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Filing a Bogus $1 Trillion Lien Against IRS Employees Proved To Be an Ineffective Intimidation Technique

Who knew!?

Oregon attorney Micaela Renee Dutson and her husband Tony Dutson were convicted of defrauding the U.S. Government of over $7 million but not before doing their damnedest to stave off the IRS and DOJ investigating them.


The Dutsons were a creative couple, selling “pure trust” packages to their clients who were told that their income would be tax free if it were placed in trust. They sold these products despite “several warning letters from the IRS, articles in the Oregonian newspaper warning the public against tax shelter scams, and a complstice Department on behalf of the IRS in an effort to stop them from selling their tax shelters.”

The IRS started auditing the Dutsons’ clients who, prior to engaging the dynamic tax duo, were seemingly compliant taxpayers. The IRS informed these clients that the “trusts” were actually illegal tax shelters and that they were being bamboozled.

This was, of course, unacceptable to the Mr and Mrs and they went on a serious offensive:

[T]he Dutsons began a campaign to obstruct the IRS’s audits and investigation, and to harass and intimidate the individual IRS employees who were auditing or investigating them. First, they created and presented dozens of fictitious financial instruments to the IRS purporting to pay off back taxes for themselves and a number of their clients.

Even though they knew the bogus instruments had no financial value and had never been accepted by a creditor, they continued to sell them to their clients with false promises they would pay off their tax liability. The Dutsons also advised clients to use them to pay off commercial debts, including mortgages and court-ordered obligations. Together, the Dutsons and their clients presented over $44 million worth of these bogus financial instruments over a four-and-a-half-year period.

To further obstruct the IRS, and harass and intimidate its employees, the Dutsons advised clients to file frivolous lawsuits against the IRS employees. The Dutsons charged their clients $3,500 each to prepare court documents and help their clients file them. They continued to advise clients to file these lawsuits — even after a federal court had dismissed the first of these suits as frivolous and without merit — without telling their clients about the dismissal.

After the Justice Department filed the complaint for a permanent injunction, and IRS special agents had notified the Dutsons in person that they were under criminal investigation, the Dutsons filed a $1 trillion lien in California against several IRS employees who had attempted to audit or investigate the Dutsons, as well as the DOJ attorneys who filed the complaint. A federal court later ruled that the lien was null, void and without legal basis, but one week later, the Dutsons prepared a $108 million lien for a client against John Snow, who was then Secretary of the Treasury.

The Dutson probably figured the jig was up and since $1 trillion is a nice round number the figured “why the hell not?!?” Back in the early ’00s a trillion was fantastical number (for the most part), not tossed willy-nilly like it is these days. The Dutsons could have filed the lien for $1 gabizillion and it would have made as much sense.

Oh and while they were at it, just file another one against the Secretary of the Treasury. If it was Tim Geithner, sure we can see that happening for a whole host of reasons but John Snow? Wasn’t he one of the most harmless cabinet members of the Bush Administration? If they would have filed the lien against Dick Cheney they could have garnered a little popular support at least.

Oregon Attorney Convicted of Tax Fraud After Filing $1 Trillion Lien Against IRS [Web CPA via TaxProf]

Start the Tax Day Party Without Me

Tonight will be the 26th tax day party of my accounting career. Pardon me if I don’t stick around very long.

The only really memorable tax day party was my first one. The tax group of the “Big 8” firm where my career started went to across the street to old Busch Stadium in St Louis, where the firm rented a box for the Cardinals baseball game. I happily drank their beer, only to be canned exactly a week later. That sort of took the fun out of the whole thing (though if I did something at the party to get fired from good old PW, it was the best career move I ever made).


So I found a job with the Des Moines tax group of another big firm. There the tax day party doubled as a bachelor party for one of the other staff accountants, and we all (well, the boy accountants) went to a north side strip club. I didn’t have any spare dollars for the garters, and I slipped away home, where I could drink all night for the cost of a single beer at the girlie club. But I just went to bed.

Which is really about all I feel like doing by the end of the day on April 15. By noon today I had already worked a 65-hour week. I’ve been in close company with my co-workers here from early morning to late night for weeks, and, as much as I love them to death, I’ve had enough quality time with them.

There are other awkward things about the tax parties. Like auditors. You can identify them by their animation and their golf tans – a sharp and annoying distinction from us dazed, pallid tax zombies. Bonus annoyance points if they come to the April 15 party straight from the golf course.

These parties typically occur at a local bar, where you run the high possibility of a colleague embarrassing himself in front of a client. Or worse, a drunk client hitting on one of our staff accountants. Worse still, a staff accountant hitting on a client. Unless it goes really well, of course.

Finally, I’m a boss now. Nobody really wants to do serious drinking in front of a boss. So now I’m like the old guys who used to start the Masters with a ceremonial tee shot. I’ll take a ceremonial shot (Templeton Rye, try it sometime), and then leave the field to the youngsters.

So have a good time tonight. If you see me out, I’ll be at dinner with my wife (I think I’m still married). I’ll be the one snoring.