Amazon Tax Tossed in Colorado

Posted on April 29, 2012 by Russ

Taxdood has had a good series of posts on the Amazon tax. Amazon.com has negotiated with several states regarding collecting sales tax on purchases made from the online retailer. Amazon will begin to collect sales tax in Texas (beginning July 1st) and Nevada (2014).

Some states have imposed “Amazon” taxes–writing laws that force the online company to collect sales tax in those states. The typical Amazon tax says that affiliates cause Amazon to have nexus to that state. Recent court decisions may make Amazon bolder in fighting the taxes.

This past week a judge in Chicago ruled that Illinois’ Amazon tax was unconstitutional. In Denver, Judge Robert Blackburn ruled Colorado’s Amazon tax unconstitutional because it, “impose[s] an undue burden on interstate commerce…Enforcing a reporting requirement on out-of-state retailers will, by definition, discriminate against the out-of-state retailers by imposing unique burdens on those retailers.” I expect the Colorado Department of Revenue to appeal.

There is the possibility of this case heading to the US Supreme Court in a couple of years, especially if one Appeals Court rules the tax constitutional and another court rules it unconstitutional.

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Your Tax Dollars NOT at Work: 293 Ultra Low Mileage Priuses in Miami

Posted on April 29, 2012 by Russ

My partner, Aaron, has a Toyota Prius (actually, two of them, if you count his wife’s car). I like the car a lot, and I’m certain Aaron won’t misplace his car. Aaron, though, does not manage the vehicle fleet of Miami-Dade County (Florida). That city/county managed to “misplace” 293 Toyota Priuses.

A television station in Miami, Channel 41, spent eight months investigating and found the cars in a parking garage in Miami. This news report stated the cars were “rusty.” I can’t imagine having the cars sit in a garage for four years could do them any good. An auto blog speculates that this relates to the previous Mayor, Carlos Alvarez. (He was recalled in 2011.)

The good news is that 123 (or 135) of the Priuses are now in use. That only leaves 170 (or 158) left to go!

Hat Tip: Instapundit

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Vikings May be Tossed for a Loss

Posted on April 29, 2012 by Russ

The Minnesota Vikings play at the Hubert H. Humphrey Metrodome. The Vikings have played in the stadium since 1982, and the stadium used to host the Minnesota Twins and the University of Minnesota football team. Before playing at the Metrodome, both teams played at Metropolitan Stadium. The Twins now have their own new ballpark, Target Field and the Golden Gophers have their own new stadium, TCF Bank Stadium.

The Vikings want a new stadium, too, and have periodically threatened to move to Los Angeles or anywhere else that doesn’t have a professional football team. The Vikings also want to have their stadium built in part with public (taxpayer) money. And therein lies the rub.

Minnesota has a Democratic governor (Mark Dayton) [technically, he’s a member of the Democratic-Farmer-Labor Party, or DFL] and Republican leaders in the state legislature. The two parties appear to mirror the problems in Washington: They don’t agree on much. The Vikings want a nearly $1 billion stadium. They’d contribute around $427 million. The remaining funds would come from the city of Minneapolis (where the stadium would be located) and from the state of Minnesota.

Vikings fans want a new stadium, of course. The problems include:

– The GOP wants a reduction in the state business property tax (Governor Dayton opposes this);
– Democrats want a bond measure (the GOP opposes this);
– Minneapolis would like other cities (e.g. St. Paul) to help pay for the Vikings’ stadium;
– Rehabilitation of the Target Center (where the Minnesota Timberwolves of the NBA play) is somehow in the middle of this;
– The deal includes exclusivity for the Vikings to bring in a soccer team to the new stadium; and
– Rarely do new stadiums pay for themselves.

The Minnesota legislature is set to end their session tomorrow, but there’s a good chance they’ll head to overtime. There’s probably less of a chance of the Vikings getting their stadium this year.

