A Boston College Law School professor who is an expert on tax law said Thursday that the indictment of the Trump Organization and chief financial officer Allen Weisselberg for cheating on taxes appears legally sound - but it will be up to prosecutors to prove their case.
“The question is whether the government will be able to meet its burden of proof in showing beyond a reasonable doubt that the defendants willfully engaged in this activity,” Professor James R. Repetti said. “I think it’s always a question about whether they can actually prove the facts, but it seems to me the legal basis for the indictment is sound.”
“This is not a frivolous charge,” Repetti said. “Our tax system relies on companies to accurately report the income of its employees and to properly withhold employment and income taxes on such income. A company’s willful failure to do so jeopardizes the operations of our government,” he said.
“If they’re not going to enforce these rules, the whole system is going to crumble,” he said. He commented in both an interview and written statements.
Repetti said the US Internal Revenue Service “routinely looks for abuse of fringe benefits when auditing closely held businesses.” He said he was puzzled by the IRS not being involved in the New York state case, but he noted that “the IRS has been woefully underfunded for several years now. They simply don’t have the manpower.”
Brian Galle, a Georgetown University tax law professor who once prosecuted cases for the US Department of Justice’s Tax Division, tweeted Thursday before the indictment that “failure to pay tax on in-kind benefits paid by a small family-owned business was one of the most common tax fraud cases I prosecuted, when I was in that biz.”
Galle said in an interview, “The thing that makes it unusual is the guy who owns the business. Aside from that, this would not be an unusual case to cross my desk at all.”
He said it was “typical” in that “you have a small business with what we would call weak internal controls where top executives are taking in-kind payments and using that for luxury purchases and thinking that they don’t have to pay the government.”
“If the facts in the indictment are true, this is a classic tax evasion case,” he said.
Galle noted that more more charges may well be upcoming. “This is probably only the first indictment. New York prosecutors have been perfectly clear their goal is to flip Weisselberg. When you’re doing that, you try to reveal as little as possible how much you’ve got against other potential defendants,” he said.
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