If You Were Paying Attention, You Could See This Tax (and Financial) Disaster Coming From A Mile Away

“In May 2004, Plaintiff hired Ra Shonda Kay Marshall… to ‘assist [him] in budgeting [his] income and expenses and to provide bill payment services.’  Marshall was previously employed at Omni Elite, a financial management firm in Ohio, where she had provided bill payment and other financial services to Plaintiff.  However, she left the firm to work exclusively for Plaintiff.  Upon hiring Marshall, Plaintiff signed a Power of Attorney giving her control over his funds and authority to file and pay taxes on his behalf.

Additionally, Plaintiff retained a tax accountant, David Krebs… of CPA Advisory Group, Inc., ‘to provide tax advice, to ensure tax returns were properly filed, and to confirm that [Plaintiff’s] tax bills were paid on time.’”


Nathan Hannah, Attorney

The man referred to as “Plaintiff” in the court decision quoted above is a recently retired major league baseball player who had a very successful career.  Can you guess what happened next?  I knew it as soon as I read the last sentence of the first quoted paragraph above.  Here’s the punch line from the court decision:

“In late 2008, Plaintiff decided to manage his money himself and terminated Marshall. At this time, Plaintiff hired new tax advisors and also terminated Krebs.  After terminating Marshall and Krebs, Plaintiff reviewed his bank statements for 2008 and realized that Marshall had embezzled millions of dollars from him and used his funds to pay her personal expenses.”

The above quotes were published in an article posted July 15 at  No, the court decision did not deal with a claim by the ballplayer for damages against the financial manager.  It dealt with the ballplayer’s claim that he didn’t owe the Department of the Treasury penalties for willful neglect. Seems that his adviser was too busy stealing his money to be bothered to file federal income tax returns or pay income tax for him.

Now, this is different from the Wesley Snipes story. The ballplayer didn’t think that he didn’t have to file tax returns or pay income tax.  He just thought it was ok to delegate that responsibility to someone else, then not bother to check to see if the person he delegated to was doing it.  The court disagreed with the ballplayer’s argument that delegating the responsibility meant that he wasn’t responsible.  Here’s the judge’s explanation:

“….while Plaintiff signed a Power of Attorney giving authority to an agent and delegated his responsibility for tax liabilities to agents, he still maintained the ultimate responsibility for his tax liabilities, oversight of his agents, and the ultimate control over his taxpaying activities. Thus, the failure to file and pay taxes as a result of the embezzlement by Plaintiff’s agent which resulted in penalty assessments against him was not beyond Plaintiff’s control….”

You had to know the ballplayer was in trouble as soon as you found out that he gave his newly independent financial manager control of his money, including filing his tax returns and paying his taxes. He ended up owing the government over $1 million in penalties for late filing of his returns and late payment of the taxes, but that wasn’t the worst of it. The financial adviser stole from him to the tune of about $2.7 million.

The ballplayer sued the thief and got a judgment against her, of course, but I doubt he will ever collect.  No word on whether the thief was prosecuted.

I also doubt that the ballplayer will ever again delegate the handling of his money to someone else and not bother to make sure that his tax returns were filed and the tax was paid.



In what could be good news for some charities, the Internal Revenue Service has produced a shorter application form for small charities to apply for 501(c)(3) federal tax-exempt organization status.

Announced July 1, the new application, Form 1023-EZ, is three pages long. That’s much shorter than the standard Form 1023 that weighs in at 26 pages. The IRS says that as many as 70 percent of all applicants will qualify to use the new form. Most organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible to use Form 1023-EZ.

The original proposal for eligibility to use the new, shorter form would have included organizations with gross receipts of $200,000 or less.  The IRS press release announcing the new form (IR-2014-77) didn’t say why the original $200,000 threshold was reduced to $50,000, except that the change was made “following feedback this spring from the tax community and those working with charitable groups.”

Form 1023-EZ must be filed online using, and a $400 user fee is due at the time the form is submitted. There’s an eligibility checklist in the instructions for the form that must be completed before the form can be filed.

In an apparent acknowledgment of the need for the new, shorter form, the IRS press release also says: “The change will allow the IRS to speed the approval process for smaller groups and free up resources to review applications from larger, more complex organizations while reducing the application backlog. Currently, the IRS has more than 60,000 501(c)(3) applications in its backlog, with many of them pending for nine months.”

The press release also quoted IRS Commissioner John Koskinen as saying: “Rather than using large amounts of IRS resources up front reviewing complex applications during a lengthy process, we believe the streamlined form will allow us to devote more compliance activity on the back end to ensure groups are actually doing the charitable work they apply to do.”

A backlog of more than 60,000 applications?



Nathan B. Hannah is a Shareholder in the Tucson office, and practices in the areas of estate planning and administration, real estate, and commercial transactions.  He is also a noted blogger, and you can find more of his articles on his private blog,

Contact Attorney Hannah:  or  520/ 322-5000