News Stories:
Star-Tribune, Pioneer Press, MinnPost, and Bemidji Pioneer.

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Hatch Finds a Job! (But Buyer Beware: Firm Linked to Roni Deutch & Another Accused Attorney)

Posted on April 26, 2012 by Russ

Congratulations to Richard Hatch, winner of the first Survivor and my favorite tax-challenged celebrity. Courtesy of Kelly Erb we find out that Mr. Hatch now has a job.

Yes, it appears to be another penny on the dollars firm. If some of you actually could read the disclaimer on the advertisement, I congratulate you! My eyesight just isn’t that good.

But this firm is different: They are just a referral service, and by doing a search on them I discovered that they have been advertising for people to buy their leads. I also found that they own http://www.taxcab.com with beautiful spokeswoman Tonya.

Unfortunately, MMAC Group may have some issues. When I looked up who owned the domain “taxcab.com” using whosis, I found the reference was to one Gregory Flahive. That name sounded familiar, and when I looked it up in Google I discovered that Mr. Flahive is one of three Sacramento area attorneys accused of taking thousands of dollars upfront from homeowners trying for loan modifications; that would be illegal if proven under California law. He faces 19 felony charges.

Yet another name associated with MMAC is Brandon Funk (see the link to the referral service). Mr. Funk’s name, too, rang a bell; he’s the former Client Intake Director for Roni Deutch’s firm. For those who aren’t aware, Ms. Deutch was accused of taking large up-front payments with promises of reducing individuals’ tax debts but provided little or no help in actually reducing their taxes.

Is this business legal? Probably; they’re not promising anything. Would I use Richard Hatch to help me recommend a good tax professional? Please….

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California Tax Revenues Lag

Posted on April 26, 2012 by Russ

In what is, for me, the biggest non-surprise, California looks to be facing a $9 billion deficit. Reports are that income tax collections in April have severely lagged behind estimates. Given that the economy remains in the doldrums, only bureaucrats and Democrats in Sacramento should be surprised by the news.

Actually, Governor Jerry Brown has called upon Democrats in the legislature to approve cuts. The problem, though, is that they are beholden to special interest groups (mainly public employee unions) which would be directly impacted by those cuts. Sooner or later those cuts will have to be made, and they’ll be a lot less painful if they’re made sooner. Unfortunately, I expect later to win rather than sooner.

Meanwhile, Governor Brown’s proposed tax increase this fall would increase the amount of money to education. If the measure passes, that is; under California’s constitution, 40% of taxes go to education. So will schools see any of those funds? No, they’d all go to pensions. As more Californians find out about this expect the measure to flunk in November.

I’ve been saying for years the solution is that government must be small and nimble. I’ve written in the past about California’s plethora of government agencies. The size of government must shrink drastically for fiscal sanity to again exist in the Bronze Golden State.

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Hurry Up and Wait: FullTilt/PokerStars/Group Bernard Tapie Update

Posted on April 24, 2012 by Russ

This post has nothing to do with taxes, but everything to do with online poker. You’ve been forewarned.

Today came news that Group Bernard Tapie has backed out of the deal to acquire the assets of FullTilt Poker. That is a fact, and that would normally be bad news for individuals who are waiting to be reimbursed by FullTilt. However, fresh on the heals of that news (and, in some cases, preceding that) came the rumor that PokerStars was acquiring FullTilt, and settling with the US Department of Justice for $750 million.

First, let’s deal with the facts. GBT says that they could not come to an agreement (with the DOJ) on repaying non-Americans and that there were issues regarding forfeiture laws outside of the US. I’ll take what GBT said at face value (though the reasons cited ring somewhat hollow with me). No matter, an acquiring company can always decide to walk away from a deal.

The next fact is that PokerStars is in negotiations with the DOJ to settle the criminal and civil charges filed against it. That’s not a surprise, as PokerStars would like to not have anything hanging over its head. This was confirmed by Eric Hollreiser, Head of Corporate Communications for PokerStars, in a corporate blog post today.

