Cody from WhistlinDiesel is innocent! Or maybe not?

Cody from WhistlinDiesel is innocent! Or maybe not?

Cody Detwiler, the 27-year-old creator behind the "WhistlinDiesel" channel, with over 10 million subscribers, is facing a serious legal challenge: two felony counts of tax evasion. 

The charges relate to $30,000 in sales tax allegedly owed on a 2020 Ferrari F8 Tributo, which he purchased in January 2023.

The Tax Strategy (or Blunder):

Cody, a Tennessee resident, bought the Ferrari in Montana using a Montana-based LLC. Since Montana is one of the few states without a state sales tax on cars, this maneuver often seems like a great tax-saving strategy.

However, Tennessee (like most states) has a use tax law. This means that if a resident buys a vehicle out-of-state to circumvent their home state's sales tax, the tax is still owed to their state of residency—in this case, Tennessee. 

By failing to pay the requisite taxes to Tennessee, Cody is now in trouble.

🤔 Can He Blame His Accountant?

Given Cody's demanding schedule of vehicle destruction and viral stunts, it’s a safe bet he relies on tax advisors and accountants for compliance. The crucial question is: Can he claim his professionals led him astray?

The straightforward answer is that the taxpayer is ultimately liable for the tax debt itself. Cody will still owe the $30,000 in taxes plus interest, regardless of who provided the advice. No huge deal for a millionaire YouTuber after all.

BUT, when it comes to the felony charges, the answer becomes "Yes, and no."

He can potentially use the "good faith reliance on a tax professional" defense to argue that he did not act willfully in evading the tax.

Goal of the Defense: This defense doesn't eliminate the tax bill, but it aims to negate the element of "willfulness" required for a criminal tax conviction or to avoid civil penalties.

The Three Requirements: 

To succeed, he'd have to prove he:

1) Relied on a competent professional.

2) Fully disclosed all relevant facts (like being a Tennessee resident).

3) Acted in good faith by honestly following the advice.

If Cody can prove he was following specific, erroneous advice on the complex matter of state-to-state sales tax jurisdiction, he might avoid the felony conviction, even if the tax bill remains.

In such a case, the criminal charges could be shifted to the tax advisor, if it was indeed willful and not a good-faith error. But it's hard to say that this was an error.