, Searching For What Already Has Been Found, Tax Style, Highways Are Not Free, Mileage-Based Road Fees: Privatization and Privacy, Is the Mileage-Based Road Fee a Threat to Privacy?, So Who Should Pay for Roads?, Between Theory and Reality is the (Tax) Test, Mileage-Based Road Fee Inching Ahead, Rebutting Arguments Against Mileage-Based Road Fees, On the Mileage-Based Road Fee Highway: Young at (Tax) Heart?, To Test The Mileage-Based Road Fee, There Needs to Be a Test, What Sort of Tax or Fee Will Hawaii Use to Fix Its Highways?, And Now It’s California Facing the Road Funding Tax Issues, If Users Don’t Pay, Who Should?, Taking Responsibility for Funding Highways, Should Tax Increases Reflect Populist Sentiment?, When It Comes to the Mileage-Based Road Fee, Try It, You’ll Like It, Mileage-Based Road Fees: A Positive Trend?, Understanding the Mileage-Based Road Fee, Tax Opposition: A Costly Road to Follow, Progress on the Mileage-Based Road Fee Front?, Mileage-Based Road Fee Enters Illinois Gubernatorial Campaign, Is a User-Fee-Based System Incompatible With Progressive Income Taxation?. Will Private Ownership of Public Necessities Work?, Revenue Problems With A User Fee Solution Crying for Attention, Plans for Mileage-Based Road Fees Continue to Grow, Getting Technical With the Mileage-Based Road Fee, Once Again, Rebutting Arguments Against Mileage-Based Road Fees, Getting to the Mileage-Based Road Fee in Tiny Steps, Proposal for a Tyre Tax to Replace Fuel Taxes Needs to be Deflated, A Much Bigger Forward-Moving Step for the Mileage-Based Road Fee, Another Example of a Problem That the Mileage-Based Road Fee Can Solve, Some Observations on Recent Articles Addressing the Mileage-Based Road Fee, Mileage-Based Road Fee Meets Interstate Travel, If Not a Gasoline Tax, and Not a Mileage-Based Road Fee, Then What?>, Try It, You Might Like It (The Mileage-Based Road Fee, That Is) , The Mileage-Based Road Fee Is Superior to This Proposed “Commercial Activity Surcharge”, The Mileage-Based Road Fee Is Also Superior to This Proposed “Package Tax” or “Package Fee”, Why Delay A Mileage-Based Road Fee Until Existing Fuel Tax Amounts Are Posted at Fuel Pumps?, Using General Funds to Finance Transportation Infrastructure Not a Viable Solution, In Praise of the Mileage-Base Road Fee, What Appears to Be Criticism of the Mileage-Based Road Fee Isn’t, Though It Is a Criticism of How Congress Functions, Ignorance and Propaganda, A New Twist to the Mileage-Based Road Fee, The Mileage-Based Road Fee: Simpler, Fairer, and More Efficient Than the Alternatives, Some Updates on the Mileage-Based Road Fee, How to Pay for Street Reconstruction, Stop the "Stop EV Freeloading Act" Because The Mileage-Based Road Fee Is a Much Better Way to Go, Why Is Road Repair and Maintenance Funding So Difficult for Public Officials to Figure Out?, Should (Will) Implementing the Mileage-Based Road Fee Cause Privatization of Highway Infrastructure?, The Freedom Caucus Doesn’t Understand that the Mileage-Based Road Fee is “PRO-Freedom,” Not the Opposite, A Mileage-Based Road Fee by Any Other Name?, Does the Mileage-Based Road Fee Work for Local Road Maintenance?, Washington State Mileage-Based Road Fee Proposal Changes: Is It Better?, The Mileage-Based Road Fee Is Much Better Than a Federal Fuel Tax Increase, Ride-Share Drivers and the Mileage-Based Road Fee, and International Aspects of the Mileage-Based Road Fee.

Does a Temporary Tax Suspension Solve the Underlying Problem?

About a week ago, Pennsylvania State Senatore Lisa M. Boscola described her plan to suspend the state's liquid fuel taxes for 60 days. The proposal is intended to help reduce the cost of fuel, which has been rising rapidly during the past three weeks.

Aware of the impact this cutoff in revenue for the maintenance of highways, bridges, and tunnels, Boscola's plan includes the issuance of bonds to replace the lost revenue. What she did not describe was how revenue would be raised to pay interest on the bonds and to pay for bond redemption. That money either comes from increased taxes or from reduced spending. So while taxpayers might rejoice at lower prices at the pump, they will not be so happy when they face increased income, sales, or other taxes, or when spending is cut for programs that are their favorites. So in the long run the tax suspension is nothing more than kicking the can down the road. Ultimately taxpayers, not only motorists, will pay the price.

Yes, increased gasoline and diesel prices are frustrating, harmful to most drivers' wallets, and detrimental to the economy. Boscola is trying to solve a problem caused by someone else. Perhaps it would be better if we insisted that those who cause a problem or break something be the ones who fix the problem or make the repairs. If someone else solves the problem, those afflicted by the problem are less likely to identify those who caused the problems and less likely to take steps to ensure that those same people don't cause yet another problem.