The rumored settlement amount, $750 million, feels right. Party Poker settled with the DOJ for around $300 million. If we consider that PokerStars operated in the US for five additional years after the UIGEA went into effect in 2006, the additional amount is reasonable.

It also feels right that the DOJ doesn’t want to deal with repaying Americans (or individuals outside of the US). Americans likely could file claims of rendition with the DOJ, and I suspect that the DOJ isn’t set up to deal with thousands of claims, so why not hand it off to PokerStars. That said, this part of the rumor could be wrong.

Let’s look at this from the DOJ’s point of view. “PokerStars operated for five years following implementation of the UIGEA. They committed bank fraud. They should pay at least double what Party paid,” might be how the DOJ looks at it. So the DOJ keeping $600 million and setting up a $150 million fund to repay Americans (the estimated amount owed US players by FullTilt is $150 million) also feels right. This is just speculation by me, and we’ll all have to wait for the press release by the DOJ.

And that’s the definite reality: Until the deal is signed off–and any deal with $500 million or more coming into the US will have to go up to the Attorney General (Eric Holder)–no one with concrete knowledge of the terms is going to say anything. This could be a matter of hours, days, or weeks. As my niece would say, “Hurry up and wait.”

There’s another certainty: No one in the US is going to be playing on PokerStars (or FullTilt Poker) if this deal goes through. This deal will not change current US law as interpreted by the DOJ. The DOJ believes that online poker is not legal under a variety of laws. Until legislation passes in Congress (or state legislation passes), there will be no legal online poker in the US. Nevada is in the licensing stage for intrastate online poker; the best hope for federal legislation will be in the lame duck session following the November election.

Finally, a brief comment about Ultimate Bet/Absolute Poker (remember them?): If the rumors are true about PokerStars purchasing FullTilt Poker, do not expect a repeat of them purchasing UB/AP.

Posted in Gambling | Tagged , | 1 Comment

For Sale: 24,000-26,000 Square Foot Home with an Interesting History

Posted on April 23, 2012 by Russ

The house has 24,414 square feet. At least that much, as it was also measured at 26,828. It has lots of bedrooms: 16, 17, or 18 (depending on who does the counting). And it will soon be for sale, as the home’s original owner is enjoying a very lengthy stay at his new digs, ClubFed.

The home was built for Thomas Parenteau. If that name sounds familiar you may have read about his trial. It could have come out of the pages of a cheap novel:

So far we’ve found out that the mistress, Pamela McCarty, is the mother of Mr. Parenteau’s two daughters; that all three lived in the same mansion; phony jobs and phony paychecks; allegations of $18 million in fraudulent loans…and the trial should last a couple more weeks.

That’s what I wrote in 2010 when the trial was happening. Today that house can be yours. It has plenty of land, and for the Hollywood type who wants to get away from the hustle and bustle, its sits in Norwich Township in the northwest part of Columbus, Ohio. The home appears to be in excellent shape, and it can be yours for somewhere between $4 and $5.5 million.

As for Mr. Parenteau, he won’t be returning to the mansion. The Department of Justice sold the home to a bank; the bank plans on selling the home soon.

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Best States for Entrepreneurs: South Dakota, Texas, and Nevada Lead the Way

Posted on April 22, 2012 by Russ

The Small Business & Entrepreneurship Council released last Monday their 2012 Business Tax Index. There aren’t many surprises when you look at the list of best and worst (at least, for regular readers of this blog). The top seven states have no income tax on individuals. Meanwhile, the usual suspects (with one exception) are on the list of the bottom ten.

