What is the potential penalty for signing someone else's signature on a tax refund?

[sir_viks]

I’ll start by saying that IANAL, so I guess I’m asking for help with a potential legal matter.

My brother is going through a nasty divorce. His soon-to-be ex-wife is crazy, but let’s keep this out of the discussion for the moment (in which I could fill this web site with examples of her lunacy).

After serving my brother in October 2011, he still kept a joint checking account with his wife. This was OK as long as she provided him with the carbon copies of the checks (and, she wasn’t going crazy spending money). He is a professional, she hardly works because of choice.

In January 2012, she stopped providing carbon copies of the checks. So, my brother closes the joint checking account, opened his own checking account, thus cutting off her revenue stream. She sued him for half of the money that was in the account at the time. In March, the judge completely sided with my brother, and dismissed all charges. She was also responsible for court costs & fees.

Recently, they had their taxes done, and they were expecting a refund of over $400. When my brother checked with the state, he was informed that the check, made out to him & his wife, was sent out in early March. Since they are still living together (again, more stories could follow), it is strongly suspected that she may have intercepted this refund, made out to both parties, and signed her/his name & pocketed the refund. We suspect that she may have been emboldened to do so after her loss on the early checking account issue.

So – in a divorce, if one party signs the other party’s name without permission, specifically a state tax refund check, is there a law that is broken (forgery? false check? stealing?). If a law has been broken here, what is the potential penalty for something like this?

Since I know nothing of the law, I would greatly appreciate any advice, or at least someone who has had experience with this topic. Thanks.

[dracoi]

Tax checks can usually be deposited with just one signature and either spouse can sign. So you’re not likely to get her on fraud or anything criminal, but it would be worth checking to see how it was signed.

Other than, it’s all civil/contract law. He can bring up the missing money as part of the divorce proceedings and make sure it gets counted in his favor with other assets. Sometimes these things even happen after a divorce and often the only recourse is to sue the person. The courts will grant a judgment, for whatever that’s worth.

[sir_viks]

So, it’s a civil matter and not a legal matter?

Hmmm, that sounds right, but it seemed to me that when she signed the check, that would constitute a forgery. However, in further researching this online, it seems from what I’ve read that it would be a civil matter, so I tend to agree with your assessment.

I mean, yes, he can always sue her for 1/2 the amount. I think the thing that made him more angry is that she knowing committed fraud. In no way is there now an implicit agreement that she can sign documents on his behalf (since they are going through a divorce).

[lawbuff]

@sir_viks

So – in a divorce, if one party signs the other party’s name without permission, specifically a state tax refund check, is there a law that is broken (forgery? false check? stealing?). If a law has been broken here, what is the potential penalty for something like this?

I am not a lawyer either, but there are basically 2 types of permission, EXPRESS and IMPLIED.

If the check was made out to both, there seems to be no reason to not believe at least implied permission was given to cash it.

Implied means, say I take my sister’s car to the store without asking. Do I have a reasonable belief that if I asked her she would be okay with it?

Expess means I did just that before taking it, not an assumption.

If there is no split of money, it can be brought up, the court will decide if it was legally proper.

[thelurkinghorror]

Does the state write out their checks as: “Bob Smith and Jane Smith” or like "Bob Smith or Jane Smith? Usually with the latter, either can sign; with the former both MUST sign. Two names on two separate lines is ambiguous, but IIRC usually interpreted as an “OR.” He should check with the state whether a) she actually did this and b) if she just signed her name, or actually forged his name. IANAL, but the latter may be much worse.

Is there a Federal refund at issue, too?

[sir_viks]

@thelurkinghorror

Does the state write out their checks as: “Bob Smith and Jane Smith” or like "Bob Smith or Jane Smith? Usually with the latter, either can sign; with the former both MUST sign. Two names on two separate lines is ambiguous, but IIRC usually interpreted as an “OR.” He should check with the state whether a) she actually did this and b) if she just signed her name, or actually forged his name. IANAL, but the latter may be much worse.

Is there a Federal refund at issue, too?

Just the state refund. Also, I think the check is made out to Bob AND Jane Smith, NOT OR, as the tax return was married filing jointly.

To lawbuff, since they are going through a nasty divorce, there is no way there could be implied permission. They haven’t spoken directly in months, only through lawyers. However, they are still legally married, but the court is very aware that they are going through a divorce.

Also, he generally took care of the finances in the family. Taking a check to the bank & cashing it is out of character for her, but of course things change when you need money and your mad at your soon-to-be ex-husband.

