Archive for the ‘Tennessee’ Category

Hurricane Helene IRS Relief for all of Alabama, the Carolinas, Georgia, and Parts of 3 Other States

Wednesday, October 2nd, 2024

The damage from Hurricane Helene was horrific in and around western North Carolina, and several states have been declared federal disaster zones.  The IRS announced late yesterday that the entire states of Alabama, Georgia, North Carolina, and South Carolina, along with parts of Florida, Virginia, and Tennessee have disaster extensions until May 1, 2025.

This will extend not only individual and corporate tax returns on extension due on October 15th but next year’s March and April tax deadlines (along with a host of other filing deadlines).  Any current client in a disaster zone with questions can contact our office for more information.

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Posted in Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee, Virginia | Comments Closed

Arbitrage Is Legal, But You Better Pay the Taxes

Sunday, June 21st, 2015

Let’s say you are 100% certain that the price of a certain article will increase from $0.20 to $0.62 in a few weeks. Can you purchase a stock of that at $0.20 each and then sell them later at $0.62? If there are no laws against it, certainly. Of course, the $0.42 profit is taxable. That last line allegedly was forgotten by a Tennessee legislator.

Joseph (Joe) Armstrong is a member of the Tennessee legislature. He wanted to increase the state’s tobacco tax from $0.20 to $0.60 (per pack of cigarettes). Was he interested in the health of the residents of the Volunteer State? Perhaps. According to the indictment handed down last week, he was really interested in the health of his bank balance.

The Justice Department alleges that he entered into a conspiracy to profit from the increase in the cost of a tobacco stamp. Buy low, sell high is great, but as a legislator you’re not supposed to profit off of it. (Though Mr. Armstrong wanted a tripling of the price, the tax increase ended up being $0.42 per pack to a tax of $0.62.) Mr. Armstrong got a loan, bought lots of tax stamps at the old rate, and then sold them at the high rate. He used a nominee business (through his accountant) to hide the profits. His accountant got 15% of the profits.

(The accountant made a plea deal in July 2014 that was unsealed earlier this year. Charles Stivers, a CPA, was Mr. Armstrong’s accountant. As a reminder to the IRS, a license doesn’t make a person immune to deficiencies in ethics.)

The Justice Department alleges that Mr. Armstrong wanted to both have his after-tax income equal his pre-tax income from the scheme (always a good, albeit, illegal option) and he wanted to hide this from his wife. He is also being charged with lying to the IRS about his activities.

Mr. Armstrong pleaded not guilty to all charges on Friday. If found guilty, Mr. Armstrong will likely be residing at ClubFed.

Posted in Tax Evasion, Tennessee | 1 Comment »

A Bipartisan Tax Bill? I’ll Drink to That!

Wednesday, February 11th, 2015

There hasn’t been much bipartisanship on Capitol Hill recently. But there is a piece of legislation that is being proposed by both Democrats and Republicans. It’s to end age discrimination against bourbon and whiskey.

You didn’t know that there was such discrimination? Well, it’s not at the liquor store; rather, it’s in the Tax Code. One of the fundamentals of accounting is to match expenses against revenue. The problem for bourbon and whiskey is that it must age, so the expenses must wait until the product is sold. As this article from the Louisville Courier-Journal notes, a bipartisan group of Kentucky and Tennessee Congressmen would like to change that. They would like bourbon and whiskey producers to be able to take their expenses as incurred.

We’ll have to wait and see if this measure gains any traction in Congress. If it does, bourbon producers will certainly be drinking up for the success.

Posted in Kentucky, Legislation, Tennessee | 2 Comments »

Catching Up on the Past

Thursday, August 6th, 2009

We’ve got some catching up to do. A few miscreants that we reported on have recently reappeared in the news, so here goes.

First, our 2008 Tax Offender of the Year, Robert Beale, had his appeal heard earlier this year. It didn’t take long for Mr. Beale’s conviction of tax evasion to be upheld. Mr. Beale first alleged that the income tax doesn’t apply to citizens of the United States. From the Appeals Court: “Beale is not the first to attempt to escape his tax obligations with this type of argument, and his arguments fare as poorly as those of his predecessors.”

Mr. Beale then tried to argue that the judge should have recused herself. Of course, Mr. Beale managed to also get convicted for attempting to “arrest” the judge. The Appeals Court was having none of that:

Furthermore, Beale’s intent to manipulate the judicial system was clearly expressed when he was recorded saying that after he had intimidated the presiding judge, “no judge in the whole Court will have anything to do with me.” Complaint ¶ 5, Beale, No. 0:08-cr-00210-RSWJJK. Remanding for a new trial with a different judge would be an undue reward for an attempt to cow the entire federal bench into submission.

