Bernard Kramer, an 83-year-old resident of Delray Beach, Florida, admitted to stashing $1.1 million in secret Swiss and Israeli bank accounts to avoid paying taxes.  This news broke on Tuesday and since then I have seen quite a bit of internet chatter about how “fair” it is to target this poor guy, who is probably now going to be poor in every sense of the word.  Most of the opposition and hostility has to do with a perceived leniency towards powerful corporations that can hold foreign assets freely and completely avoid paying taxes (so why go after this no-name retiree?).  Others disapprove of the plea deal, which is reported to include payment of $588,000 in penalties, plus the underlying tax, plus up to eight years in prison.  Doesn’t the IRS have bigger fish to fry?

$1.1 million is not a huge sum of money compared to what the IRS collects each year.  However, what makes this crime particularly egregious is the fact that Kramer literally perpetuated the fraud for 25 years by filing false tax returns during the years 1987-2012.  In trying to figure out possibly why the IRS picked Mr. Kramer to showcase as an example of bad behavior and an example of what happens to tax evaders, I think this long pattern of behavior is one clue.  Also, if the IRS only prosecuted famous people, regular taxpayers might grow apathetic and lazy about paying taxes.  Perhaps another reason insisting on a very severe punishment for Mr. Kramer is to demonstrate that the IRS will not be more lenient on the elderly.  After all, old people have had more time to amass their fortune and they’ve been around long enough to know that taxes are unavoidable.

Are there ever situations where the IRS takes one’s age into account?  Yes, age is something that factors into the acceptance or rejection of an Offer in Compromise.  It is rarely ever the deciding factor, but it definitely comes into play.  All other variables remaining equal, I think the IRS is more likely to accept the offer of an elderly retiree than the offer of someone who still has several years left in the work force.  It all has to do with future income and the likelihood of future income from work.  That being said, the IRS isn’t Denny’s.  They aren’t too keen on senior discounts.