At the very least, the money could factor into the final divorce settlement. But legally, by signing his name, without permission, and she certainly does not have implicit permission (since they are going through a divorce), does her forgery constitute breaking a law?

My opinion . . . probably yes, but no DA will touch it.

[lawbuff]

@sir_viks

To lawbuff, since they are going through a nasty divorce, there is no way there could be implied permission. They haven’t spoken directly in months, only through lawyers. However, they are still legally married, but the court is very aware that they are going through a divorce.

At the very least, the money could factor into the final divorce settlement. But legally, by signing his name, without permission, and she certainly does not have implicit permission (since they are going through a divorce), does her forgery constitute breaking a law?

The facts need to be given to the divorce lawyer for the party complaining. S/he will know what to do about it.

[ExcitedIdiot]

@sir_viks

But legally, by signing his name, without permission, and she certainly does not have implicit permission (since they are going through a divorce), does her forgery constitute breaking a law?

There’s no way for you to know that she forged his signature. A bank could have accepted the check with only her signature.

If she did sign his name, it might be illegal:

@Title 26 USC § 7206(2)

Any person who…(2) Aid or assistance - Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the Internal Revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document; shall be guilty of a felony and, upon conviction thereof:

Shall be imprisoned not more than 3 years
Or fined not more than $250,000 for individuals ($500,000 for corporations)
Or both, together with cost of prosecution

http://www.irs.gov/compliance/enforcement/article/0,,id=106790,00.html

[thelurkinghorror]

Oh, by the way I just uncovered a memory. Wonder how many experience points I get?

From my bank days, I remember some people bringing in what looked a crappy shrunken photocopy of a Federal refund check. The OP is state so maybe this doesn’t apply, but the point was that these were valid and that the government was returning the checks in this form if they were signed improperly and deposited previously. A common issue was one spouse signing for both (but not forging AFAIK). So at least the IRS/Federal government looks at this kind of thing.

[sir_viks]

@ExcitedIdiot

There’s no way for you to know that she forged his signature. A bank could have accepted the check with only her signature.

If she did sign his name, it might be illegal:

http://www.irs.gov/compliance/enforcement/article/0,,id=106790,00.html

Interesting.

There might not be a way to definitively prove that she herself signed her soon-to-be ex-husband’s name (as someone else could have done it), but if two signatures appear on the check, and one is hers, AND . . . she was the recipient of the funds specified on the check, I would think that it could be proven she knowingly was complicit in an act of fraud.

This is a state refund check, so I doubt that the federal IRS laws apply here. Although the link you provided was helpful.

If there was only one signature on the check, and the check required two, would the bank be at fault? If there are two signatures on the back of the check, I agree, the bank should cash the check, as they are not handwriting experts. But if the check required two signatures & was cashed with only one, I would assume the bank would shoulder some of the blame here.

[ExcitedIdiot]

@sir_viks

If there was only one signature on the check, and the check required two, would the bank be at fault? If there are two signatures on the back of the check, I agree, the bank should cash the check, as they are not handwriting experts. But if the check required two signatures & was cashed with only one, I would assume the bank would shoulder some of the blame here.

I doubt the bank can be held responsible. I don’t think there is a specific law that requires them to have both signatures.

A recent thread on here talked about banks depositing checks with no signature, just a stamp saying “for deposit only” is all most banks require. Several people said they had deposited checks with nothing on the back, and had them go through.

[ExcitedIdiot]

@sir_viks

This is a state refund check, so I doubt that the federal IRS laws apply here. Although the link you provided was helpful.

Sorry, didn’t see that. I’m sure there is an equivalent state law in your area, but don’t expect charges to be filed in any case. To prove a crime was committed here, they would need to prove she intended to defraud someone.

[thelurkinghorror]

Again, I know this is about state taxes (which state, by the way?), but my memory of the bank’s check rules were: if there are two names on a random check and both are on the account, you may deposit it with a stamp. But government checks were special: both signatures needed to be present, even if it was a married couple depositing into a joint account. If they were cashing it, I think both parties had to be present, unless it was “in trust for” or similar. This was partly the bank’s CYA to avoid the OP’s brother’s position, and part government regulations, as they’d send it back as I mentioned, and charge you for it if it was cashed.

I think that he should gather evidence, but agree that it will be a long time before he sees it again even so. Good point: she could claim ignorance and possibly be legally off the hook, but the money might not be seen even after a court battle.