A Comfortable Lifestyle

The Tennessee Supreme Court has suspended an attorney for failure to pay federal taxes

Effective April 8, 2024, the Supreme Court of Tennessee suspended John Cris Helton from the practice of law for five (5) years, with four (4) years to be served as an active suspension pursuant to Tennessee Supreme Court Rule 9, Section 12.2, and the remainder to be served on probation conditioned upon Mr. Helton’s engagement of a practice monitor.

A Petition for Discipline was filed alleging Mr. Helton failed to file required federal income tax returns for several years and willfully attempted to avoid his tax liabilities. After the United States Internal Revenue Service initiated civil litigation against Mr. Helton to recover approximately $400,000.00 in owed income taxes, Mr. Helton filed for Chapter 7 Bankruptcy protection, asserting that this Internal Revenue Service lien should be discharged. The federal bankruptcy court determined that the tax debt was non-dischargeable because the failure to pay was willful and intentional. On appeal, the Sixth Circuit Court of Appeals affirmed the district court ruling.

As noted above, the United States Court of Appeals for the Sixth Circuit affirmed the non-dischargeability of his tax debt in bankruptcy

Helton has been a self-employed attorney practicing law since 1994. His income fluctuated over the years, approaching $100,000 in the late 1990s but spiking to $178,913 in 2004, $250,536 in 2005, and $234,359 in 2006, before declining to about $60,000 in 2007. But Helton failed to make any estimated tax payments for those years, and did not even file tax returns for years 2004-06 until several years later. And even after Helton filed his returns, he made minimal payments toward his tax debts for those years and (later) for the years 2009 and 2012.

Meanwhile, Helton enjoyed a comfortable lifestyle, driving a Mercedes-Benz sedan, purchasing numerous luxury gifts for his wife, eating at restaurants “almost every day,” enjoying annual vacations, and spending (along with his wife) an average of $10,000 per month on discretionary purchases during some of the years at issue. Helton also donated about $34,000 to charity during the years in which he failed to pay his taxes, and in 2014 spent an unspecified sum in support of his successful campaign to become a part-time state-court judge.

The necessary mental state of voluntary and intentional conduct was found below

Helton barely disputes that finding, asserting that he was too busy with work or too depressed during some of the years at issue to pay his taxes. The district court did not clearly err when it found those excuses belied by Helton’s ability to maintain his law practice and to run successfully for election as a state-court judge.

Helton’s principal argument, rather, is that § 523(a)(1)(C) requires proof that the debtor acted with “specific intent to evade the tax.” Hawkins v. Franchise Tax Bd., 769 F.3d 662, 670 (9th Cir. 2014). Thus, in Helton’s view, the government was required to prove not only that Helton chose to allocate his funds toward Mercedes-Benz sedans and dinners out each night and luxury gifts, rather than towards his taxes; instead, the government was required also to prove that he purchased or paid for those things specifically to avoid paying his taxes. Regardless of whether that is the law in the Ninth Circuit, it is not the law in this one, as shown above.

(Mike Frisch)