When it comes to federal income tax, all income is reportable unless it’s specifically excluded. And all income means all income – including income derived from illegal activities, like stealing. A North Carolina couple found this out the hard way.
Daniel Balson and Renee Balson, of Greensboro, North Carolina, have been charged with one count of conspiracy to defraud the United States and to commit bank fraud, one count of bank fraud and five counts of wire fraud. Daniel Balson was additionally charged with three counts of filing false tax returns for 2009 through 2011 and Renee Balson was charged with one count of filing a false tax return for 2009. The charges were handed down in the Middle District of North Carolina earlier this week.
According to the indictment, Daniel Balson owned and operated Southern Sales Online (SSO). SSO was an online retail business that sold a variety of merchandise through companies like eBay and Amazon, including scrapbooking and art materials, books, inspirational DVDs, pet supplies, and tools.
The business was apparently quite successful (because who doesn’t think to pick up glitter, a Bible, and dog food all at the same time?). It was alleged in the indictment that SSO earned more than $1 million in gross receipts during 2005 through 2011 but the Balsons failed to report gross receipts for SSO on their tax returns filed with the Internal Revenue Service (IRS).
And the deception didn’t stop there. According to the indictment, in 2011, the Balsons submitted copies of fraudulent income tax returns to support a mortgage loan modification to Bank of America, N.A. In 2012, they allegedly furthered the fraud by signing a Loan Modification Agreement with Bank of America claiming that they had truthfully disclosed all of their income.
(If that sounds like shades of Real Housewives fraud, it is. You can read more about the initial charges levied against Teresa Giudice, including bank fraud, here.)
The Balsons had quite the online retail business but not all of the merchandise was obtained legally according to the feds. The indictment alleges that at least some of the merchandise was stolen from LifeWay Christian Stores and Hobby Lobby and then resold online.
Here’s a list of some of what the feds allege the Balsons stole for resale:
That’s right. The Balsons went to Christian oriented stores, stole Christian oriented merchandise and then sold it online without reporting the sales to the IRS. That would literally be a multitude of sins.
As for Bob Ross? You must remember him. He was the host of “The Joy of Painting” which aired from 1983 to 1994 on PBS:
(I have to think his trees and clouds won’t be quite so happy if they’re painted with stolen brushes.)
Selling stolen property over the internet would clearly be breaking a few laws. Not including it in taxable income makes it worse. Apparently, the Balsons didn’t read IRS Publication 17 (downloads as a pdf), which makes clear:
If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.
If convicted, Daniel Balson and Renee Balson each face up to five years in prison for the conspiracy count, 30 years in prison for the bank fraud count, 20 years in prison for each wire fraud count and three years in prison for each false tax return count together with penalties and restitution.
