$300,000 Income Tax Reward (Peymon Mottahedeh)

[Dr. Caligari]

I still find it hard to believe that CA passed up a big tax bill, my impression is that just isn't in their repertoire.

I'm not sure about California, but most states have laws which suspend the statute of limitations on tax cases until a federal case for the same tax years is concluded. So once the feds conclusively determine what the taxpayer's correct income was, they notify the state and the state assesses their income tax on that amount.

[The Observer]

I still find it hard to believe that CA passed up a big tax bill, my impression is that just isn't in their repertoire.

I'm not sure about California, but most states have laws which suspend the statute of limitations on tax cases until a federal case for the same tax years is concluded. So once the feds conclusively determine what the taxpayer's correct income was, they notify the state and the state assesses their income tax on that amount.

I think that is in regards to fed-state agreements where a state taxing agency has agreed to share income information with the IRS. I believe that California does have that type of agreement, so that if ND was referring to the state not assessing SFRs against the Mottahadehs for the same years as listed on the NFTL, then I agree with you that the state is waiting for the dust to settle on the litigation before assessing. States love allowing the feds to do the hard work so they can swoop in and assess with little fuss.

[jcolvin2]

I still find it hard to believe that CA passed up a big tax bill, my impression is that just isn't in their repertoire.

I'm not sure about California, but most states have laws which suspend the statute of limitations on tax cases until a federal case for the same tax years is concluded. So once the feds conclusively determine what the taxpayer's correct income was, they notify the state and the state assesses their income tax on that amount.

Many states also impose an affirmative obligation on taxpayers to report any federal adjustments (whether made in agreed audits or litigation) to the state. If the taxpayer fails to report federal changes, the statute of limitations for the state to assess state taxes remains open.

[The Observer]

On Monday (March 22), April Mottahedeh's opening brief is due to be filed with the appeals court - unless she tries to get another extension. But something jcolvin said earlier escaped my attention and now I am wondering if this is the route that April will try in her appeal:

April may be left arguing that she fits within the final (highlighted) sentence of (c) (inequitable to hold her liable), assuming that there may be facts supporting this argument in the trial record.

While April would in all likelihood fail to meet the requirements of Section 66 (c) (a) and (b), the "equitable relief" clause under (c) gives the IRS more latitude in determining whether April is an innocent spouse. However, the IRS has spelled out what criteria must be met by a spouse prior to claiming equitable relief in Revenue Procedure 2003-61:

(1) The requesting spouse filed a joint return for the taxable year for which he or she seeks relief. This seems to disqualify April from being eligible for equitable relief.

(2) Relief is not available to the requesting spouse under section 6015(b) or (c) Again, the requirements under that section seems to be a bar against relief, since it requires that a joint return was filed.

(3) The requesting spouse applies for relief no later than two years after the date of the Service's first collection activity after July 22, 1998, with respect to the requesting spouse. I cannot determine whether April would meet this criteria since we don't have all of the facts and timeline available to show when the IRS started collection activity against April. While the Notices of tax liens are certainly evidence that the IRS started collection activity, those notices were only recorded against Peymon.

(4) No assets were transferred between the spouses as part of a fraudulent scheme by the spouses. Again, I am uncertain where this leaves April. In my layman opinion, the fact that April was depositing checks from Peymon's activities into her credit union account is an example of a fraudulent transfer.

(6) The requesting spouse did not file or fail to file the return with fraudulent intent. I imagine April would claim that she did not file a joint return because she had no idea or reason to believe that Peymon's earnings were taxable and that she was jointly liable. Of course the fact that she was putting monies attributable to Peymon into her account makes this a hard line to swallow. Otherwise, if she could convince the court that her failure to file the joint return was not intended to commit fraud, then she might dodge the requirement of (1) above.

(7) The income tax liability from which the requesting spouse seeks relief is attributable to an item of the individual with whom the requesting spouse filed the joint return (the “nonrequesting spouse”), unless one of the following exceptions applies:

(a) Attribution solely due to the operation of community property law.
(b) Nominal ownership.
(c) Misappropriation of funds
(d) Abuse not amounting to duress.

Could April allege that the funds that Peymon were generating were only nominally hers and/or were misappropriated as a plausible defense? Again, I think it would be a very high barrier for her to clear given what she has done with the monies. I doubt that she could claim she was abused, since again the requirement is that a joint file had to be signed and filed by her - which has not happened. And I doubt Peymon is going to be agreeable to any claim being entered into the court records that he abused his wife.

