Jean Schmidt’s $1.3 million IRS problem

By Nate Noy

Today I filed a Form 3949 A with the IRS reporting Jean Schmidt, the Committee to Elect Schmidt and the Schmidt for Congress Committee for blatant violations of 26 U.S.C. Section 6113(a). Additionally, I provided evidence that this violation falls within the parameters of 26 U.S.C. section 6710(c) constituting an intentional disregard of 6113(a) and therefore subjecting Schmidt and her campaign committees to a $1,000 per day fine for the aforementioned violation.

For those of you that are not experts in campaign finance law, IRS code 26 U.S.C. section 6113(a) states:

(a) General rule. Each fundraising solicitation by (or on behalf of) an organization to which this section applies shall contain an express statement (in a conspicuous and easily recognizable format) that contributions or gifts to such organization are not deductible as charitable contributions for Federal income tax purposes.

26 U.S.C. section 6710 (a) and (c) provide:

(a) Imposition of penalty. If there is a failure to meet the requirement of section 6113 with respect to a fundraising solicitation by (or on behalf of) an organization to which section 6113 applies, such organization shall pay a penalty of $1,000 for each day on which such a failure occurred. The maximum penalty imposed under this subsection on failures by any organization during any calendar year shall not exceed $10,000.


(c) $10,000 limitation not to apply where intentional disregard. If any failure to which subsection (a) applies is due to intentional disregard of the requirement of section 6113—
(1) the penalty under subsection (a) for the day on which such failure occurred shall be the greater of—
(A) $1,000, or
(B) 50 percent of the aggregate cost of the solicitations which occurred on such day and with respect to which there was such a failure


Thanks again to archive.org, a complete historical review of www.jeanschmidt.com is available.

Excerpts from my correspondence with the IRS are provided below:

The website www.jeanschmidt.com was established as a campaign website by the Committee to Elect Schmidt on 4/22/01. The Committee’s initial solicitation for funds was published on 2/17/03 and remained unchanged until 7/19/05 a total of 884 calendar days.

On 4/1/2005 the Schmidt for Congress Committee was formed. The contribution solicitation section of campaign website was not altered until 7/20/2005 and remained unchanged until 12/01/2006 a total of 500 calendar days. I have included a printout of the contribution solicitation section of the website. A complete review of the website’s history is available at: http://web.archive.org/web/*/http://www.jeanschmidt.com.

A review of the public solicitation for campaign funds posted on the above website clearly shows a blatant and intentional disregard for 26 U.S.C. section 6113(a). The website clearly failed to disclose that contributions are nondeductible. In fact, that the website intentionally disregarded this requirement by misleading potential contributors. The website contained a link to make contributions titled: “Contributions and Tax credits.” While technically correct that Ohio law allows a $50.00 tax credit for the purposes of state income tax, the site failed to notify potential contributors that this tax credit did not apply to federal income tax and was not tax deducible for federal income tax.

Based on this intentional disregard for 26 U.S.C. section 6113(a) the IRS should apply 26 U.S.C. section 6710(c) constituting an intentional disregard of 6113(a) and therefore subjecting Schmidt and her campaign committees to a $1,000 per day fine for the aforementioned violation. Her campaign was in violation for a total of 1,384 days spanning four calendar years.

The evidence:

2/17/2003 – 7/19/05 (884 days)

http://web.archive.org/web/20030409125545/jeanschmidt.com/Contributionsgroup.htm

I HAVE EXCITING NEWS FOR YOU!!
A change in the Ohio income tax laws now allow a once per year, dollar-for dollar CREDIT for donations to candidates for the Ohio State Legislature. The credit consists of $50.00 for a single person or $100 for a married couple filing jointly.
WHAT DOES THIS MEAN FOR YOU?
If you make your check payable to "Committee to Elect Schmidt, 771 Wards Corner Rd., Loveland, OH 45140" for $100.00, the State of Ohio will reduce your tax by the full $100.00 when you file your Year 2003 Ohio Form IT-1040 and report your contribution on line 52 of your joint return ($50.00 credit if you file an individual return).
What a great way to support my candidacy by sending your check to my campaign committee instead of sending it to the State of Ohio in the form of $50.00 or $100.00 in state taxes!
(Just print and fill out this form below)
-------------------------------------------------------------
Yes, I would like to contribute to your campaign. I have enclosed a check for _____. (No corporate checks please.)
Please print the form below, as this information is required by Ohio law.
NAME _____________________________________________________
ADDRESS _____________________________ PHONE ______________
EMPLOYER/TITLE ____________________________________________
CITY ___________________ STATE ________ ZIP _______________
-------------------------------------------------------------
Mail your contributions to:
Committee to Elect Schmidt
771 Wards Corner Rd
Loveland, OH 45140

7/20/2005 – 12/1/2006 (500 days)

http://web.archive.org/web/20051024131544/www.jeanschmidt.com/ContributeVolunteerGroup.htm

(Just print and fill out this form below)
-------------------------------------------------------------
Schmidt for Congress Committee
Yes, I would like to contribute to your campaign.

I have enclosed a check for $________.

(Corporate and foreign national contributions are not permitted)
Please make check payable to ?Schmidt for Congress Committee?
Name___________________________________________________________
Home Address____________________________________________________

City/State/ZIP____________________________________________________
Phone______________________ Email_______________________________
Employer/Occupation______________________________________________
Paid for by the Schmidt for Congress Committee
The maximum an individual may contribute
at this time is $2100.00 ($4200.00 per couple)
-------------------------------------------------------------
Mail your contributions to:
Schmidt for Congress Committee
P.O. Box 867
Milford, OH 45150

What this means for Team Schmidt:

If the IRS agrees with my assertion that this constitutes an “intentional disregard” for the law, then Schmidt will be subject to a $1000 per day fine totaling $1,384,000.00. The BEST CASE scenario for Schmidt is that the IRS does not consider this an intentional disregard and ONLY fines her $10,000 for calendar years 2003, 2004, 2005 and 2006. If she is lucky, this blatant disregard for the law will only cost her $40,000.

Once again Jean Schmidt shows that she is either incompetent (and surrounded by completely incompetent advisers) OR she again shows she really doesn’t think the law applies to her. I’m sure the IRS and US Department of Justice will disagree with Schmidt’s “untouchable” persona.