Thursday, May 04, 2006

Tax Accountant Acquited, IRS Says Taxes Still Due

Happy returns for acquitted tax accountant
Accountant charged with filing false income tax papers for clients, arguing wages are not taxable, acquitted though IRS says taxes are due

A Bay Shore accountant has been acquitted of income-tax evasion charges after he filed returns for 36 clients claiming that salaries cannot be legally taxed.

But don't get ready to go rushing out to your tax preparer next April. While the tactic initially saved the clients $500,000 in taxes, the Internal Revenue Service has since required them to pay tax on their salaries, according to court records.

The acquittal Tuesday by a jury in U.S. District Court in Central Islip was the second time in three months that the government has failed to convict Paul Petrino of charges of aiding and abetting false tax filings from 1999 to 2001. His defense was based on arguments from the tax-protester movement, which questions the validity of the federal income tax laws. Petrino prepared the returns in his home office and most of his clients were from Long Island.

The case was a retrial of the same charges in February that resulted in a hung jury, split 6-6, according to Petrino's attorney, Robert Fink.

The jurors who acquitted Petrino, who faced 61/2 years in prison, were angry that they had to do so, Fink acknowledged after speaking with them yesterday. But he said they accepted his argument that there was "reasonable doubt" that his client was intentionally committing a crime.

He called the verdict a victory for the average man "over the overwhelming power of the federal government, the Justice Department and the Internal Revenue Service."

While acknowledging that they could not immediately think of a situation in which a criminal case based on tax-protester logic has resulted in an acquittal, officials of the Justice Department and the IRS cautioned yesterday that Petrino's case was unusual and that it would probably have no impact on the average citizen's tax filings...