From what I understand, the intent of Section 66 was to address situations where one spouse dominated the financial aspects of the marriage and kept the other spouse in the dark by lying or misleading about unreported income or abusing the spouse over the control and reporting of the marriage's finances on the joint return. April, by not filing a joint return, has essentially disqualified herself from being able to avoid joint liability, unless she can prove that she essentially had the financial awareness of an ice plant.

[Arthur Rubin]

There's a difference between 'innocent spouse' and 'injured spouse'. I doubt April qualifies for either.

[notorial dissent]

From my NAL perspective, I just flat out DO NOT see anyway that April can claim any form of innocence, ignorance, or injury as she was and has been a willing participant and player in Paymon's little not so little scam for most if not all of their marriage. She most certainly has benefited from it all along, so I just don't see any way she, or her lawyer, can believably make such a claim. I mean talk about believing three impossible things before breakfast. Admittedly she wasn't the principal in this, but she was certainly a willing participant in the scam and IRS fraud.

[The Observer]

I don't think April is going to be successful in trying to claim that she is an innocent spouse. I agree that she has taken too many steps over the years to nullify any possibility that she was unaware of what Peymon was doing and that there was no liability for which they were both liable.

However, there is nothing to stop her making that claim. And given the fact that April is trying to sever her case from Peymon, I am guessing either her attorney will go along with it, and then shrug his shoulders at her when it fails, or he will stop representing her if he is not willing to go that route and cannot convince her to give up that strategy. Behind all of this is Peymon, who most likely controls the financial strings in regards to the attorney being paid. I would not be surprised to see a new attorney appear on the horizon if Peymon cannot get the attorney to argue what Peymon tells him to argue. The only subtle difference is that Peymon has to worry about getting April off the hook. If April has laid down a ultimatum about this ("If I get hit with the taxes, I am divorcing you.") then that adds a whole new complexity to the case at hand.

[notorial dissent]

Oh, I am quite sure she/they will try it, in fact I really expect it, she/they really don't have any other options, so it is either Hail Mary or admitting guilt and throwing herself on the mercy of the court, and that I just DON'T see happening.

This attorney is an unknown quantity to me, so I don't really know what he is likely to do. I can definitely see Peymon trying to get him/his lawyer to argue his particular legal phantasms, I just don't know if this guy will. I am still concerned that he saw no real problem in representing both of them when their cases would ultimately be mutually antagonistic.

I do think Peymon is twixt a really big sharp rock and a really hard place as far as April is concerned, and I am sure she isn't thrilled with the idea of jail time. The only realistic options I see for Peymon are arguing more of his nonsense, or at least trying to get his lawyer to, and which I really do expect him to do, or throwing himself under the bus trying to protect April, and in all honestly, I just don't see that working either.

I think, as they say, he is well and truly screwed about six ways to Sunday. Sucks to be him.

[The Observer]

I do think Peymon is twixt a really big sharp rock and a really hard place as far as April is concerned, and I am sure she isn't thrilled with the idea of jail time.

Unless I have missed something, we are still at a civil prosecution regarding the liability of the taxes. Whether the IRS is going to pursue Peymon and/or April criminally is unknown. And at this point, regarding these assessments, I doubt that a CI investigation has been even initiated - or will. Given the amount of litigation that has gone on regarding the assessments, I believe that the US attorney's office would not accept a criminal prosecution recommendation from CI. The Justice Department's philosophy is heavily reliant on jury appeal; the outlook of a potential juror who could hang the jury would be based on the belief that the government has been persecuting Peymon and that they already got him once. If the IRS could show that Peymon profited greatly from his scam and was spending lavishly on luxury items like expensive homes, cars, yachts, trips and the like, then juror members are more likely to vote for a criminal conviction.

Of course, if April really blows a fuse over being hit with joint liability, her going to the AUSA and willing to tell all would be another consideration for prosecution. As they say, hell hath no fury like a woman assessed for her mate's stupidities.

The only realistic options I see for Peymon are arguing more of his nonsense, or at least trying to get his lawyer to, and which I really do expect him to do, or throwing himself under the bus trying to protect April, and in all honestly, I just don't see that working either.

I think you have nailed it there in regards to what Peymon will attempt. Throwing himself under the bus was a bit of a surprise to me - most of the tax denial promoters over the years have given their mates little consideration when the chips are down (Hendrickson, Schiff, and Ed Brown come immediately to mind). But given the attempt to sever their trials, it is apparent April does not want to go down with the ship and Peymon is scrambling like crazy to get under the bus; whether that is because he fears April giving up the goods on him or because he sincerely does not want this marriage to end. Hopefully it is the latter reason, just in hopes that Peymon has some humanity left in him.

