Snipes Loses Another Appeal

Posted on September 8, 2011 by Russ

The Eleventh Circuit Court of Appeals denied Wesley Snipes’ appeal of his convictions of willfully not filing tax returns. Mr. Snipes has about 26 months left on his three-year sentence.

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Four Pinocchios to President Obama

Posted on September 8, 2011 by Russ

At a Labor Day speech in Detroit, President Obama stated, “We said working folks deserved a break, so within one month of me taking office, we signed into law the biggest middle-class tax cut in history, putting more money into your pockets.” The Washington Post’s Glenn Kessler gave this quote “Four Pinocchios.” That means it’s a whopper of a lie, of course.

Peter Pappas has more.

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Same Old Song and Dance

Posted on September 6, 2011 by Russ

Governor Jerry Brown would like to increase taxes. That appears to be his message to voters. Voters have rejected several income tax increases over the past few years. It’s as if no one seems to care about the voters.

I bring this up because today is Labor Day (well, it’s still Labor Day on the West Coast as I write this). I saw today that Jimmy Hoffa, Jr. wants to “take those Tea Party Son of ****** out.” It’s nice to see that decorum still exists with organized labor. President Obama praised Mr. Hoffa, too.

I think the country could use some real hope and change, not a change back to the 1960s.

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Nonexistent Inspectors Lead to a Real Cell at ClubFed

Posted on September 6, 2011 by Russ

Jay Vincent was a standout player at Michigan State. He was part of the squad that featured Ervin “Magic” Johnson that won the NCAA Championship over Indiana State in 1979. Mr. Vincent played in the NBA with stops in Dallas, Washington, San Antonio, Denver, Philadelphia, and Los Angeles.

Unfortunately, Mr. Vincent’s occupation after the NBA appears to be on the dark side, so to speak. Mr. Vicnent operated a business that did home inspections on foreclosed properties. That would seem like a good business in this economy. Unfortunately, he forgot a necessary step: hiring home inspectors. But Mr. Vincent did take his customers’ payments, but they didn’t get anything in return. That’s fraud. Mr. Vincent also didn’t pay tax on the income from the fraud. He pleaded guilty earlier this year and was sentenced last week to 68 months at ClubFed on the fraud charge and 3 years on the tax fraud charge (to be served concurrently).

Mr. Vincent is also facing possible indictment on another alleged scam. In Indiana, Mr. Vincent advertised tryouts for an exhibition basketball team. The team apparently didn’t exist. His advertisements were allegedly paid for with bad checks. This doesn’t look good for Mr. Vincent

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I’m Shocked to Find that Record Tax Increases Impact Job Losses

Posted on September 1, 2011 by Russ

I hope you detected the sarcasm in the headline. The Illinois Policy Institute reports that following the record tax increase in Illinois, Illinois lost more jobs in July than any other state.

There’s a wonderful chart in the article:

You don’t even need to see the spot marked “Tax Hike Enacted” to know that something changed drastically. True, the economy has gotten worse, but taxes matter. That’s true in Springfield as well as Sacramento…but it’s a lesson that politicians keep forgetting.

Hat Tip: Mish’s Blog

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22 Years, But at Least He’ll be Away from his Wife and Mistress

Posted on August 30, 2011 by Russ

We’ve written about Thomas Parenteau before. His trial was straight out of a cheap novel: He was accused of tax fraud and money laundering while living in a 30,000 square foot mansion with his wife and his mistress. Last year, he was found guilty on 11 of 13 counts. Yesterday, Mr. Parenteau received 22 years at ClubFed for his crimes.

Joe Kristan and TaxDood have more.

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The Shipment of California Jobs to Texas — What can be Done?

Posted on August 29, 2011 by Russ

Back in April, Herman Bouma, an attorney with Buchanan Ingersoll & Rooney PC in Washington, DC, penned this prediction:

May 2, 2011. This just in: Concerned about the shipment of California jobs to Texas, the California State Legislature today passed legislation imposing current, worldwide income taxation on every corporate group headed by a California corporation, thus subjecting such a group to current taxation on its income earned worldwide, including in Texas. The Governor indicated he will sign the legislation, stating, “It is high time we repeal the tax breaks and loopholes for shipping California jobs to Texas.”

May 2, 2016. This just in: Recently released statistics indicate that the number of corporate groups headed by California corporations has dropped precipitously over the last five years. The statistics also indicate that those California-headed corporate groups still remaining are having a difficult time competing with other corporate groups. Members of the California State Legislature expressed surprise at the findings.

May 2, 2017. This just in: Dazed but undaunted, the California State Legislature today passed legislation imposing current, worldwide taxation on every corporation in the world and instructing the Governor to take over the world in order to ensure compliance. The Governor indicated he will sign the legislation and expressed every confidence in the ability of the California Highway Patrol to carry out its new mission.

This is, of course, false…except that as Phil Hodgen noted, its true about trusts.

Let’s say there exists a trust. The assets are outside of California. All of the beneficiaries live outside of California and have never traveled to California in their lives. The only connection with California is that the trustee is based here.

