Suit: Attorney owes more than $1.3 million in federal taxes

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March 15, 2010

By KENNETH HART — The Independent The Daily Independent Mon Mar 15, 2010, 10:48 PM EDT

Ashland — A Johnson County attorney owes the federal government more than $1.3 million in unpaid taxes, according to a lawsuit filed last week in U.S. District Court in Ashland.

The office of U.S. Attorney James A. Zerhusen filed suit against Leo A. Marcum and the Marcum Law Office of Lowmansville because the Internal Revenue Service “has exhausted all of its administrative abilities to compel Marcum to file his federal tax returns and pay his federal tax liabilities,” according to court documents.

The suit alleges that Marcum, who has been practicing law since 1971, has, over the past decade “flouted the tax laws” by refusing to file federal tax returns, pay federal unemployment taxes and withhold payroll taxes from his employees.

Marcum’s total federal tax liability was more than $1.3 million as of Feb. 15, the suit states.

In addition to refusing to pay his taxes, the suit claims that Marcum has “thwarted” the IRS’ attempts to collect them “by falsely stating that he is not entitled to be paid certain legal fees and surreptitiously arranging for them to be paid to his clients.

“Through this subterfuge, Marcum makes it difficult or impossible for the IRS to levy upon the legal fees due him to satisfy his delinquent tax liabilities,” the suit states.

The suit was filed at the request of, and with the authorization of, the chief counsel for the IRS. Through the action, the government seeks to “put an end to Marcum’s brazen behavior” by reducing his federal tax liability to a judgment, compelling him to file his delinquent tax returns, forcing him to pay his future employment tax liabilities and enjoining him from evading taxes in the future.

The suit seeks a judgment against Marcum totaling $1.1 million for unpaid income taxes for tax years 2001 through 2005; a judgment totaling $219.6361 for unpaid employment taxes for 2001 through 2008; and a judgment of $13,915 for unemployment taxes for 2002 through 2007.

In addition to his tax problems, Marcum, a resident of Inez, has a checkered history with the Kentucky Bar Association.

In September, acting on a recommendation from the bar association, the Kentucky Supreme Court suspended Marcum for practicing law for 181 days for professional misconduct.

According to records, an investigation by the bar association’s inquiry commission revealed that Marcum had withdrawn a “substantial amount” of money in his own name from his escrow account at the Inez Deposit Bank between 2005 and 2008.

A review of bank records showed a number of “apparent irregularities,” including the account being overdrawn for about three weeks in 2005, a payment identified as a donation for a judge’s reception that same year , payments to an attorney for legal fees for Marcum’s son and more than 150 checks identifying Marcum as the payee.

The commission charged Marcum with two counts of misconduct. Marcum didn’t answer the charges and the bar association’s board found him guilty of both.

KENNETH HART can be reached at khart@dailyindependent.com or (606) 326-2654.

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