McMahon, a former IRS attorney, also said “the publication of such a claim would be highly reckless” because it “would suggest publicly both civil and criminal wrongdoing.”
McMahon said the money Patrice received should be considered a gift because the money was given to her by a relative and because there was no known negotiation of how much she would be paid.
But the tax specialists consulted by the Globe said that the most important question is whether the money was paid for services rendered — like a job — or out of pure generosity — like a gift. And Patrice Tierney’s testimony in the 2011 trial of her brother Daniel, now serving a prison term for his role in the Antigua-based gambling operation, suggests that she worked for the money.
Under questioning by Assistant US Attorney Fred M. Wyshak, Jr., Patrice Tierney said, “I received gifts from my brother for helping him.” When Wyshak asked if she received a lot of money, she replied, “Yes, I did a lot of work.” And when Wyshak asked her about monthly checks that she wrote to her mother, which her mother then signed back over to her, Patrice Tierney said, “It was a way for her to compensate me for all things I did for her.”
The IRS generally relies on a 52-year-old Supreme Court case in trying to decide whether money is taxable income or a tax-free gift. In that case, known as Commissioner v. Duberstein, the court said that in order to be considered a gift, the money or property received must have been given out of a “detached and disinterested generosity,” which is to say, “out of affection, respect, admiration, charity or like impulses.”
“That’s just another way of saying you can’t be getting something in return for something,” Mandel said. “It has to be purely for love or affection and that doesn’t seem to fit the facts here.”
But Donald K. Stern, a former US attorney who represented Patrice Tierney during her testimony at Daniel Eremian’s trial, issued a statement saying that the IRS had already reviewed the issue during the long criminal investigation that led to her imprisonment and did not find that any portion of the $223,000 was income.
Further, Stern said the federal judge presiding at Patrice Tierney’s sentencing hearing stated in open court that Patrice “is not a tax evader.”
Stern declined to be interviewed for this story but was referring in his statement to remarks by US District Judge William G. Young, who appeared to be summarizing a plea bargain rather than offering his informed judgment. “She’s not a tax evader. This is only willful blindness, aiding and abetting,” Young said. In plea bargains, prosecutors often drop more serious charges in the interest of obtaining an expedited guilty plea, and the dropped charges never become public.
Stern, in his statement to the Globe, also said, “not only are there no further investigations, but there is no basis for such action.” But Patrice Tierney’s testimony came more than a year after her plea agreement and may have raised new issues.
A spokeswoman for US Attorney Carmen M. Ortiz would not comment on whether the IRS might review the Tierneys’ tax filings.
The tax experts consulted by the Globe said that, even if the IRS were to consider a portion of the $200,000 that Patrice Tierney received through Robert Eremian’s gambling business as income, it would not be possible to calculate the amount of back taxes owed — if any — or any possible penalties and interest, without seeing the couple’s tax returns.
Correction: Due to a reporting error, a story that was posted on Tuesday about US Rep. John F. Tierney’s personal tax returns inadvertently misconstrued a statement by the attorney for Tierney’s wife. The attorney said that the IRS had determined that no portion of the money she received from her brother should be considered income.
Michael Rezendes can be reached at email@example.com. Follow him on Twitter @RezGlobe.