While playing a round of golf he writes on the back of his golf shirt "To: Bank of Mine, account #4312, Pay to the order of The IRS" and fills in a dollar amount. He signs it by dipping his hand into the mud around the waterhole on the 15th green and making a muddy hand print as his mark at the bottom of the shirt. When he finishes playing the 18th hole, he takes off his shirt and mails it along with his tax return to the IRS.
Is the shirt a negotiable instrument? Why or why not?
2007-12-19 11:09:03 · 4 answers · asked by negoshable 1 in Business & Finance ➔ Taxes ➔ United States
Actually, the penalty for a frivolous return has just been raised to $5,000. That would be an expensive protest point if the IRS wanted to push the issue. They might ignore the shirt IF the tax return itself was properly completed.
Although a check can technically be written on any media, the muddy hand-print is NOT the signature on file at the bank and therefore the shirt is NOT negotiable. Even if you signed it, the recipient (that's the IRS) is under no legal obligation to accept the "check." As such, your return MIGHT be filed in a timely manner, but your taxes would NOT be paid.
2007-12-19 11:49:35 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
No because it is, in effect. an IOU not recognized under the Uniform Commercial Code as a negotiable instrument.
A negotiable instrument is one that if it is negotiated to a person who acquires the instrument i) in good faith ii) for value iii) without notice of any defenses to payment.
The transferee is a holder in due course and can enforce the instrument without being subject to defenses which the maker of the instrument would be able to assert against the original payee.
Obviously a muddy hand print would not be conclusive evidence that your golfer signed the document and therefore renders the "document" as non-negotiable.
2007-12-19 11:29:27 · answer #2 · answered by Tom Z 7 · 0⤊ 0⤋
This falls under frivolous and would subject the taxpayer to a $500 fine. The IRS will not present the check to his bank.
If it happened to be the amount he owed by 4/15 and it's now 4/16, he begins to owe failure to pay penalties and interest.
2007-12-19 11:14:20 · answer #3 · answered by Anonymous · 0⤊ 0⤋
This puts a new wrinkle on laundering money. If the bank would cash the check, you would be OK, but they generally shy away from taking dirty money.
2007-12-19 11:46:00 · answer #4 · answered by Anonymous · 0⤊ 0⤋