Paul Hogan Cleared of Criminal Tax Evasion

Posted on November 29, 2010 by Russ

The Australian Crime Commission announced last week that actor Paul Hogan (star of Crocodile Dundee) has been cleared of tax evasion charges. The ACC stated,

On the material presently available to the ACC, including documents recently obtained as a result of overseas inquiries, the ACC has concluded that there are insufficient prospects of securing convictions to justify continuing with its investigation this time.

Mr. Hogan still faces a civil case by the Australian Tax Office. The ATO alleges that Mr. Hogan owes income tax on $40 million (AUD) of income that wasn’t on his tax returns.

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Expect an AMT Patch…Eventually

Posted on November 29, 2010 by Russ

The 111th Congress will likely be remembered in history books for profligate spending and going against voters’ wishes. Sure, some of President Obama’s agenda was enacted (such as Obamacare), but most of it wasn’t wanted by voters. The public responded by voting out many Democrats. However, the 111th Congress will be back in session one last time in a ‘lame duck’ session.

As Jim McTague reports in Barron’s, the upcoming tax season will almost certainly be worse than usual. First, it’s almost certain that an AMT patch will be enacted. (If an AMT patch is not enacted, somewhere around 25% of Americans, including many middle-class families, would be hit with AMT. Congresscritters are well aware that the outcry would last years, and would ensure that they wouldn’t be Congresscritters the next time they come up for an election.) However, will the Senate consider that patch this week? Or what about the budget? No, food safety will dominate the Senate this week.

What this means is that the IRS must assume an AMT patch won’t be enacted, and the agency won’t update their computers until one is. That means the IRS probably won’t accept electronic returns (or process most paper returns) until sometime in February.

Next, what about the Bush Tax Cuts. President Obama has said he’d like to see those extended for the “middle class” while Republicans want them extended for everyone. I don’t see anything passing the 111th Congress, so while I think eventually we will see such legislation, and some to all of the Bush Tax Cuts will be extended, the IRS will be forced to assume that none of them will be.

What does this mean? Well, if you get a paycheck, the withholding tables the IRS will issue will assume higher tax rates, and you will get less money in early 2011. Assuming that some sort of extension of the Bush Tax Cuts eventually passes, we’ll see revised withholding tables sometime during 2011. Until that happens, you will receive less pay. As I’ve said before, the elimination of a tax cut is a tax increase.

I agree with Mr. McTague’s conclusion:

Democrats and Republicans in the 111th haven’t worked together in two years…My advice: Assume the worst, and take some profits and income in 2010. And plan for less take-home pay in the first part of 2011.

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Rasmussen College Spotlights Tax and Accoungting Blogs (Including Us)

Posted on November 22, 2010 by Russ

Rasmussen College, with campuses in the upper Midwest and Florida, decided to spotlight twenty blogs for accounting students. Some of the blogs you’ll recognize: The TaxProf Blog and Don’t Mess With Taxes are two of the other tax blogs that are listed. There are also some accounting and fraud blogs that I had not heard of (but definitely would be good reading for accounting students). I’m pleased to note that Taxable Talk is on their list.

I might quibble with one or two of the blogs on their list, but overall its representative of the quality of blogs that now exist. There’s a lot of excellent content available today on the Internet–quite a bit more than when I started this blog in 2005. You could do far worse than reading their list.

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Denver “High-End” Madam Indicted on Tax Evasion Charges

Posted on November 22, 2010 by Russ

Somehow tax evasion goes hand-in-hand with strip clubs and escort services. And if the government is correct in its allegations, a Denver madam will soon have plenty of time at ClubFed to reflect on this.

Brenda Stewart apparently owned Denver Sugar/Denver Players. Ms. Stewart began as an employee and then bought the business. Unfortunately, if the indictment is accurate, her business methods were both unusual and illegal.

Ms. Stewart allegedly didn’t bother sending most of her employees 1099s or W-2s. She also allegedly didn’t bother filing a 2006 tax return and understated her 2005 income on that return. Ms. Stewart allegedly created a second company, Phoenix Media and Consulting, LLC. There’s nothing wrong with that. However, she’s alleged to have used that company to shield some of her income from her businesses and not report it. There’s a lot wrong with that (if proved).

As I keep saying, there’s something about strip club owners (and escort service owners) and tax evasion. They go together very well. As usual, it’s a whole lot easier to just pay your taxes…even if you’re an escort service owner.

Posted in Colorado, Tax Evasion | Tagged | 1 Comment

Selling Software to Cheat the Government Out of Strip Clubs’ Taxes Isn’t a Bright Idea

Posted on November 22, 2010 by Russ

It’s one thing to sell accounting software such as QuickBooks. That product, when used properly, helps companies accurately report their income.