Tax Return Preparer Not Satisfied With Just Tax Fraud

I have written so many times about tax return preparers who disregard the law that I refrain from commenting every time a tax return preparer is accused of, convicted of, or sentenced for tax fraud. Examples of my commentaries include posts such as Tax Fraud Is Not Sacred, More Tax Return Preparation Gone Bad, Another Tax Return Preparation Enterprise Gone Bad, Are They Turning Up the Heat on Tax Return Preparers?, Surely There Is More to This Tax Fraud Indictment, Need a Tax Return Preparer? Don’t Use a Current IRS Employee, Is This How Tax Return Preparation Fraud Can Proliferate?, When Tax Return Preparers Go Bad, Their Customers Can Pay the Price, Tax Return Preparer Fails to Evade the IRS, Fraudulent Tax Return Preparation for Clients and the Preparer, Prison for Tax Return Preparer Who Does Almost Everything Wrong, Tax Return Preparation Indictment: From 44 To Three, When Fraudulent Tax Return Filing Is Part of A Bigger Fraudulent Scheme, Preparers Preparing Fraudulent Returns Need Prepare Not Only for Fines and Prison But Also Injunctions, Sins of the Tax Return Preparer Father Passed on to the Tax Return Preparer Son, Tax Return Preparer Fraud Extends Beyond Tax Returns, When A Tax Return Preparer’s Bad Behavior Extends Beyond Fraud, More Thoughts About Avoiding Tax Return Preparers Gone Bad, Another Tax Return Preparer Fraudulent Loan Application Indictment, Yet Another Way Tax Return Preparers Can Harm Their Clients (and Employees), When Unscrupulous Tax Return Preparers Make It Easy for theblo IRS and DOJ to Find Them, Tax Return Preparers Putting Red Flags on Clients’ Returns, When Language Describing the Impact of Tax Fraud Matters, Injunctions Against Fraudulent Tax Return Preparers Help, But Taxpayers Still Need to Be Vigilant, Will the Re-Introduced Legislation Permitting Tax Return Preparer Regulation Be Enacted, and If So, Would It Make a Difference?, Can Fraudulent Tax Return Preparation Become An Addiction?, Tax Return Preparers Who Fail to File Their Own Returns Beg For IRS Attention, Using a Tax Return Preparer? Take Steps to Verify What Is Filed on Your Behalf, When Dishonest Tax Return Preparers Are Married, There Was Nothing Magical About This Tax Return Preparation Business, Don’t Get Burned By a Tax Return Preparer, Tax Fraud School: When It’s Not Enough to Be a Fraudulent Tax Return Preparer, It’s Not Just Tax Return Preparers Assisting in the Preparation of Fraudulent Tax Returns, Overused Fraudulent Tax Return Preparation Ploys, It’s Not Just Law Enforcement That Confronts Misbehaving Tax Return Preparers, When An Injunction Doesn’t Stop a Tax Return Preparer from Filing False Returns, Filing a Fraudulent Tax Return Is Bad, Filing More Than 3,000 Is Outrageously Bad, When It Comes to Fraudulent Tax Returns, It's Not Always the Preparers, A Procedural Twist on Dealing with Fraudulent Tax Return Preparers, Can Tax Return Preparers Learn from the Misdeeds of Other Preparers?, Should Tax Return Preparers Use Their Full Legal Names?, Is There Ever a Free Lunch, Even in the Tax Return Preparation Business?, Is the Tax Return Preparer or the Client Responsible For Unjustified Deductions?, When Preparing False Tax Returns Seems to Lack a Financial Motive, Was This Convicted Tax Return Preparer Courageous or Foolish?, One-Stop Shopping for Tax Return Preparation and Unrelated Merchandise?, and How Much Prison Time Should Be Imposed on a Tax Return Preparer Convicted of Preparing and Filing Fraudulent Returns?

Yet sometimes the preparation of fraudulent tax returns involves a twist that is somewhat different. According to this Department of Justice press release, a former IRS employee took things several steps further. This individual had been employed as an IRS contact representative from 1998 to 2009. She prepared and filed income tax returns for other people between July 2020 and April 2023. She did not list herself as the tax return preparer, making the returns appear as though these taxpayers prepared the returns on their own. She listed ineligible depends on the returns, generating higher refund amounts. She did not inform these taxpayers that she was doing this. Worse, she filed forms with the IRS directing portions of these excess refunds be deposited into her personal bank accounts. She used these funds for her own personal benefit.

She didn't stop there. Between April and October of 2020, she applied by telephone for Social Security retirement and spouse and widow benefits with the Social Security Administration. But she didn't apply for herself. She applied on behalf of other individuals who had no knowledge that she was doing this. She directed the Social Security Administration to send the benefits to her personal bank accounts. She used these funds for her own personal benefit.

Eventually, she was identified and charged. She pled guilty to four counts of aiding and assisting in the preparation and filing of a false tax return and one count of theft of government money.

According to this follow-up Department of Justice news release, which is what caught my attention, a few days ago she was sentenced to 18 months in prison, followed by three years of supervised release.

According to the first press release, "the charge of aiding and assisting the preparation and filing of a false tax return provides for a sentence of up to three years in prison, one year of supervised release and a fine of up to $250,000. The charge of theft of government money provides for a sentence of up to 10 years in prison, three years of supervised release and a fine of $250,000." There is no mention in the sentencing of any fines. She could have faced as much as 13 years in prison, four years of supervised release, and $500,000 in fines. Nor is there any mention of restitution, that is, the Social Security Administration recovering the amounts paid to her.

And this makes a mess for the individuals for whom she prepared returns and in whose names she acquired social security benefits. The taxpayers for whom she prepared returns face the aggravation of figuring out how much of their refund that they should have received went to the preparer, and how what she did affects their accounts with the IRS. The individuals in whose name she acquired social security benefits face the aggravation of clearing their accounts so that when they become eligible and do apply for benefits the computations are distorted by what this person did.

The damage done by people who behave fraudulently, whether with taxes, social security, false texts from police departments or the Pennsylvania Turnpike Commission, online sales scams, phone calls designed to extract social security, Medicare, bank account, and credit card numbers, and whatever else goes in this list, reaches wide and deep. It is unfortunate that not enough is being done to identify and deal with these scammers and to prevent additional instances. They are far more of a threat than some of the people currently getting attention.