But however cool you may be, cat, watch those stipulations. See my blogposts “Watch That Stip”, 3/20/13, and “Stipulate, Don’t Capitulate”, 9/23/11.

Mary A. Laciny should have heeded my words when she copped to some Section 7206 fraudulent return counts, as told by Judge Thornton in Joseph E. Laciny and Mary A. Laciny, 2013 T.C. Memo. 107, filed 4/15/13.

Mary A. was a triple-threat: she took unsubstantiated deductions on her corporate and personal returns, failed to report income, and diverted corporate monies to personal use.

Mary A. and Joe were the corporate czars of Sta-Cool Air Conditioning & Heating, Inc. Mary A. ran the back office and stayed cool, until nailed by the Federales. Mary A. and IRS stipulated to certain of Mary A.’s delictions, which Judge Thornton can’t reconstruct from the record, but Mary A. “signed a plea agreement, attached to which was a statement of facts which she signed and a worksheet calculating the ‘Total Unreported Diverted Funds’. 2013 T. C. Memo. 107, at p. 5 (Footnote omitted).

“Pursuant to her plea agreement Mrs. Laciny was sentenced to 12 months and 1 day of prison and 1 year of supervised release; she was also ordered to pay restitution of $195,938.” 2013 T. C. Memo. 107, at p. 5 (Footnote omitted).

The $195,938 supposedly covered “a calculated tax loss for criminal purposes.” 2013 T. C. Memo. 107, at p. 5, footnote 4.

Mary A. pays up in full when restored to society. But when IRS claims she owes more tax and fraud penalties, her defense “I gave at the office” avails her not.

“At trial petitioners’ counsel argued that Mrs. Laciny’s restitution payment should be applied to petitioners’ deficiencies. Respondent’s counsel agreed that the restitution payment should be applied to any deficiencies determined by this Court but argued that the restitution payment has no effect on the redetermination of petitioners’ deficiencies in this case. The District Court, in ordering that Mrs. Laciny make restitution payments as part of the judgment, did not determine petitioners’ civil tax liability and did not bar respondent from assessing a greater amount of civil tax liability against petitioners or from assessing civil fraud penalties. Accordingly, petitioners’ deficiency or underpayment is not affected by the restitution payment. See Morse v. Commissioner, 419 F.3d 829, 833-835 (8th Cir. 2005), aff’g T.C. Memo. 2003-332; Hicks v. Commissioner, T.C. Memo. 2011- 180.” 2013 T.C. Memo. 107, at p. 13, footnote 9.

Criminal defenders, make sure you deal with this in your plea bargains, and let your clients know that restitution may not be the end.

Mary Larceny learned this the hard way.

A quick by-the-way. This blogpost was delayed because of the effects of some recent dealings of mine with orthopedic professionals. But not those in Charles L. Barocas and Heidi Cohen, 2013 T. C. Memo. 106, filed 4/15/13, even though Charley is the director of the American Society of Orthopedic Professionals (ASOP). I broke my collarbone. Please omit flowers.