Tom Cryer
Encyclopedia
Tommy K. Cryer, also known as Tom Cryer (born September 11, 1949 in Lake Charles, Louisiana
), is an attorney
in Shreveport, Louisiana
who was charged with and later acquitted of willful failure to file U.S. Federal
income tax return
s in a timely fashion. In a pending case in United States Tax Court
, Cryer is contesting a determination by the U.S. Internal Revenue Service
that he owes $1.7 million in taxes and penalties.
According to a resume published by Cryer on his website, Cryer graduated with honors from Louisiana State University
(LSU) Law School in 1973, and was inducted into the LSU Law School Hall of Fame in 1987. Cryer is also a member of the Order of the Coif
(a law school honor society), that he served as a Special Advisor and Draftsman at the Louisiana Constitutional Convention in 1973 and that he has argued cases before the Louisiana Supreme Court
. Finally, he opened a solo law practice in 1975 and gained experience in many different civil and criminal matters.
, mostly in regard to taxes on wages. He claims that "the law does not tax [a person's] wages", and that the federal government cannot tax "[m]oney that you earned [and] paid for with your labor and industry" because "the Constitution does not allow the federal government to tax those earnings" (referring to "wages, salaries and fees that [a person] earn[s] for [himself]"). Cryer states:
Cryer also asserts that:
.http://www.usdoj.gov/usao/law/news/wdl20061026.pdf In March 2007, two counts of willful failure to timely file tax returns were added to the charges. The indictment alleged that Cryer evaded over $73,000 in taxes in 2000 and 2001 by using a trust to receive payments of dividends, interests and stock income.
The government responded by stating that Cryer, “asserted various tax protester
claims...and courts have rejected and discredited these claims” and countered Cryer's claim that the income generated from his law practice is not taxable, citing Commissioner v. Kowalski
, 434 U.S. 77 (1977) (payments are considered income where the payments are undeniably accessions to wealth, clearly realized, and over which taxpayer has complete dominion); Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th Cir. 1981) (rejecting taxpayer's contention that the “exchange of services for money is a zero-sum transaction”); Reading v. Commissioner, 70 T.C. 730 (1978), aff'd, 614 F.2d 159 (8th Cir. 1980) (monies received from the sale of one's services constitute income within the meaning of the Sixteenth Amendment).
The court rejected Cryer's first motion, in which Cryer had contended that the indictment had failed to allege "affirmative acts." The court rejected Cryer's second motion, in which Cryer had argued that the Secretary of the Treasury had failed to comply with the Administrative Procedure Act
by not publishing certain information in the Federal Register
. The court rejected Cryer's third motion, in which Cryer had asked for dismissal on the ground that he had not, with respect to a trust mentioned in the indictment, created that trust for the purpose of evading taxes. The court rejected Cryer's fourth motion to dismiss, in which Cryer contended that his income, which was derived through the practice of law in Louisiana, was not "taxable income" as defined by the Internal Revenue Code, ruling the contention to be "without merit."
Cryer was acquitted on July 11, 2007. Cryer did not make any of his arguments about the legality of the income tax to the jury itself. Instead he asserted that he really did not believe that he owed the taxes, so there was no criminal intent. According to the New Hampshire Union Leader:
Although the jury was not convinced of Cryer's willfulness, the theories he raised in his motions for dismissal have been repeatedly rejected by the courts. (See Tax protester arguments
and related articles.)
Cryer and the government have made various claims pertaining to tax law, and have cited many rulings by the courts that Cryer and the government contend support their conflicting positions. Citations to the cases can be found on web sites for Cryer and the government.
Section 6103 generally prohibits disclosure of certain information by IRS employees, but also provides the investigative purposes exception of section 6103(k)(6). Under that exception, an IRS employee:
The related Treasury regulations provide that IRS employees:
In May 2008, the court rejected Cryer's arguments, and his case was dismissed. The court ruled "that the disclosures at issue are covered by the 'investigative purposes' exception" of section 6103(k)(6). The court also rejected Cryer's claim that certain disclosures violated the rules on grand jury proceedings.
The IRS asserts that Cryer owes $848,806.00 in Federal income tax plus $615,384.37 in section 6651(f) penalties for fraudulent failure to file tax returns, $212,201.50 in section 6651(a)(2) penalties for failure to timely pay the taxes, and $43,044.84 in section 6654 penalties for failure to timely pay estimated taxes.
Cryer's statement in the petition, in explanation of why he disagrees with the IRS determination, is: "The amount of the claimed deficiency is disputed. The correct amount is $0.00." The trial, originally scheduled for January 10, 2011 in New Orleans, has been postponed to December 5, 2011.
