Kapp

I. Facts and Procedural History

Kapp is a Certified Public Accountant who specializes in preparing federal income tax returns for individuals employed in the transportation industry. This case relates to his prepara- tion of federal tax returns for mariners who work on ocean- going ships and who are at sea for long periods without returning to port (“deep sea mariners”), and mariners who work on tug boats and barges (“tug and barge mariners”), which return to port more frequently. Deep sea mariners are provided meals by their employer while working on board the UNITED STATES v. KAPP 5141 ship. Tug and barge mariners also typically do not incur meal related expenses.

Between approximately January 1997 and February 2006 Kapp prepared tax returns for mariners who lived on vessels in the course of their employment that claimed the mariner’s tax deduction. Two of these returns were for Marin Johnson and Jim Westling, who were employed as deep sea mariners during the tax year in question. Both individuals were pro- vided meals at no cost, but claimed a deduction based on the number of days at sea multiplied by the full meals and inci- dental expenses (“M&IE”)…