[wserra]

And . . . Gibbons has moved to withdraw from representing both Peymon and April. The applications and accompanying affidavits are identical except for the appropriate uses of "wife", "husband" and gender pronouns. Gibbons basically says that his clients promised to tell him what the case was about: he told them that "I would only accept representation if my client timely provided a draft of the issues together with the trial exhibits". They haven't done that, although this is the first time I recall that a lawyer put in writing that he relied on his clients to tell him the issues. Moreover, "upon further consultation with my client other [unspecified - WS] irreconcilable conflicts between us have arisen". If they are the type of "irreconcilable conflicts" I think it likely they are, I would expect a lawyer to get that in order - "I won't put that bullshit on paper" - before accepting the representation.

The parties' excuse: "Just before Christmas 2020, my sister, her husband and 4 daughters, ages 4 -16 moved back to the United States from Somoa and stayed with us for almost 3 months. During their first week back, their 7-year-old daughter became sick with chicken pox. Then chicken pox rapidly spread among all the children. At the same time, my sister and her husband both became ill with the flu and were unable to attend to their children, which then became the responsibility of my husband and I to help them recover. It took my sister and her husband almost 3 weeks to get over being sick and then my husband and I, one after another also got the flu, followed by 2 of our 3 daughters." Is Samoa like Puerto Rico in that its residents who have only island-based income don't pay federal income taxes?

These deadbeats filed their notices of appeal nearly two years ago. No one has offered me an appointment to the federal appellate bench. If someone had, however, I would be pretty fed up with the Lottahooeys. About the only thing left to them is "the dog ate our briefs".

[notorial dissent]

I guess I was jumping the gun, but I really did have it in my mind that there was a threat of prosecution hanging in the background, maybe conflating it with another case, or mind just going, it was early when I wrote my original post so it could be either or both.

Yaknow, I was going to say my opinion of Gibbons had gone up just a tad, then WES pointed out Gibbon's current excuse "I would only accept representation if my client timely provided a draft of the issues together with the trial exhibits" and it went right out the window. He allegedly went in to court willing to represent both of them, not knowing what was going on????? Oh, come on!!!! That speaks either of a magnitude level of incompetence I hadn't thought possible, or else, as our English brethren would say, someone is telling porkies!!!! Irreconcilable conflicts!!!!! Irreconcilable conflicts, indeed, oh my stars and garters, you don't say!!!! Like that wasn't glaringly obvious from the start, even without knowing all the nit picky little details. Howsumevers, I think the likelihood of "I won't put that bullshit on paper" probably was more of a contributing factor, which indicates that Gibbons may just have an inkling about what he can get away with in court and what he can't, notice I did say may. I think we are long past benefit of the doubt time. Now he could have taken the tack of Anthony Williams' poor PD and presented Peymon's nonsense under the "my client insisted this be presented" avenue, but he may just have wised up enough to figure it was a bad idea all 'round and baled.

I will give them points though for the final excuse as being finest kind "the dog ate my brief" excuse, worthy of GIL himself. I have to admit I expected lots of unintended comedy with this, and it has more than delivered, but I agree with WES this has drug on way too long, and would now seem to be no closer to an actual resolution than it was before all this happened.

[The Observer]

I am going to go out on a limb here and say that nobody paying attention to this thread is shocked, shocked I say, by this new development. It is patently obvious that Peymon is trying the four-corner stall defense of basketball in trying to delay the inevitable. File for an appeal, wait until your filings and briefs are going down in flames, then hire an attorney and tell the court you are ready to play ball, but you just need more time. Give your attorney nothing but garbage arguments and let him know that he can resign from the case at the last minute, then ask the court for another continuance so that you can find another attorney that can better represent you. Wash, rinse, spin then repeat, always with the goal of avoiding having to go the dryer.

The court must have some idea of what a filing from Peymon consists of, so they are not doing themselves any favors by letting this drag out. They need to tell him that the shenanigans are over and its time for the appeal hearing to commence.

Is Samoa like Puerto Rico in that its residents who have only island-based income don't pay federal income taxes?

Yes, if you are referring to the territory of American Samoa. But from what I understand that exclusion only applies if you are a native Samoan. American citizens who reside there are still required to pay US federal taxes, plus whatever taxes that American Samoa levy against citizens and residents. If an American citizen who is still a US resident and earns income in AS, then they can file form 4563 for permission for that income to be excluded from US taxation.