First, the top ten:
1. South Dakota
2. Texas
3. Nevada
4. Wyoming
5. Washington
6. Florida
7. Alaska
8. Alabama
9. Ohio
10. Colorado

The bottom ten has a lot of the usual high-tax “Blue” states:
42. Connecticut
43. Hawaii
44. Vermont
45. California
46. Maine
47. Iowa
48. New York
49. New Jersey
50. Minnesota
51. District of Columbia

I was surprised to see Minnesota so low on the list. Minnesota has a high capital gains tax rate; that, combined with its relatively high personal income tax rate, inheritance tax, and the state’s AMT, led to it being near the bottom of the list.

I also need to compliment Michigan. I’ve been down on the state–at times, saying it has been worse than California–but the SBEC ranks the Great Lakes State number 12. Under a Republican governor, Michigan has improved its tax policies.

For those wondering why I’m now in Nevada rather than California, this is just another measure of the problems with the Golden State. Governor Brown and Democrats in the state are discussing measures to further increase the state’s taxes. Well, there are six more spots to go before reaching the top (worst) position!

The SBEC has a nice interactive map showing the 50 states (plus DC); you can view the map here.

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He Should Have Known Better

Posted on April 22, 2012 by Russ

It’s one thing if someone makes an honest mistake in preparing his tax returns. It’s another thing if an attorney makes an honest mistake. It’s quite a different thing if the attorney makes dishonest mistakes and obstructs justice. I expect one Ohio attorney to have plenty of time to think over his actions.

From Columbus comes the story of Rick Matsa. Mr. Matsa is not only an attorney but also an architect, real estate broker, and a minister. As the Department of Justice press release notes:

Rick Matsa individually was convicted of one count of a corrupt endeavor to obstruct and impede the IRS, 15 counts of aiding and assisting in the preparation of false and fraudulent tax returns, that related to five different trusts; one count of willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR); one count of conspiracy to obstruct justice, commit perjury, and make false statements; two counts of witness tampering; one count of submitting a false statement; and one count of obstruction of justice.

Mr. Matsa created a phony trust, several nominee entities, phony foreign benificiaries, ignored reporting his foreign bank account that had more than $300,000 in it, but did manage to use the untaxed proceeds of his scheme to buy a 150-acrfe farm and a house.

Adding to his woes, he, “…conspired to obstruct the investigation by misleading and concealing evidence from the grand jury, making false statements to the grand jury, creating false documents, tampering with witnesses, and lying to federal investigators.”

Mr. Matsa faces up to 108 years at ClubFed, and I expect his sentence to be quite lengthy given the numerous severe charges he was convicted of.

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Bozo Tax Tip #1: Get Out of Town, Fast

Posted on April 15, 2012 by Russ

There’s an old saying: When the going gets tough, the tough get going. Well, with Bozos things work differently. “Oh my,” a Bozo thinks. “Tax Day is just a couple of days away. I’m completely unprepared. I know: I’ll go visit Aunt Bertha and Uncle Abner in Ottawa. I’ll catch the hockey, and forget about tax.”

Believe it or not, this strategy actually works (for a while). If you are outside of the United States on the day taxes are due (April 17th this year), you get an extra two months (until June 15th) to file your federal taxes. There are no penalties, just interest.

So suppose you haven’t a prayer of paying your federal taxes and you go to Ottawa to see the Rangers face the Senators on both Monday and Wednesday (and stay all three days). Yes, you have until June 15th to file your taxes.

Now, this strategy doesn’t work for every state, though. Some states do follow the two-month extension (New York and North Carolina, for example); others do not. I’ve had clients stuck in Europe do a volcanic eruption (remember that volcano in Iceland that erupted a couple of years ago), panic, and I told them to relax.

Of course, if you can’t travel abroad, going from the city to the suburbs won’t change the tax deadline. And I must emphasize that this is just a temporary fix. Yet this is the one example of a Bozo maneuver that can really work.

That’s it for our Bozo Tax Tips for the 2011 Tax Filing Season. I hope you’ve enjoyed them. We’ll be back with actual tax posts at the end of the week.

Happy Tax Day!

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