April 1, 2017 | View PDF
In 1966, Ray McKinley Dunwoody Jr. was a USAF chief master sergeant stationed in Roswell, New Mexico. During this time a friend of his, a retiring master sergeant, held a small party with a number of his friends and associates, including Ray.
During a casual conversation, Ray mentioned chess. His friend eagerly announced that he was a member of the local chess club and held a high ranking. He then asked Ray about his chess experience. Ray told him that he only played once in a while, was just so-so, and had no ranking.
He asked Ray if he would play him a game and make a wager on it. Ray told him that he did not gamble and would not wager, but after he insisted, Ray agreed to a $100 bet.
The friend had left his chess board at his home, so the entire party went there to play.
The two men played, and Ray beat him fairly easily. Ray's friend insisted that it must have been a fluke, so he asked Ray if he would agree to make it two out of three. Ray initially disagreed and said a bet was a bet--that he had himself asked to play one game. But since the man was Ray's friend, Ray agreed to play a second game.
But Ray won the second game also. The man who thought of himself as a great chess player was trounced by a novice in front of his friends. He pulled out a $100 bill and threw it onto the table. Ray and the other people left soon afterwards.
By the following year, Ray had retired himself and had forgotten all about the chess game.
In late August, Ray got a notice from the IRS stating that he was being audited. It was the first time he had ever been audited in his life. He had always been a very careful businessman and had taken only legitimate deductions.
Ray went to the IRS office and talked with an agent there. They went over all of Ray's records. The agent asked multitudes of questions. He went over Ray's earnings. Then he asked Ray if he had any gambling winnings.
Ray said he didn't gamble.
"Are you sure you don't gamble?"
"The only wagers I've ever made were in golf for a nickel a hole or a beer a game. It's trivial. I don't keep notes on things like that."
"Are you sure that's all you've ever won?"
"That's about it."
"What about chess? You ever play chess?"
"I very seldom play chess."
"Ever make a bet on a chess game?"
"Don't think I have."
"I think you have. I have been notified that last year you won $100 on a chess game."
Ray then knew who had ratted on him. "Oh, I had forgotten all about that."
"Don't you know that you owe taxes on that $100?"
"I don't think so. Nobody ever reports taxes on little stuff like that."
"But your friend has reported it. You haven't. And you owe taxes on it."
"Okay, how much do I owe?"
"Let's see, in your bracket, it comes to about $25 plus interest."
The man then went over the rest of Ray's return. He looked at his numerous business deductions.
"Sir, I'm afraid I can't allow this one. And I don't think this one will get by either...."
In the end, the IRS hit Ray for several hundred dollars of extra taxes, interest, and penalties.
And that was just the beginning. Agents kept auditing Ray every year. They hit him for sums ranging from $160 to $1200 in extra taxes over the next five years.
By this time, Ray had a talk with a friend, Vietnam veteran Jeremiah Denton (Alabama's future US senator). He informed Ray that he could state the time of his audits--that the law allowed him to specify any times that were convenient for him, regardless of how inconvenient it was for them. Thus, he might be able to get them to be less enthusiastic in their tax pursuits.
When the IRS notified Ray for the seventh year, he insisted that they meet in their office at 10 pm--five hours after it closed for normal business. This upset the people at the IRS, but Ray insisted that it was the most convenient time for him to come. They finally agreed on it.
Unfortunately, Ray's plan backfired. They gave him an interrogation worthy of a violent terrorist.
This audit did not last only a night or two; it lasted all the way from August until early December. For five days a week, from 10pm until about midnight, agents grilled Ray again and again. Ray eventually relented to having numerous perfectly legitimate deductions disallowed. The IRS had Ray so worn down that he succumbed to about $6000 in additional taxes, interest and penalties.
Ray had to close down his business, Paramount Enterprises, and sell his vehicles and equipment at a substantial loss to pay taxes he didn't even owe.
Finally, after that, the audits ended. There are rumors that the IRS often pursues audits for seven years in a row on people they don't like or whom they might feel are "cheating."
At first, Ray could never understand how his friend could have been so cruel as to report him to the IRS for a measly $100.
Only years later, did Ray find out that this "friend" was extremely jealous of him. Ray had been rapidly promoted from a technical sergeant to a chief master sergeant and had become the second youngest chief master sergeant in the history of the air force. During the same time frame, Ray's "friend" had received no promotions at all and remained a master sergeant. On top of that, Ray had embarrassed him by beating him--a well-ranked chess "champion"--not once, but twice in front of his friends on a wager that he had insisted upon himself.
After his military retirement, this "friend" had obtained a job at the IRS and used his position to vindicate himself against Ray.
This act has to be one for the record books as one of the most vicious acts of revenge ever committed against a person over a trivial matter. Ray said that God must reserve a special place in Hell for people like that.
Ray Dunwoody Jr. had been a close friend of mine since 1988, when he was protesting the “Cong. William L. Dickinson Drive” fiasco in Montgomery. He passed away in 2015.