New Excuse for Nonfiling: It's a Syndrome

[Cpt Banjo]

The attorney for the top aide to New York Governor David Paterson has come up with a new excuse for his client's failure to file and pay his federal and state taxes: "Non-filers syndrome".

http://www.nydailynews.com/news/2008/10 ... d_not.html

http://blogs.timesunion.com/capitol/archives/9047

See additional links at TaxProf Blog: http://taxprof.typepad.com/

This excuse is even worse than Steve Martin's classic, "I forgot!"

[Demosthenes]

I've been chuckling over that medical diagnosis all morning.

Late-filing syndrome, sometimes known as nonfiling syndrome or failure-to-file syndrome, is not listed in the Diagnostic and Statistical Manual of Mental Disorders. A spokeswoman for the American Psychiatric Association said that the group does not recognize it as a psychiatric condition.

But legal experts said that it is not uncommon for tax evaders to claim they suffer from such a syndrome, because it can shield them from criminal penalties.

[Judge Roy Bean]

Wasn't Kestenbaum with the IRS at one time?

[Famspear]

The attorney for the top aide to New York Governor David Paterson has come up with a new excuse for his client's failure to file and pay his federal and state taxes: "Non-filers syndrome".

Wow. I just wonder if it would be possible for me to develop the I Must Get a Little Chicken on the Side At Least Twice a Week Syndrome and convince my wife that it's a bona fide psychological condition that would induce her to excuse the behavior that would be implied by that condition.

Or, what if I develop the All My Personal Living and Family Expenses Are Deductible for Federal Income Tax Purposes, the Provisions of 26 USC 262 to the Contrary Notwithstanding Syndrome; maybe the Internal Revenue Service would be understanding of my condition.

Maybe we will see the losers at losthorizons developing the I Believe Everything That Ex-Con PeterEricBlowhardMeister Hendrickson Says or Writes About The Tax Law Even Though He Has No Training or Experience With Tax Practice and Can't Get His Theories To Work in a Court of Law So I Shouldn't be Prosecuted for Following Cracking the Code Syndrome.

Good luck with that.....

[Dr. Caligari]

When I used to represent people in criminal tax cases, I would sometimes run accross clients who I believed legitimately had a failure-to-file syndrome. They were not tax protestors-- they never claimed any legalistic or political reason for nonfiling. And if they were tax cheats, they were awfully stupid about it-- they simply didn't file, when the IRS was getting W-2s and 1099s showing all their income. What made me believe they were not willful tax cheats was that, entirely separate from the tax arena, they had real psychological issues about paperwork. One client was bouncing checks all over town because he couldn't get his act together to deposit his paychecks in the bank-- he had over a year's worth of undeposited checks sitting on his dining room table, under a huge pile of other papers. Another client made a very good income but kept getting her electricity shut off because she never sent her payments in on time. In both cases, I persuaded the IRS to forego criminal proscution on the ground that they couldn't prove willfulness. (The clients were hit with back taxes, interest and civil penalties.)

These folks were very different, personality-wise, from the typical tax evader, who filed a return but either reported false deductions, or reported W-2 and 1099 income but omitted income from some other source which wasn't reported to the IRS. Those people were acting out of greed, and had a realistic belief that they were going to get away with tax fraud. The nonfiler-with-W-2-income type is a very different character.

[Quixote]

IRC §6511(h) defines "financial disability". The regulations state that the proof refered to in (2)(A) is a doctor's statement. Although 6511(h) only tolls the limitation period for refunds, I suspect that a financially disabled person could avoid other time related penalties as well.

(h) Running of periods of limitation suspended while taxpayer is unable to manage financial affairs due to disability
(1) In general
In the case of an individual, the running of the periods specified in subsections (a), (b), and (c) shall be suspended during any period of such individual’s life that such individual is financially disabled.
(2) Financially disabled
(A) In general
For purposes of paragraph (1), an individual is financially disabled if such individual is unable to manage his financial affairs by reason of a medically determinable physical or mental impairment of the individual which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered to have such an impairment unless proof of the existence thereof is furnished in such form and manner as the Secretary may require.
(B) Exception where individual has guardian, etc.
An individual shall not be treated as financially disabled during any period that such individual’s spouse or any other person is authorized to act on behalf of such individual in financial matters.

