Recent media reports indicate that Michael Cohen, who is an attorney and loyal friend of DT, made a $130,000 cash payment to Stormy Daniels in order to prevent her from revealing a sexual encounter with DT in 2006. The payment was made just a few days before the 2016 Presidential election and may have constituted a violation of the campaign finance laws. More importantly, it may also have violated the INTERNAL REVENUE CODE, and thus constituted TAX FRAUD.
Remember, Al Capone, did not go to jail for the St. Valentine’s Day Massacre, nor for illegally selling alcohol; he went to jail for TAX FRAUD.
So too, Michael Cohen, Esq., and Stormy Daniels may be guilty of TAX FRAUD, and may face jail time. Section 61 of the Internal Revenue Code, defines gross income, as income received from whatever source derived. Thus, any payment to Stormy Daniels [aka Stephanie Clifford or Peggy Peterson] would be considered income, and she would be required to report such income to the IRS, and pay any federal income tax due on the $130,000 received from Mr. Cohen, or Essential Consultants, LLC through which the payment was made. Likewise, Mr. Cohen, and/or the LLC he represented was required by the Internal Revenue Code to properly report any payments made to the Internal Revenue Service [IRS Form 1099 etc.]. In addition, such IRS Forms must contain the correct names, addresses, and Taxpayer Identification Numbers [TIN] of both the entity making the payment and the recipient. If neither Mr. Cohen, nor the LLC reported such payment to the IRS, as required by law, then they would be in violation of the Internal Revenue Code, and their failure to report could amount to criminal conduct, if it were determined the failure to report such payment was intentionally done to avoid the payment of income taxes.
The secrecy surrounding the agreement and payment appears be sufficient evidence to conclude that there was conscious intent to evade the payment of the income tax required by law. Thus, the IRS and the Department of Justice should conduct an investigation in order to determine if criminal prosecution is warranted under the circumstances. Based on the facts publically available, Stormy Daniels, who is not a lawyer, is probably not conversant with the complexities of the tax law, should be given consideration. In her case, payment of the taxes, and penalties owed should suffice.
However, Michael Cohen is a lawyer, and according to media reports acts as DT’s fixer, and is reputed to have surreptitiously made payments to other individuals in order to silence them. In his case there may be a pattern of tax avoidance. Mr. Cohen has claimed his unflinching loyalty to DT, and probably would not willfully provide evidence which could incriminate DT. However, if presented with an indictment for tax fraud, the possibility of going to jail, and losing his license to practice law, he may question his professed loyalty, and be willing to accept a plea agreement, and agree to cooperate with the government, including giving evidence which may incriminate DT.
It is submitted that this may be an easy case for the IRS, and Department of Justice to investigate, and prosecute. If there was no attempt to evade the tax laws, then the relevant documents should be on file with the IRS. If there are no records on file, that would indicate an intent to defraud the IRS. Thus, the IRS should immediately conduct a through search for the tax records of Stormy Daniels, Michael Cohen, Esq., and all of the entities through which the payment of $130,000 was made. The $130,000 payment was made in 2016, and should have been reported in 2017. Thus, the IRS need only search the tax records for 2017.