NY CPA Charged With IRS Abuse

This case originated in 1994 when a farm boy’s "brain storm" turned into a nightmare. He thought he could save the debt-ridden, family farm from bankruptcy by growing marijuana. The ill-conceived plan was discovered by local authorities before the plants could be harvested. The farm boy plead guilty and served his time under the harsh minimum sentencing guidelines for crimes of this sort.

Not quite end of story! Next, IRS steps in and slaps a lien on the farm. According to the initial IRS audit report, the farmer owed over $40,000 in back taxes, interest, and fines because of the "ill gotten gains" from the sale of a "controlled substance."

Just before IRS could get their hands on the keys to the tractor, a NY CPA/Attorney, Peter G. Masullo, agreed to take over the tax case, on a "Pro Bono" basis. A bitter fight ensued, lasting over a year. IRS accused Mr. Masullo of the serious crime of falsifying documents. They recommended disciplinary action against Mr. Masullo for use of what they called "abusive language."

When we reached Masullo for comment he steadfastly proclaimed his innocence. "I didn’t do it! All I did was point to the door and politely suggest that their souls belong in the company of Lucifer."

Mr. Masullo became visibly angered as he continued, "I wasn’t going to let IRS push me or my client around. The agents were convinced of my client’s guilt before they even started their audit. They clearly overstepped their role as accountant/investigators. They behaved more like storm troopers. The state police had already confiscated every scrap of paper they could find at the farm house, including a search through ‘large, kitchen type, plastic bags’ (in plain English this means the garbage). That wasn’t enough for IRS. An unnamed renegade agent issued a subpoena to everyone who had ever done business with this destitute farmer. The agent admitted to spending over 200 hours on this case. I’ll venture a guess that he spent an equal amount of time in his vendetta against the farm boy’s aged parents. And that doesn’t include the agent’s supervisor’s time, nor the appeals officer’s time, nor clerical and secretarial time. Can you imagine the cost of defense if you had to pay a lawyer for 500 or 600 hours? It simply is not fair when the vast, unlimited resources of the federal government are unleashed against the ordinary taxpayer.

"They tried to intimidate me with their authority, enormous amounts of paperwork, and bogus charges against my honor. They even took the unprecedented step of enforcing a levy against the farm boy’s parents’ only source of income, their meager Social Security Benefits. I fought back with a paperwork barrage of my own. It helps when the facts and the Constitution are on your side. On appeal, I was finally able to convince IRS that the illegal profits were nominal because the plants were still in the ground. I think the record speaks for itself and I have been totally vindicated."

We did check the record, and Mr. Masullo seems to have prevailed. According to an agreement filed by the IRS Appeals Office on June 16, 1998, the $40,000 original assessment was compromised down to $7,000, and almost half of that was interest and penalties. There was nothing in the compromise about falsified evidence, and all charges of abusive language appear to have been dropped. We attempted to reach IRS for comment, but their phone lines were continually busy.

This is a true story. Names have been withheld, except for the innocent.