[LaVidaRoja]

As I recall, there was one case in the 90's where a non-filer for two years established sufficient disability to the court to have the penalties waived for one year. TP was in an alchool-induced coma on the due date of the return, and for a month or two before and after. The Court agreed that there was an inability for him to file his taxes for that year. The other year, he was conscious at the due date and the Court found no disability.

I THINK the case was in So. Cal. and the attorney MAY have been Joyce Rebhun (sp?)

[The Observer]

I THINK the case was in So. Cal. and the attorney MAY have been Joyce Rebhun (sp?)

Joyce Rebuhn has been known for being an advocate of those taxpayers who are suffering from alcohol or drug dependency and has made it point in her practice to request reasonable cause abatements of penalties where she can show that the dependency was directly relevant to the taxpayer failing to file or pay timely.

[Doktor Avalanche]

I know people who have terminal cases of rectal-cranial insertion, but as the great Ron White once said, "You Can't Fix Stupid".

[Famspear]

Apparently, claiming that you have this syndrome may not prevent you from losing your job....

http://cityroom.blogs.nytimes.com/2008/ ... ng-job/?hp

[Dr. Caligari]

http://cityroom.blogs.nytimes.com/2008/ ... -syndrome/

[grixit]

As a registered democrat, i'm ashamed of the New York state branch of the party. Our proud tradition of audacity and arrogance in government is ill served by such paltry mendacities. We expect, and deserve, bolder scandals than this.

[Famspear]

http://cityroom.blogs.nytimes.com/2008/ ... -syndrome/

Wow, and I just thought it was a character flaw.

Excerpt from the linked article:

In an article titled ” ‘Failure to File’ Syndrome: Legal and Medical Perspectives,” published in the New York Law Journal in 1994, Elliot Silverman, a lawyer, and Dr. Stephen J. Coleman, a practicing psychiatrist, describe the traits shared by sufferers of the syndrome:

They are sophisticated, both financially and with respect to taxes.

The reality of ultimate discovery of the failure to file is obvious to them.

The potential penalties, both financial and professional, are clear to them.

They acknowledge that these penalties will likely occur.

There is often no clear benefit to not filing, in that either (a) there is no significant tax due, or (b) they have the money to cover their tax liability, or (c) they can easily borrow the money to cover the liability.

They usually have a history of filing in the past.

They sometimes get extensions and make some estimated payments.

They often are anxious and obsessed about not filing.

And yet, exhibiting self-destructive behavior like lemmings rushing to the sea, they do not file until the I.R.S. is upon them.

The authors also say other personality traits are common in those suffering from the syndrome, which is not recognized — at least, not yet — by the psychiatric profession at large. Individuals with the syndrome tend to be perfectionists and workaholics, hypercritical of themselves and others. They have difficulty talking about their problems with others and cannot ask for help until their secret is exposed.

(bolding added).

If one of these sufferers is charged with willful failure to file, it would seem that the matters described in the bolding material above, especially if admitted by the defendant, would tend to reduce the likelihood of a successful defense of "lack of willfulness." But willfulness (or lack thereof) is a jury question -- so, who knows?

[Gregg]

Wow. I just wonder if it would be possible for me to develop the I Must Get a Little Chicken on the Side At Least Twice a Week Syndrome and convince my wife that it's a bona fide psychological condition that would induce her to excuse the behavior that would be implied by that condition.

That was the LAST Governor of New York.

Actually, especially after the above references are posted, I may not totally buy this guy's story, but I do believe the theory. In fact, I honestly admit to having a lot of the symptoms. Since my side company getting big enough for me to hire people who take care of these things for me more or less coincided with my divorce, when my wife took care of them, I definitely had a few of them. I always put off my taxes and last year was the first in years I didn't file an extension that resulted from me basically just not getting the stuff together for the accountant who does them for me, although I am myself a lapsed CPA and my return isn't really very difficult. I have had my electricity and water both turned off before because the bill was setting on my desk unopened. I make W2 and 1099Div income near or over 7 figures so it's never been about money, I just avoid it sometimes, and honestly if my PA didn't take care of most of that stuff I'd have more problems than I have had before. I get it.