“Girls Gone Wild” founder Joe Francis feels he finally got a break when a federal judge okayed a deal that Francis struck with prosecutors. Under the agreement, Francis was credited with 301 days already served and sentenced to one year of probation.
The plea deal was struck after Francis learned that a key witness, Francis’ former accountant, had withheld information from his defense team at trial. Francis was originally indicted on tax evasion charges in 2007 stemming from a number of income omissions and false deductions. He pleaded guilty to two misdemeanor counts of filing false tax returns and one count of bribing Nevada jail workers.
“I think we won that one,” Francis said after the hearing.
The former bad boy was polite during the hearing, answering questions as asked. It was quite a turn-around from the belligerent persona he had maintained since the charges were first brought against him in 2007.
After the hearing, he kissed his mother.
Apparently he really does kiss his mother with that mouth.
Here’s a crazy thought: if you give people a financial incentive, you can make them do almost anything (trust me, I watch a lot of reality TV).
For the IRS, the financial incentive comes in the form of increased rewards for turning in tax cheats. A new law, which was established by the Tax Relief and Health Care Act of 2006, rewarded taxpayers who reported tax cheats in the workplace. But they aren’t looking for small potatoes: the tax, penalties, interest, additions to tax, and additional amounts in dispute must exceed $2 million for any taxable year (that’s the sother restrictions also apply).
Is it working? Boy is it ever. The IRS whistleblower office announced this week that tips have increased to about 100 per month – up from 10-20 per month before the incentives. And it’s big money: 64 of the cases from last year alleged underpayment of $100 million or more. Run the quick numbers on that. If true, it’s mind-boggling.
That doesn’t mean that things have gone smoothly. The law is still very new (it took effect in 2007) and tax cases take a long time to investigate and prosecute. As a result, there hasn’t yet been a single payout to a tipster.
The program has met with mixed reactions in Washington. Some point to the increased numbers of complaints and say that it’s proof that upping financial incentives was the right thing to do – and that it’s just a matter of working out the kinks for payment. Others claim that the process is too slow and will discourage future tipsters from coming forward. Still others claim that the process actually encourages fraud. Joe Francis (of Girls Gone Wild fame) is a prime example: Francis claimed that his accountant set him up by preparing returns without his knowledge and then turned him into the IRS under the whistleblower program to get a reward (Francis later took a plea for filing false returns).
What do you think? Is the program a good idea? Or a bad idea with some good press?
“Girls Gone Wild” founder Joe Francis has agreed to a plea arrangement that will significantly reduce his outstanding tax liability and keep him out of jail (for a bit – I’m making no promises about what he’ll do next). Francis has agreed to plead guilty to two counts of filing false tax returns and one count of bribing Nevada jail workers.
Francis, who has already spent 301 days in jail, will receive credit for time served. In addition, he will receive a year of supervised release and pay a quarter of a million dollars in restitution. The agreement, which slashed the potential jail sentence for Francis, doesn’t completely put an end to Francis’ tax woes but does require tax issues relating to Francis or his companies from 2002 to 2008 to be handled in civil or administrative arenas.
Francis had been accused of tax evasion relating to his business. Francis’ attorney, Brad D. Brian, has said – and I’m not making this up – that prosecutors “didn’t understand Francis’ business model” and the expense related to the “Girls Gone Wild” brand.
It’s Fix the Tax Code Friday! Since I posted about Marion Barry’s tax woes earlier today, I thought it would be great fodder for Fix the Tax Code Friday. Tax evasion cases have often made news – from Wesley Snipes to Joe Francis to Helio Castroneves – especially when jail time is involved. Counsel in these matters generally argue that an alleged failure to file tax returns should be a private matter and not made a criminal case. Prosecutors argue, however, that big time jail sentences deter other citizens from committing similar crimes (tax fraud, tax evasion, etc).
Today’s Fix the Tax Code Friday question is:
Should failure to file federal tax returns be a criminal offense? Is jail time an appropriate response for failing to file federal tax returns? And if so, should there be a dollar amount or number of years for which taxes are not filed, before jail time is imposed?