Mr. Beale will get to enjoy ClubFed for a few more years. (Hat Tip: Roth Tax Updates)

Meanwhile, we reported on the saga of Kent Hovind, the former evangelist and owner of Dinosaur Adventure Land (no, we’re not making that up) a couple of years ago. Mr. Hovind was convicted on 58 tax counts and I wondered, at the time, whether or not the government would soon own Dinosaur Adventure Land. Well, the government now can sell off the theme park and other properties that Mr. Hovind owned so that it can recover the money owed to the Treasury. No, Dinosaur Adventure Land won’t be reopening but the land will likely go to good use.

Finally, the case of Tennessee’s Crack Tax is done (at least, for now). The Tennessee Supreme Court ruled 3-2 that the tax is unconstitutional, upholding a lower court ruling. Peter Pappas writes that the law could be reconstituted by the Tennessee legislature but we’ll wait and see what happens.

Posted in Tax Fraud, Tennessee | Comments Closed

Tennessee Crack Tax Ruled Unconstitutional

Friday, September 7th, 2007

Lawmakers in Tennessee had an interesting idea a couple of years ago. Why not tax illegal drugs? So legislators in the Volunteer State required sellers of illegal drugs to get a tax stamp on their merchandise. If sellers were caught selling illegal drugs without the tax stamps, they would face tax charges (and probably charges relating to selling illegal drugs, too).

Of course, if you want to have such a tax, you must make sure that there’s a wall between revenue agents and the drug police (or the tax would likely be unconstitutional under the 5th Amendment). A lower court found that Tennessee’s tax violated that.

However, the Tennessee Court of Appeals ruled that the tax also violates the Tennessee Constitution, in that “…the statute is arbitrary, capricious, and unreasonable and, therefore, invalid under the Tennessee Constitution, in that it seeks to tax as a privilege, activity that prior legislation has designated as criminal activity….”

Tennessee will appeal to the Tennessee Supreme Court.

News Story: The Tennessean

Hat Tip: Tax Foundation

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Sacked in Tennessee?

Sunday, September 24th, 2006

When you run for Congress, strange things can happen. Consider this story from Knoxville, home of the University of Tennessee. Heath Shuler is a famous former quarterback for the Volunteers. His NFL career wasn’t lengthy, but he did earn a nice signing bonus. He and his brother formed Heath Shuler Real Estate (HSRE), and they later sold most of their interest in the business. Shuler is running for Congress. And so the story might have gone, but…

…And it’s a big but. The Associated Press happened to find out that HSRE has been “chronically late” in paying its taxes. In fact, they just made a $69,000 late payment. Mr. Shuler, according to the story, is planning on filing a lawsuit to have his name taken off the name of HSRE. I’m not sure how this will be taken in Tennessee politics, but I’m sure he wishes that this story broke in December rather than September.

Posted in Tennessee | 1 Comment »

How to be a Millionaire, Illegal Style

Sunday, September 10th, 2006

There are lots of ways to become a millionaire. You can build a successful business, have real estate appreciate, and of course inherit money. You can win the lottery. Or you can do it illegally.

One way is to collect $1,078,392.27 in sales tax and not remit that money to the state. That’s what Randall Lee Malin is accused of doing in Tennessee. If Mr. Malin is convicted on all charges, he faces 92 years in prison and fines of $181,000.

News Story: Jackson Sun

Posted in Sales Tax, Tax Evasion, Tennessee | Comments Closed

Nissan to California: It’s Too Expensive There

Friday, November 11th, 2005

Nissan Motor Company will move its US headquarters from Gardena (suburban Los Angeles) to Williamson County, Tennessee (suburban Nashville) in order to save money. Nissan CEO Carlos Ghosn noted, “The costs of doing business in Southern California are much higher than the costs of doing business in Tennessee.” The move will directly cost 1300 jobs in Southern California. Jack Kysar, chief economist at the Los Angeles Economic Development Corporation estimates that it will cost an additional 1500 jobs through indirect impacts.

We wonder if the Democrats in the legislature have any thoughts about keeping business in California given their proposals to increase California’s already high income tax rates.

News Coverage: Washington Post (AP Story)

Posted in California, Tennessee | Comments Closed