Romanowski Case

[gma]

Bill Romanowski and his wife have around 15 million in tax liability.  How was the IRS able to go so far back in years for that assessment of taxes?  It even sounded like liens weren't recorded until 2019 or so.  And the taxes are all the way back to around 1998.

[BobKamman]

For those who don't follow football, he's a retired NFL player.  His case is in the news now because IRS (through the Justice Department) is suing him for taxes they have been trying to collect, unsuccessfully, for nearly two decades.  There is a Tax Court case, filed in 2010 involving 1998 through 2004.  Romanowski and his wife lost that in 2013, with a judgment against them for what looks like about $5 million plus interest.  I didn't add up all of the years, but you can find the 49-page opinion on the Tax Court website. 

Then their tax problems continued because they started a "nutrition" company that was feeding them money for personal expenses, hoping IRS wouldn't notice.  If someone wants to avoid collection, they can often avoid payment for years.  Liens were probably filed; those could have been renewed, but the last resort is a civil suit in federal court.  Further delay is then possible with a bankruptcy filing, which is what the Romanowskis are doing now.  

A couple of later case were settled by stipulation.  Those decisions were signed by Tax Court Judge Kroupa, who along with her husband pled guilty to tax evasion in 2016.  No, I am not making this up.  

[BobKamman]

Out of curiosity I downloaded the complaint that started the civil suit last June, with IRS suing for taxes it had not been able to collect.  The assessments were made in 2013, when two Tax Court cases were decided that related to years 1998-2007.  Those cases commenced in 2010 and 2012, so the statute for assessment must have been extended multiple times for the earlier years.  

IRS doesn't always (or even usually) record a lien because it can be detrimental to the taxpayers' credit rating and therefore their ability to remain in business.  So most of  the liens were not filed until 2019.  Oddly enough, the liens just for 2005-07 were filed in 2016.

This case was in the news recently because the IRS lawsuit had progressed to a point where some adverse actions were about to take place.  So, the Romanowskis filed a Chapter 11 bankruptcy on April 29, 2024.  Their home address is a 2710 square foot house in Lafayette, CA, worth about $2.3 million according to Zillow.  In other words, just your typical California home. 

Leave me a private message with your email address and I'll send you a pdf of the 18-page IRS complaint.  

[Taxtime3]

Never ceases to amaze me what people do.

[qbteachmt]

"How was the IRS able to go so far back in years for that assessment of taxes? It even sounded like liens weren't recorded until 2019 or so. And the taxes are all the way back to around 1998."

So, the answer is...The IRS has been pursuing it all along. What makes people think it won't be pursued?

[BobKamman]

@qbteachmt Most people know they will be pursued, but they may have a different idea on how to use the money rather than paying it to the government.  For example, at the time most of these taxes were assessed in 2013, Intuit was selling for about $60 a share.  If they had invested in tax software instead of paying IRS, their shares today would be worth more than $650.  

These taxpayers instead chose to invest in a nutritional supplement company.  We don't know how much it's worth because it's not publicly traded.  But for now, I picture them laughing all the way to the bank.