Winning the “Unwinnable” Tax Case
Memphis, Tennessee, Summer of 2003. Few people thought Vernie Kuglin had even a remote chance for acquittal. The 58-year-old former Fedex pilot readily admitted she had not paid taxes, nor even filed a tax return, for six years, during which time she made almost a million dollars in income.
She faced up to 30 years in prison and $1.5 million in fines.
And then the impossible happened: She was acquitted on all six counts. A Memphis jury unanimously decided that Kuglin had no criminal intent to commit felony tax evasion.
Newspapers, television stations and people around the world all asked the same question: “How could Kuglin have possibly gotten off when the case looked like a slam-dunk victory for the IRS?”
Attorney Robert Bernhoft, who helped defend Kuglin in this landmark case, developed a simple, yet innovative strategy that won over the jury: He said Kuglin was simply waiting for the government to respond to her legitimate concerns as a citizen about the taxation system.
Kuglin had studied the Constitution and believed the IRS had misapplied the tax structure that had been set up by the Founding Fathers. For years, she repeatedly asked the IRS to respond to her concerns, asking very basic questions about her tax obligations under the law.
“She never received an answer from the IRS and we made that the foundation of her defense for not filing a tax return,”
Bernhoft says. “We said if the IRS had provided a reasonable response to her legitimate questions, instead of completely ignoring her inquiries, she would not have been in the courtroom. The jury agreed with our contention that a sincere person acting in good faith is not a fraudster nor a criminal.”
For Bernhoft Law, the Kuglin acquittals were also a harbinger of more high profile tax and conspiracy acquittals to come.