Lake Charles, Louisiana
Lake Charles is the fifth-largest incorporated city in the U.S. state of Louisiana, located on Lake Charles, Prien Lake, and the Calcasieu River. Located in Calcasieu Parish, a major cultural, industrial, and educational center in the southwest region of the state, and one of the most important in...
), is an attorney
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
in Shreveport, Louisiana
Louisiana
Louisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
who was charged with and later acquitted of willful failure to file U.S. Federal
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
income tax return
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
s in a timely fashion. In a pending case in United States Tax Court
United States Tax Court
The United States Tax Court is a federal trial court of record established by Congress under Article I of the U.S. Constitution, section 8 of which provides that the Congress has the power to "constitute Tribunals inferior to the supreme Court"...
, Cryer is contesting a determination by the U.S. Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
that he owes $1.7 million in taxes and penalties.
According to a resume published by Cryer on his website, Cryer graduated with honors from Louisiana State University
Louisiana State University
Louisiana State University and Agricultural and Mechanical College, most often referred to as Louisiana State University, or LSU, is a public coeducational university located in Baton Rouge, Louisiana. The University was founded in 1853 in what is now known as Pineville, Louisiana, under the name...
(LSU) Law School in 1973, and was inducted into the LSU Law School Hall of Fame in 1987. Cryer is also a member of the Order of the Coif
Order of the Coif
The Order of the Coif is an honor society for United States law school graduates. A student at an American law school who earns a Juris Doctor degree and graduates in the top 10 percent of his or her class is eligible for membership if the student's law school has a chapter of the...
(a law school honor society), that he served as a Special Advisor and Draftsman at the Louisiana Constitutional Convention in 1973 and that he has argued cases before the Louisiana Supreme Court
Louisiana Supreme Court
The Supreme Court of Louisiana is the highest court and court of last resort in the U.S. state of Louisiana. The modern Supreme Court, composed of seven justices, meets in the French Quarter of New Orleans....
. Finally, he opened a solo law practice in 1975 and gained experience in many different civil and criminal matters.
Cryer's assertions about taxation
On his web site Cryer makes a variety of assertions about the legality of the federal income tax in the United StatesIncome tax in the United States
In the United States, a tax is imposed on income by the Federal, most states, and many local governments. The income tax is determined by applying a tax rate, which may increase as income increases, to taxable income as defined. Individuals and corporations are directly taxable, and estates and...
, mostly in regard to taxes on wages. He claims that "the law does not tax [a person's] wages", and that the federal government cannot tax "[m]oney that you earned [and] paid for with your labor and industry" because "the Constitution does not allow the federal government to tax those earnings" (referring to "wages, salaries and fees that [a person] earn[s] for [himself]"). Cryer states:
- The income tax law, although it is carefully written to APPEAR otherwise, does not actually tax your wages, salaries and fees that you earn yourself because the Constitution does not allow the federal government to tax those earnings.
Cryer also asserts that:
- [T]he law, which is carefully drawn to stay inside the Constitution, does not actually tax personal earnings, but the IRS publications, no more law than Time Magazine, say it does and by collecting taxes on personal earnings it has violated several fundamental constitutional restrictions.
Indictments
In October 2006 Cryer was indicted on two counts of tax evasionTax evasion
Tax evasion is the general term for efforts by individuals, corporations, trusts and other entities to evade taxes by illegal means. Tax evasion usually entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liability,...
.http://www.usdoj.gov/usao/law/news/wdl20061026.pdf In March 2007, two counts of willful failure to timely file tax returns were added to the charges. The indictment alleged that Cryer evaded over $73,000 in taxes in 2000 and 2001 by using a trust to receive payments of dividends, interests and stock income.
Cryer files motions to dismiss tax evasion charges
Cryer filed four motions to dismiss the case against him.The government responded by stating that Cryer, “asserted various tax protester
Tax protester (United States)
A tax protester is someone who refuses to pay a tax on constitutional or legal grounds, typically because he or she believes that the tax laws are unconstitutional or otherwise invalid...
claims...and courts have rejected and discredited these claims” and countered Cryer's claim that the income generated from his law practice is not taxable, citing Commissioner v. Kowalski
Commissioner v. Kowalski
Commissioner v. Kowalski, , is a decision of the United States Supreme Court relating to taxation of meals furnished by an employer. In this case, the Court interpreted Internal Revenue Code §119- and and Treas. Reg. §1.119-1...
, 434 U.S. 77 (1977) (payments are considered income where the payments are undeniably accessions to wealth, clearly realized, and over which taxpayer has complete dominion); Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th Cir. 1981) (rejecting taxpayer's contention that the “exchange of services for money is a zero-sum transaction”); Reading v. Commissioner, 70 T.C. 730 (1978), aff'd, 614 F.2d 159 (8th Cir. 1980) (monies received from the sale of one's services constitute income within the meaning of the Sixteenth Amendment).
