There is a case in New Jersey called Sheridan v. Sheridan,247 N.J. Super. 552 (Ch. Div. 1990), that requires trial judges to report evidence (usually after a trial or hearing) of any illegal activity to the proper authorities. It most cases, it comes up in the context of unreported or under reported income cases, affectionately known as "Sheridan cases." That said, I have often joked that this is like Bigfoot or the Loch Ness Monster, that is, we have all heard about the legend, but no one has actually seen it. I have even tried cases where a party testified about cash and employees who were "off the books", and other cases where the excess perks paid through the business were massive, with no referral to the IRS, etc.
However, in the last two months, I have seen two unreported Appellate Division decisions which noted that the trial court made a Sheridan referral.
In Chalow n/k/a Spence v. Chalow, the judge found that defendant had "underreport[ed] . . . income on the tax returns that is not permitted such as, bartering, exchanging services for personal benefits that are not deduct[i]ble, deducting items that are club memberships or other entertainment expenses that are not deduct[i]ble . . . all of which could be considered intentional unreporting [sic] of income." Therefore, pursuant to Sheridan, the judge decided to send a copy of his decision "to both the New Jersey and Federal Taxing Authorities for their consideration."
In Onyiuke v. Onyiuke, during discovery and later a hearing regarding a relocation issue, counsel for defendant and the court learned that plaintiff had falsely taken a credit on his 2007 through
2009 federal income tax returns for daycare expenses of the parties’ daughter. . In fact, Plaintiff’s tax returns showed specific false amounts of fees allegedly paid to a day care center though neither child had ever attended that facility. During the hearing, the trial judge stated that he would report plaintiff’s false income tax filings to the Internal Revenue Service in accordance with
So alas, Sheridan is not myth or legend, it is real. Note, however, many people address these issues in binding arbitration, with the belief that the arbitrator does not have the same duty to report that a judge has. Litigant’s who are willing to go to court knowing that they have these potential issues, do so at their peril.