30 Years and 1300 Pilots Finally Expose IRS Subterfuge

The Ninth Circuit Court of Appeals (San Francisco) ruled last week that two IRS attorneys committed "a fraud on both the taxpayers and the tax court," as they ginned up a phony case against nearly 1300 pilots.

In the 1970s, when interest was a deductible expense, a lot of pilots looked for tax shelters; some found one particular one, that the IRS decided to attack. The IRS simply denied the legitimate deductions the pilots claimed, and then tacked on the customary interest and penalties, threatening to bankrupt many families. The Tax Court upheld the pirate agancy, not knowing that, "...the two IRS attorneys had secretly cut a settlement deal with two of the pilots," as reported by Monica Perin, in the Houston Business Journal.

The rest of the 1300 or so pilots had agreed to go along with whatever the Court decided. The IRS, in order to get cooperation of two pilots, changed their tax returns, so that those two conspirators came out even, after their attorneys had been paid. The rest were simply railroaded.

If the case had gone in favor of the crooked IRS, one pilot said, "I would have lost my house, my car, everything. No one can pay 25 years of penalties and interest." As it is, he lost a lot of money, in legal fees alone; not to mention, he had assets tied up for 30 years.

There is no word on whether the IRS will do anything to the crooks in their midst, or whether those frauds will face any legal action whatsoever; but at least the IRS has finally apologized -- to the 9th Circuit Court.

FMI: www.irs.gov