The court rejected Cryer's first motion, in which Cryer had contended that the indictment had failed to allege "affirmative acts." The court rejected Cryer's second motion, in which Cryer had argued that the Secretary of the Treasury had failed to comply with the Administrative Procedure Act
Administrative Procedure Act
The Administrative Procedure Act , , is the United States federal law that governs the way in which administrative agencies of the federal government of the United States may propose and establish regulations. The APA also sets up a process for the United States federal courts to directly review...
by not publishing certain information in the Federal Register
Federal Register
The Federal Register , abbreviated FR, or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains most routine publications and public notices of government agencies...
. The court rejected Cryer's third motion, in which Cryer had asked for dismissal on the ground that he had not, with respect to a trust mentioned in the indictment, created that trust for the purpose of evading taxes. The court rejected Cryer's fourth motion to dismiss, in which Cryer contended that his income, which was derived through the practice of law in Louisiana, was not "taxable income" as defined by the Internal Revenue Code, ruling the contention to be "without merit."
Trial proceeds with reduced charges
The prosecution dropped its allegations of tax evasion (on which the law provides a maximum prison term of five years) against Cryer on July 9, 2007. Cryer was then tried on two counts of willful failure to file tax returns, for which the maximum jail sentence is one year in prison.Cryer was acquitted on July 11, 2007. Cryer did not make any of his arguments about the legality of the income tax to the jury itself. Instead he asserted that he really did not believe that he owed the taxes, so there was no criminal intent. According to the New Hampshire Union Leader:
- Cryer convinced jurors that he genuinely believed he was not liable for the $73,000 in taxes the government says he owes for tax years 2000 and 2001. Absent proof of criminal intent, the jury acquitted him.
Although the jury was not convinced of Cryer's willfulness, the theories he raised in his motions for dismissal have been repeatedly rejected by the courts. (See Tax protester arguments
Tax protester arguments
Tax protester arguments are a number of objections raised by individuals who deny that a person has a legal obligation to pay a tax for which the United States government has determined that person is liable....
and related articles.)
Cryer and the government have made various claims pertaining to tax law, and have cited many rulings by the courts that Cryer and the government contend support their conflicting positions. Citations to the cases can be found on web sites for Cryer and the government.
Civil litigation
On December 26, 2007, Cryer instituted a civil suit against the United States government, alleging that criminal investigators with the Internal Revenue Service violated and other provisions of law by disclosing confidential information and injuring Cryer's reputation during their criminal investigation of Cryer. Cryer alleged that IRS employees disclosed to approximately thirty of Cryer's clients that Cryer was under investigation, and that the disclosures violated the law.Section 6103 generally prohibits disclosure of certain information by IRS employees, but also provides the investigative purposes exception of section 6103(k)(6). Under that exception, an IRS employee:
- [...] may, in connection with his official duties relating to any audit, collection activity, or civil or criminal tax investigation or any other offense under the internal revenue laws, disclose return information to the extent that such disclosure is necessary in obtaining information, which is not otherwise reasonably available, with respect to the correct determination of tax, liability for tax, or the amount to be collected or with respect to the enforcement of any other provision of this title. Such disclosures shall be made only in such situations and under such conditions as the Secretary [of the Treasury or his delegate] may prescribe by regulation.
The related Treasury regulations provide that IRS employees:
- [...] may identify themselves, their organizational affiliation with the Internal Revenue Service (IRS) (e.g., Criminal Investigation (CI)) or TIGTA (e.g., Office of Investigations (OI)), and the nature of their investigation, when making an oral, written, or electronic contact with a third party witness [...]
In May 2008, the court rejected Cryer's arguments, and his case was dismissed. The court ruled "that the disclosures at issue are covered by the 'investigative purposes' exception" of section 6103(k)(6). The court also rejected Cryer's claim that certain disclosures violated the rules on grand jury proceedings.
Cryer's Tax Court case
In 2009 Cryer's federal tax problems continued. On April 2, 2009, Cryer filed a petition in the United States Tax Court. Cryer's petition includes a copy of three statutory notices of deficiency issued by the Internal Revenue Service, all dated January 5, 2009, in which the IRS asserts that Cryer owes $1,719,436.71 in taxes and penalties for the years 1993 through 2001.The IRS asserts that Cryer owes $848,806.00 in Federal income tax plus $615,384.37 in section 6651(f) penalties for fraudulent failure to file tax returns, $212,201.50 in section 6651(a)(2) penalties for failure to timely pay the taxes, and $43,044.84 in section 6654 penalties for failure to timely pay estimated taxes.
Cryer's statement in the petition, in explanation of why he disagrees with the IRS determination, is: "The amount of the claimed deficiency is disputed. The correct amount is $0.00." The trial, originally scheduled for January 10, 2011 in New Orleans, has been postponed to December 5, 2011.