Of course there is the non-US-territory portion of Samoa simply known as the Independent State of Samoa which is not under US jurisdiction, being an independent country. It is not clear from Gibbon's statement if by "Samoa" he means the sovereign nation of Samoa.

At the same time, my sister and her husband both became ill with the flu and were unable to attend to their children, which then became the responsibility of my husband and I to help them recover. It took my sister and her husband almost 3 weeks to get over being sick and then my husband and I, one after another also got the flu, followed by 2 of our 3 daughters.

Simply amazing at the incredible bad luck of the Mottahedeh Family. When the flu season became a no-show for the US due to COVID-19 being the 500-pound gorilla on the block, somehow this family ended up getting the flu. I wonder if they are on the anti-vax circuit and think flu shots are for sissies.

[notorial dissent]

Shocked, surprised, not in the least. I do wonder what the court is going to do. This reminds me of one of the sovcit gurus who made a habit of not getting lawyer til the last minute, then stretching things out as far as they could before the attorney quit and the poor dear had to get another attorney and get him up to speed, I forget how many times he got away with that before the judge said no more.

[wserra]

Gibbons is relieved from representing both April and Peymon. April's brief now due May 24, Peymon's June 1.

This is really becoming a joke.

[The Observer]

So what happens next?

1) Peymon and April wait until the last minute and tell the court they have a new appeals attorney, therefore they need another continuance to allow the attorney to prepare their briefs?

2) Peymon and April decide to represent themselves and ask for another continuance, arguing that the loss of Gibbons was devastating and they simply need more time?

3) Peymon decides he can represent April and himself better, and file a huge brief full of tripe in the hopes that the court will be overwhelmed?

4) Peymon and April retreat to Samoa beyond the reach of the US government and start selling detax packages to the natives?

[notorial dissent]

Gibbons is relieved from representing both April and Peymon. April's brief now due May 24, Peymon's June 1.

This is really becoming a joke.

Joke, yes, sad, pathetic, or is that peripatetic, most certainly. So all this meshugas for what amounts to another couple months of delay????? Not that I have any fondness for Gibbons, but I hope he socked them for a really large non-refundable retainer.

I have to agree with Observer here, I'm kind of surprised they haven't done a bunk, but then I never thought Peymon was overly bright, so he may just think he can pull a rabbit out of his hat and beat this.

[The Observer]

...I'm kind of surprised they haven't done a bunk...[/color][/b]

Well, I was being a tad flippant about them scampering off to the southwest Pacific, but I was thinking that it may be the only way for Peymon to keep April beyond the reach of the government. "Listen, honey, Samoa is so beautiful and you won't have to worry about traffic, crowds, tax liens, long lines at the stores, tax liens, price of gas, tax liens, noisy neighbors, and earthquakes. And hey, did I mention you won't have to worry about tax liens?"

Beyond that scenario, I really can't see Peymon giving up the lifestyle and available money from his marks in the US. I just don't think his ego will allow him to step back from the precipice he is standing on. So you are probably very right, ND, that Peymon won't quit while he is ahead.

[notorial dissent]

I concur, I have never thought Peymon was all that bright.

I'm not even sure he's all that good of a conman, just that he is really good at picking his marks and playing to that audience and that they are so utterly clueless they buy in to it hook line and sinker.

I also agree that there's a whole lotta ego goin' on there, and I just don't think it will let him do or consider the smart thing(s), either of throwing himself and April on the mercy of the court, for all the good it will do since legally/realistically I really do think he/they be brunt toast, or else do a runner.

The latter choice would require that he had the foresight to actually put some/most of his ill gotten gains somewhere untouchable except by him/them and then to actually have an exit strategy. Again, I have never thought he was all that smart and as you say, I think his ego is in the way, so that scenario doesn't really look promising either, and on top of it all that assumes he hasn't spent it all as fast as he got it. I have the feeling he has it tied up in material things he can't easily or readily move. Particularly since he seems to favor CA and FL, and let's face it real estate there is beyond pricey as is COL.

I guess we will find out when the Feds finally bring the hammer down.

[The Observer]

Gibbons is relieved from representing both April and Peymon. April's brief now due May 24, Peymon's June 1.

This is really becoming a joke.

So do we know what happened with April's deadline date? Just trying to figure if the long running joke is turning into a shaggy dog story.

[wserra]

Nothing in PACER. Since the deadline was four days ago, if it was timely filed, it should have shown up by now.