According to Reuters News Service, criminal tax charges have been filed by the Internal Revenue Service (IRS) against Professional Golfer Jim Thorpe. The information that was filed with the District Court in Orlando, Florida alleges that Jim Thorpe failed to file or pay his taxes for 2002, 2003 and 2004. According to the IRS during those 3 years Thorpe’s taxes totaled about $1.5 million on income of over $5.2 million. Failure to pay taxes or file an income tax return is a violation of Internal Revenue Code Section 7203, punishable by 1 year in jail. In addition, the IRS alleged that for one of the years Thorpe failed to file his corporate income tax return. Thorpe could go to jail for seven years if convicted on all 7 counts.
Thorpe has pled not guilty and his attorney released a statement saying that he did not willfully violate the tax laws. It is true that mere negligence will not result in tax evasion or tax fraud charges. However, from the IRS filing it appears that the IRS has some strong evidence that Thorpe didn’t just overlook his tax problems. The IRS says that it had investigated him once before for possible criminal tax violations in the mid-90s, and he got off the hook by claiming he got confused because he had two accountants and thought they were filing the returns. Also his accountant had advised him of the need to pay estimated taxes, but he only paid in a few thousand dollars. While he wasn’t paying his taxes he was spending money like water-including the purchase of a $2 million home. Most juries don’t like to hear that, and getting him off the hook will be a tough job for his tax attorney.
It is worth noting that one of the witnesses against Thorpe will likely be his accountant, and of course there is no accountant-client privilege in criminal tax cases. One reason why those with potential tax fraud problems should not be giving sensitive information to their accountants.