Willy Wonka is under investigation for various tax crimes. He is the president of Golden Ticket Enterprises, a S-corporation. Beginning in 2013, Willy Wonka, created a Florida corporation, Oompa Loompa Marketing. Oompa Loompa sends Golden Ticket a monthly invoice for $10,000. Every month, Golden Ticket pays the invoice from Oompa Loompa. Willy has his secretary deposit the payment to Oompa Loompa in a bank account at Never Never Land Bank (located outside of the United States). Golden Ticket files an 1120-S every year and deducts the payments to Oompa Loompa as a business expense. Willy timely filed personal tax returns for 2013, 2014, and 2015 (he was on extension for 2015) but he failed to file a personal tax return for 2016. On March 1, 2017, an IRS agent showed up at the Chocolate Factory and asked Willy if he had control over a bank account outside of the United States and Willy said no. Willy was last seen at Never Never Land Bank withdrawing $50,000 cash from the bank account in the name of Oompa Loompa.
a. You are a Special Agent with IRS and you have been asked to lead the grand jury investigation into Willy Wonka’s tax affairs. What information would you seek through the grand jury? What witnesses would you want to interview? Why?
b. As the Special Agent, you have the ear of the federal prosecutor. What charges would you recommend be brought against Willy Wonka? Discuss the advantages and disadvantages of each of the potential charges.
c. You are now the forensic accountant hired by Willy Wonka’s criminal defense attorney. What facts would you want to gather to help in Willy’s defense? What arguments would you suggest Willy’s defense attorney make in order to show why Willy is not guilty of the crime?
d. Discuss the civil and criminal statute of limitations issues that exist for the IRS and for Willy. What is the latest date criminal charges could be filed against Willy and for what charge? What is the latest date the IRS could assess additional taxes against Willy?