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Queen of Mean Stays in the News

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The Internal Revenue Code includes provisions that impose severe punishments for criminal offenses, such as intentional attempts to evade income taxes. Section 7201 authorizes jail sentences of up to five years and fines of as much as $100,000, or both, plus prosecution costs, for each fraudulent return.

The harsh sanctions imposed on tax evaders didn't deter real estate tycoon Leona Helmsley, who learned the hard way not to tangle with the IRS. The New York businesswoman's evasion efforts secured her an enduring place in the pantheon of tax cheats, alongside such miscreants as mobster Al Capone and baseball stars Pete Rose and Darryl Strawberry.

Leona had a widely-reported reputation for mistreating people, particularly her hotel employees, that earned her the sobriquet "Queen of Mean." She was unyielding in her unwillingness to allow an unpleasant thought to go unexpressed.

Leona is best remembered for an indiscreet comment to Elizabeth Baum, a housekeeper at the Helmsley home: "We don't pay taxes. Only the little people pay taxes." Perhaps our queen was inspired by another queen whose reign was cut short (pun intended) in 1793.

The testimony of the former housekeeper helped Uncle Sam convict the premier hotelier on charges of evading taxes of several million dollars. The centerpiece of her evasion scheme was to offset hotel profits with illegally-billed invoices for remodeling and other expenditures. Actually, the outlays were nondeductible personal expenses, mostly improvements to Dunnellen Hall, a 21-room mansion in Greenwich, Connecticut, that she shared as a weekend retreat with husband Harry Helmsley, the builder of a real-estate fortune over half a century.

Leona faced the charges alone. An enfeebled Harry was unfit to stand trial. He died in 1997.

Unsurprisingly, the media-savvy feds ordered Leona to report to prison on tax day, April 15, 1992, to serve a four-year sentence. The mogul was released after serving 19 months at Club Fed.

Jail time didn't cramp the style of someone like Leona, whose sprawling property portfolio included the iconic Empire State building. At the time of her death in 2007, her assets aggregated slightly south of $5 billion, putting her right up there with The Donald.

She wrote a will that left most of Harry's fortune to charities and named four executors. All of them proved to be equally rapacious in the execution of their duties; more on that in a moment.

Like "Jarndyce versus Jarndyce" (a fictional court case from the novel Bleak House by Charles Dickens that has become a byword and metaphor for seemingly interminable legal proceedings), the unwinding of Leona's estate has generated lots of billable hours. The protracted litigation has been closely covered by, among others, the Wall Street Journal. A Journal article of January 22, 2016, details a "New Fight Over Helmsley Fortune."

"A $l00 million fee sought by the estate's four executors for work done so far 'is astronomical' and 'should be cut, potentially by about 90 percent, '"says the New York State Attorney General. The attorney general's court filing adds that an hourly rate a few dollars north of $6,400 is," by any definition, "exorbitant, unreasonable and improper...The fight over executor fees stems in part from the will's lack of clarity. It doesn't specify how the executor fees should be calculated."

So, people, why is a federal tax columnist like me chronicling a squabble over the administration of an estate that is playing out in a Manhattan courtroom? One reason is that the IRS has a dog in this fight. For estate tax purposes, fees charged by executors and other administrative expenses are deductible.


Julian Block writes and practices law in Larchmont, New York, and was formerly with the IRS. He's frequently quoted in the New York Times, the Wall Street Journal, and the Washington Post, and has been cited as "a leading tax professional" (New York Times), "an accomplished writer on taxes" (Wall Street Journal), and "an authority on tax planning" (Financial Planning magazine). Information about his tax guides can be found at