Amid impeachment headlines, an interesting tidbit slipped by: the U.S. Tax Court found that Massachusetts Sen. Elizabeth Warren’s colleague on the Harvard Law faculty, Ronald Sullivan, owes more than $1.2 million in back taxes, for failing to file income tax returns from 2005 through 2013.
This was not a case of resistance against the Trump administration, as Sullivan’s ‘failure to file’ occurred during the George W. Bush and Barack Obama administrations. According to his bio on Harvard Law’s website, in 2008 he was a legal adviser to Obama’s presidential campaign. Apparently, Obama’s victory did little to change Sullivan’s tax habits.
There are many dimensions to this case, one proving the maxim: “A man who represents himself has a fool for a lawyer.” Sullivan, representing himself, received summary judgment from the judge for failing to respond to IRS requests for evidence that Sullivan did not owe $1.2 million in back taxes. “At one point, the assigned IRS settlement officer scheduled a date for a telephone hearing; Sullivan did not call in on the appointed date, provide relevant financial documents, or provide tax returns,” according to a report in the Harvard Crimson.
Sullivan has claimed that he never made enough money to accumulate $1.2 million in taxes, but his Harvard profile states that he does sit on two corporate boards. Plus, he can command hefty speaking fees when he’s not in the classroom, including during months when the school is on summer break. He and his wife were also given a year of rent-free housing in exchange for acting as “house deans” in a Harvard undergraduate dormitory.
Lastly, Sullivan and his wife sold their home in the tony Boston suburb of Newton for over $1.8 million in 2013. If Sullivan realized a profit from this sale, it may have been subject to a capital gains tax. The IRS has rules about when a person can take the $250,000 tax exemption on the sale of a home, however, Sullivan’s residence in the Harvard apartment may have nullified the exemption.
Incidentally, thanks to his representation of Harvey Weinstein, Sullivan and his wife are no longer “house deans.” Earlier this year, the couple were fired by Harvard College due to student fury over Sullivan’s decision to work for Weinstein.
Meanwhile, down the street at Harvard Law, Sullivan retains his perch, although its website still lists him as a “house dean.”
Does Warren, who aspires to be the national scourge of the rich, have a plan for apparently wealthy tax scofflaws, including her old colleague?
In fact, a close examination of Sullivan’s 2013 house sale demonstrates how wealthy people can minimize their tax exposure by gaming the system.
If Sullivan had sold his house a year earlier (specifically in July 2012), he would have met the IRS’s test for the length of time a person must live in a home in order for any profits arising from the sale to be eligible for the capital gains exemption.
This is why wealthy people pay accountants and tax lawyers. Besides providing advice on “tax avoidance” (defined by Black’s Law Dictionary as “taking advantage of legally available tax planning opportunities”), they also urge clients to file their tax returns in a timely manner, and to make all proper tax payments.
Perhaps the maxim about having a fool for a lawyer also applies to attorneys who handle their own tax liabilities. Only a fool would believe the IRS wouldn’t notice someone who didn’t file tax returns for years.
And as the Tax Court judge noted, Sullivan, as the faculty director of the Harvard Trial Advocacy Workshop, should have known that failing to submit evidence would have “adverse consequences.”
Finally, a shout-out goes to Harvard’s campus newspaper, “The Crimson,” whose writers produced straight reporting on the Sullivan debacle, despite the risk to their future employment opportunities at The New York Times and Washington Post. Bravo!
Joanne Butler was an international trade specialist at the Office of the U.S. Trade Representative and at the Foreign Agricultural Service at USDA in the George H.W. Bush administration. In the George W. Bush administration, she was a senior adviser and speechwriter at the Department of Labor.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.