Alabama Tax Official Receives Misdemeanor in Tax Fraud Case

A former revenue commissioner in a northern Alabama county has agreed to plead guilty to a misdemeanor charge in a tax fraud case that may have cost the county millions of dollars in tax revenue.

An audit conducted by the Office of the State Auditor of Alabama in 2012 found that the Revenue Commissioner’s Office made approximately $17 million in errors by reducing property values below what they were actually worth.  Further investigation alleged that Joey Masters, the Revenue Commissioner of Marshall County, had reduced the property tax values of many of his friends and relatives by as much as $20 million.

The Alabama Attorney General indicated and jailed Masters in November 2013 on tax fraud charges related to the undervalued tax assessments.  In addition, the attorney general accused Masters of taking an unknown amount of money from an account of the Revenue Commissioner’s Office for personal use.

Millions of Dollars in Tax Fraud Allegations Lead to Misdemeanor Charge

Despite the severity of the allegations involving tax fraud to the tune of millions of dollars, Masters plead guilty to a misdemeanor charge on Monday.  The Alabama Attorney General’s Office was unable to prove that Masters was responsible for the millions of dollars of tax fraud.  Rather, Masters agreed to a misdemeanor ethics charge involving misuse of office funds to a total of $740, which he took and repaid in 2012.

Circuit Court Judge Howard Hawk was surprised at the plea agreement but ultimately approved it.

“I’m somewhat staggered by you saying ‘This is it,’” said Judge Hawk.  “But if you say ‘This is it,’ I’m taking your word for it.”

As a result of the plea agreement, Masters must pay a fine of $1,100, as well as court costs.  In addition, Masters must perform 200 hours of community service and serve probation for two years.

Because Masters plead guilty to a misdemeanor charge rather than a felony, he will continue to receive his state pension, can vote in elections, and can seek election to political offices.

After reaching the plea agreement, Masters’ defense attorney Dan Warnes noted that the misdemeanor ethics charge was a reasonable outcome.  Warnes noted that the office did not keep detailed records of the monies in the office fund.  Therefore, although Masters took money from the fund multiple times, the prosecution could not determine the exact amount.

In addition, the prosecution could not dispute claims by Masters that others in the office knew Masters was using the funds for personal reasons or that he repaid every dollar he took from the fund.

“That is why it was a misdemeanor,” added Warnes.

With Criminal Charges Behind Him, Masters Now Faces Civil Lawsuit

Masters now faces a civil lawsuit on behalf of taxpayers because of the potentially $20 million tax revenue shortfall for Marshall County.  The lawsuit alleges that Masters reduced property tax values by this amount for the benefit of his allies.

James Hutcheson, County Commission Chairman for Marshall County, noted that the $20 million amount does not seem reasonable.  Marshall County is in a rural area of Alabama and has less than 100,000 people.  The annual budget for the county is just over $20 million.

“The county couldn’t survive if those numbers were real,” noted Hutcheson.

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by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.