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It’s ‘Best’ To Know Your Client

Atlanta skyline with Richard Russell Federal Building in foreground.
The Richard Russell Federal Building in Atlanta, home of the U.S. Attorney's Office for the Northern District of Georgia.
Photo by Flickr user David.

In the age of peak TV, there’s a lot to keep track of. So it’s possible you don’t know that “Chrisley Knows Best” is a reality show that has aired on the USA Network for the past five years.

Todd Chrisley, its star, probably hopes that if you know his name at all, it is because you’re a fan. But unfortunately for Chrisley, it is not his show that recently launched him and his family into the headlines. Chrisley and his wife, Julie Chrisley, indicted earlier this month on multiple counts of tax evasion and fraud. The couple are pleading not guilty.

Before the indictment, Todd Chrisley issued a statement on Instagram. He accused an unnamed former employee of stealing from them. In Chrisley’s version of the story, after the couple fired and sued the employee, he used “a bunch of phony documents” to convince the U.S. attorney’s office to charge the Chrisleys as an act of revenge.

The Chrisleys’ recent bad press extends beyond the indictment. They also engaged in a very public fight with their estranged daughter, Lindsie, around the same time. I don’t know the Chrisleys, and as a tax professional, I have no particular grounds to weigh in on the family feud. But the more I read about this case, the more I noticed the alleged involvement of someone in particular: the tax professional who became the Chrisleys’ co-defendant.

Peter Tarantino, the Chrisleys’ accountant, has also been indicted. Tarantino allegedly lied about the Chrisleys’ finances to the Internal Revenue Service, as well as to the FBI. I do not know whether he is guilty of a crime. But I can say that, assuming the indictment holds up to scrutiny, the best-case scenario is that Tarantino did not do a very good job on behalf of the Chrisleys – or himself.

The indictment describes a conspiracy involving the Chrisleys to defraud the IRS that began around 2010. Todd Chrisley allegedly maintained control of an entity called 7C’s Productions, but he was not listed as its owner in documents filed with the Georgia and Tennessee secretaries of state. The indictment alleges that his information was omitted specifically to prevent the IRS from accurately determining Chrisley’s income. (Todd, but not Julie, allegedly owed the IRS significant back taxes from tax year 2009.) The indictment also alleges that the couple failed to “timely file federal tax returns or pay income taxes for the 2013, 2014, 2015 or 2016 tax years.” Tarantino is further accused of obstructing IRS collection efforts by actively hiding income and lying to third parties about his clients’ returns.

Tarantino seems to have largely avoided talking to the press. According to the indictment, the certified public accountant, who is based in the Atlanta suburb of Roswell, Georgia, has worked for the Chrisleys “at least” since 2015. (It also alleged that he began conspiring with the Chrisleys as early as 2010, though what relationship, if any, he had with them at that time is unspecified.) The accountant held power of attorney granting him the right to discuss the couple’s tax affairs with the IRS. The indictment alleges that Tarantino provided false and misleading information to IRS officers, including the assertion that the Chrisleys couldn’t afford to pay back taxes. Tarantino also allegedly claimed that he did not know fundamental information about them, including what bank they used, how Todd Chrisley made his money, or where the couple lived.

In cases of alleged tax fraud, it is always worth remembering that we tax preparers are not auditors. If you hire a tax preparer, it is still your responsibility to make sure that he or she has all the knowledge and documents necessary to create an accurate tax return on your behalf. Tax professionals cannot, and should not, come to your home and look through your desk – literally or metaphorically – for anything you left out.

That said, as a tax professional, I know that there are certain pieces of information that I should ask about if I don’t see. If a client had a Form W-2 one year and I don’t see a W-2 the next, I will ask the client about the change. And, at a minimum, I certainly need to know where my clients live to properly prepare their returns.

Murky residency has been a long-standing issue for the Chrisleys. An investigative report from a local news station in 2017 alleged that Todd Chrisley had claimed to be a Florida resident in a bankruptcy proceeding, despite declaring himself a Georgia resident in various other court documents during the same period. The difference matters; Florida has no state income tax, but Georgia does. The Georgia Department of revenue filed nearly $800,000 in liens against the couple in 2017. During a radio interview that year, Todd Chrisley continued to insist that he had been living in Florida for 15 years. A month later, his son Kyle told “Good Morning America” that the family had never resided in Florida; in a recent Facebook post, Kyle reversed himself and said he had lied in that interview. Todd and Julie Chrisley now live in Tennessee, according to the Justice Department’s press release about the current case.

Under the circumstances, I suppose Tarantino’s confusion about where his clients live might be understandable. If the Chrisleys told him that they were not Georgia residents, it was not his responsibility to prove or disprove that claim. But at a minimum, he should know what state he thinks his clients live in, even if he later turns out to be wrong. And, of course, taxpayers need to file federal returns regardless of where they live. Not only did the Chrisleys allegedly avoid filing individual returns for four years, but Tarantino allegedly filed false corporate tax returns for 7C’s Productions in the same period.

Every tax preparer knows that you should never guess when it comes to giving information to the IRS. If you know that clients cannot or will not give you the information you need to file an accurate return, you should decline to take their business. It is the ethical thing to do – and it also protects your professional reputation. If Tarantino knew as little as he said he did, at least according to the prosecutor’s version of events, he should have fired his clients and looked for straightforward business elsewhere.

Everyone deserves a presumption of innocence until proven guilty. That includes the Chrisleys and Tarantino. But if the federal tax charges are sustained, it is hard to see Tarantino as anything other than a cautionary tale for accountants to hold themselves and their clients to standards high enough to stand up to scrutiny.

Vice President and Chief Investment Officer Paul Jacobs, of our Atlanta office, contributed several chapters to our firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55, including Chapter 12, “Retirement Plans;” Chapter 15, “Investment Approaches and Philosophy;” and Chapter 19, “A Second Act: Starting a New Venture.”

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