Tax Laughs 9/11

Arguably, the most famous tax evader in history is Al Capone. Despite the best efforts of Elliott Ness and his Untouchables, Capone was convicted only of failure to pay income tax on his ill-gotten gains, not for any of the other crimes he may have committed.

Perhaps Capone would have fared better if he had tried the argument recently raised in Tax Court by William Wood. 

Wood and his wife owned a grocery store that was organized as a corporation. Wood was also employed by a garage door company, from which he embezzled more than $500,000. When the IRS sought to collect taxes from Wood on the stolen funds, Wood argued that his criminal activity was conducted in his capacity as president of the grocery store. Therefore, the corporation, not Wood personally, was responsible for any income taxes. 

In other words, Wood argued, the grocery store was the thief; Wood was just the president. Not surprisingly, the Tax Court saw things differently. 

"They can't collect legal taxes from illegal money." -- Al Capone