Result 1: California says the trust must pay California income tax on its income. (Consequently, the beneficiaries end up paying the California income tax even though they don’t live here). This is seen as completely logical in Sacramento–as immutable as the Law of Gravity.

Result 2: California banks and trust companies cannot compete for this business. Instead they open trust companies in Nevada and Delaware. (Consequently, banking and trust company jobs are created in Nevada and Delaware). This produces utter bewilderment in Sacramento.

It’s also true about business entities which are registered to do business in California, especially LLCs. Assume Acme LLC is a Delaware LLC; its managing member, Joe Smith, is a California resident but none of the business of the LLC is conducted in California. All of the business is conducted in Delaware (there are no California employees, offices, or any other ties that would give nexus to California). Tough; just having the managing member be a Californian is enough to give nexus to California for the LLC.

California also passed the “economic nexus” bill last year. Under this law, if 25% of an entity’s sales are to California, there is economic nexus to California and an entity is supposed to file a California tax return even if it has no employees, plant, or materials in California. (Good luck on enforcing this, or on the constitutionality of it, but the law is on the books.)

Mr. Bouma’s prediction was meant in jest about the way California has gone. The trouble is, some of his prediction is already true.

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IRS Extends Offshore Voluntary Disclosure Deadline

Posted on August 26, 2011 by Russ

The IRS announced an extension of the deadline for participating in the 2011 Offshore Voluntary Disclosure Initiative due to potential issues from Hurricane Irene:

Due to the potential impact of Hurricane Irene, the IRS has extended the due date for offshore voluntary disclosure initiative requests until September 9, 2011. For those taxpayers who have not yet submitted their request and any documents, the following actions are necessary by September 9, 2011:

Identifying information must be submitted to the Criminal Investigation office. This includes name, address, date of birth, and social security number and as much of the other information requested in the Offshore Voluntary Disclosures Letter as possible. This information must be sent to:

Offshore Voluntary Disclosure Coordinator
600 Arch Street, Room 6404
Philadelphia, PA 19106.

Send a request for a 90-day extension for submitting the complete voluntary disclosure package of information to the Austin campus. This request must be sent to:

Internal Revenue Service
3651 S. I H 35 Stop 4301 AUSC
Austin, TX 78741
ATTN: 2011 Offshore Voluntary Disclosure Initiative

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Today Is the Day to Prepare (Hurricane Irene)

Posted on August 25, 2011 by Russ

If you are a resident of New Jersey, New York City/Westchester County/Long Island, Connecticut, Rhode Island, or Massachusetts, you need to drop what you’re doing and get prepared for Hurricane Irene. Now.

Maybe we’ll get lucky and Hurricane Irene will veer out to sea. However, the current forecast track map puts Irene directly over the New York metropolitan area on Sunday. Unfortunately, there is no reason to think that Irene will veer away; the recent forecast maps have moved Irene toward the west rather than the east.

Hurricanes don’t strike New York City often, and I suspect residents of the Big Apple think this might be just another storm. The effects, though, of a direct hurricane strike might be truly horrifying: Flooding the subway system for weeks to months, devastation along the Long Island shore, flooding in lower Manhattan, millions without power, etc.

If you reside in a low-lying flood-prone area in the Northeast threatened by Irene, consider taking action today. The moment that government authorities announce possible evacuations, people will panic. Buy your supplies now. The National Hurricane Center has links to preparedness guides.

Again, I am hopeful I’ll be looked at in a week as a fear-monger. I just remember the last time I saw such a map, and the disaster that occurred (Katrina). I also remember a saying from my mother: Better safe than sorry.

Edit:
Some Resources:
National Hurricane Center (Irene Home Page)
Dr. Jeff Masters’ Blog
Ryan Maue’s Twitter Feed
Brendan Loy’s Blog

And, most importantly, your local office of emergency preparedness.

Hopefully, my writing this post is much ado about nothing. I just don’t like what I’m seeing on the maps.

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Shake, Rattle, and Irene

Posted on August 24, 2011 by Russ

I live in earthquake country. The notorious San Andreas Fault is about 55 miles away (it runs just to the north and east of San Bernardino); the Newport-Inglewood Fault (which caused the 1933 Long Beach Earthquake) is just ten miles from my house. Scientists think a major quake on the San Andreas Fault will likely come sooner rather than later (the southern-most section has not had a major earthquake in 300 years, and is thought to be far overdue).

But not just Southern California faces natural hazards. Earthquakes can occur in the Midwest (the New Madrid Faultzone), the South (Charleston, SC), and Virginia. That’s not to mention tornadoes and hurricanes.

With Hurricane Irene threatening the East Coast now is a good time to remember some tips for disaster planning. Have a disaster kit, have a plan, including an out-of-area contact (I know the importance of this from living through the Northridge Earthquake), and make sure you backup and store in a secure place your computer data.

For those living in earthquake country, consider earthquake insurance. In California, you must purchase this from the California Earthquake Authority (either directly or indirectly). If you live in an area that can flood, consider flood insurance. Make sure your homeowners/renters insurance coverage is up to date, too.

While there are casualty loss deductions available after the fact, its better to be prepared. Natural disasters will happen, and in this case an ounce of prevention is worth far more than a pound of cure.

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