Anthony J. Marzullo and Mary P. Marzullo - Page 7

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          return, contending that he could not afford to pay the tax due              
          thereon because of financial difficulties.                                  
               The College offered as an employee benefit a matching pension          
          plan whereby it would match its employee's contribution up to 5             
          percent of the employee's salary. Mr. Marzullo participated in              
          this plan and had the matching contribution calculated on the               
          entire amount of his salary, not just on the amount paid to him as          
          salary and reported as such on his Form W-2.  He determined his             
          total salary by adding the omitted income from the accounts payable         
          account to the amount paid directly to him as salary.  But he did           
          not include as part of his salary the cost of medical benefits              
          received.                                                                   
               Mr. Marzullo listed the entire amount of his bifurcated salary         
          when applying for a loan.  On April 29, 1986, Mr. and Mrs. Marzullo         
          signed a loan application in which it was stated that Mr.                   
          Marzullo's annual salary was $60,000.  On February 8, 1988, Mr. and         
          Mrs. Marzullo signed a loan application in which  Mr. Marzullo's            
          gross monthly income was listed as $5,250 (which would total                
          $63,000 per year) and Mrs. Marzullo's gross monthly income was              
          listed as $3,666 (rounded) or $43,992 per year.                             
          Form 1099                                                                   
               Patricia Grega, the College's director of computer services,           
          discovered that Mr. Marzullo was receiving payments from the                
          accounts payable account in August 1988, when auditors were doing           
          a fiscal year audit of the College. The business office was                 




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