$100 million tax repayment down the drain

March 28, 2007

The IRS, which is always nagging us taxpayers to be careful in filing our returns, needs to talk to its government colleagues in the Justice Department about their paperwork protocols.


Poorly written prosecutorial documents just cost Uncle Sam more than $100 million in what was supposed to have
been the feds’ biggest tax prosecution ever.

Telecommunications entrepreneur Walter Anderson admitted
hiding hundreds of millions of dollars from the IRS and District of
Columbia tax collectors. Federal prosecutors said Anderson used offshore corporations to
disguise his ownership in telecommunications companies that
earned more than $450 million between 1995 and 1999. He was charged with not filing federal income tax returns from 1987 to 1993.

For those evasive maneuvers, Anderson was sentenced Tuesday to nine years in prison
and ordered to repay about $23 million to Washington, D.C.

Kitchen_sink_drain_small_2
But five (or more) times that amount
went down the proverbial drain.

The presiding judge said he couldn’t order
Anderson to repay the U.S. Treasury the $100-to-$175 million
that the feds estimated he bilked from Uncle Sam because the Justice Department’s binding plea agreement with Anderson
listed the wrong statute.

The judge said he could have worked around that problem by ordering
Anderson to repay the money as part of his probation. That option was unavailable, however, because prosecutors omitted any discussion of probation, which typically is part of plea agreements, from Anderson’s paperwork.

You can read the Department of Justice’s press release issued last September following Anderson’s guilty plea. And then read (and weep about) the details of this week’s sentencing snafu here.

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