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jointly held, David and Rosalee each kept almost exclusive
control over one of them. In 1999, Rosalee began to transfer
money from the Electric Company’s payroll account into the
checking account that she controlled and into which she had her
own pay directly deposited.
Rosalee kept her embezzlement secret from her husband and
she did not report on their 1999 return the nearly $40,000 that
she had stolen. The Electric Company discovered the embezzlement
in December 2000, fired her, and then notified the authorities.
She told her husband what she had done and hired a lawyer,
Patrick Wiesner. (Wiesner also represented David in this case
and before the IRS.)
In his capacity as Rosalee’s lawyer, Wiesner advised her to
report the embezzlement income to the IRS on an amended return.
He told her that if she did, a sentencing judge would probably be
more lenient and might even depart from the U.S. Sentencing
Guidelines. But section 1.6013-1(a)(1) of the income tax
regulations created a problem. It prohibits spouses who have
already filed a joint return for a particular year from filing
amended returns changing their status to married-filing-
separately once the deadline to file returns has passed. The due
date for the Billingses’ 1999 tax year--April 15, 2000--was long
past, and so Wiesner told David (whether in Wiesner’s capacity as
Rosalee’s lawyer or as David’s is unclear) that David also had to
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Last modified: May 25, 2011