Theodore Kramer sold a very different software product. His Journal Sales Remover made income magically vanish from a company’s books. As the DOJ noted,

In 2001, the owner of two Detroit-area strip clubs requested that Kramer load the JSR program onto his clubs’ computer systems so that the club owner could report less income to the IRS. From about 2001 to about 2004, Kramer periodically visited the clubs to run the JSR program to remove a substantial amount of the clubs’ sales from their computers. The club owner then provided the reduced sales figures to his accountant. With Kramer’s assistance, the club owner understated his clubs’ gross receipts by more than $500,000.

Shock of shocks, a strip club owner wanted to cheat on his taxes. And more shocking is that the IRS would be looking at a strip club’s income (that was sarcasm, of course).

Joe Kristan has more.

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Snipes Heading to ClubFed

Posted on November 22, 2010 by Russ

This evening as I was changing channels I briefly saw an infomercial hosted by Wesley Snipes. Well, Mr. Snipes doesn’t actually appear in the commercial.

But in the new television show, Wesley Snipes spends three years at ClubFed, Mr. Snipes will be appearing. Mr. Snipes was ordered on Friday to surrender and begin his three-year sentence at ClubFed. Judge William Terrell Hodges noted in his opinion,

The defendant Snipes had a fair trial; he has had a full, fair and thorough review of his conviction and sentence. … The time has come for the judgment to be enforced….

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Helping Boss, Wife, and His Mistress Leads to ClubFed, Not a Cheap Novel

Posted on November 22, 2010 by Russ

Dennis Sartain used to be the typical accountant. He worked for Thomas Parenteau, a Columbus, Ohio homebuilder. Of course, Mr. Parenteau was found guilty of 11 counts of tax evasion and related charges, and that’s not typical. And as I reported earlier, Mr. Parenteau’s case comes straight from the pages of a cheap novel yet it’s absolutely true.

Well, Mr. Sartain was sentenced this week and he’ll have plenty of time to think about his dysfunctional employer and how he helped him commit tax evasion; he received 11 years at ClubFed. Mr. Sartain had turned down a two-year sentence; that’s an oops moment that Joe Kristan notes (along with more of the sordid details from this case).

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Does California Have Some of Your Money?

Posted on November 18, 2010 by Russ

California used to be rather infamous about how quick it would seize unclaimed property. While the speed of seizing the funds has slowed down, there’s still millions and millions of dollars in Sacramento that belong to you. If you’ve ever resided in California (or had funds in California), you can check and see if you have any money in Sacramento that should really be in your pocket.

There’s an online database for the Unclaimed Property Office of the State Controller. Just enter your name and see if something comes up. If you do have something there, you will need to complete a form and send proof but you will get your money back if you do so.

Hat Tip: The Tax Foundation

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IRSAC Issues 2010 Recommendations; Will Sanity In FBARs Advance?

Posted on November 18, 2010 by Russ

The Internal Revenue Service Advisory Council (IRSAC) issued their 2010 report. The report includes 23 recommendations to the IRS (and Congress, I suppose). The entire report is worth perusing. I’m going to focus on just one item of the 23 in this entry: FBARs.

IRSAC notes that the requirements for the FBAR are confusing and extremely overbroad. Well, as one who practices in this area all I can say is, that’s absolutely correct. So what is the IRS (not IRSAC) proposing? Currently, plans are underway for an additional form, the Son of FBAR.

IRSAC’s recommendations are a breath of fresh air.

Our summarized recommendations include: (a) extending the due date to October 15 to coincide with the final filing deadline for most income tax returns; (b) providing coordinated electronic filing for income tax filers, developing an easy to use electronic filing portal for non-income tax filers, and adopting the well established “mailbox” rule for paper filers, (c) requesting guidance in connection with a reasonable cause penalty relief to encourage and accommodate filings when accounts have been disclosed and income has been substantially reported; (d) changing the filing threshold, and (e) providing an exemption from the filing requirement for employee benefit plans and U.S. officers and employees of publicly traded corporations and their subsidiaries.

Somehow I suspect that adding a second form that duplicates the FBAR wouldn’t be on their wish list.

Of course, just because the recommendations exist does not mean that anything will come of them. Unfortunately it’s far more likely we’ll see the Grandson of FBAR rather than sanity prevailing on this issue.

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If Anyone Wonders Why the Economy Isn’t Adding Jobs

Posted on November 17, 2010 by Russ

First, there’s the news that a deal to extend the Bush Tax Cuts is unlikely to pass Congress before year-end. I expected that (this Congress hasn’t shown any ability to pass anything useful). While both Democrats and Republicans have publicly stated they’ll pass an AMT patch, that hasn’t happened yet (though this is the one item that I actually expect Congress to deal with before year-end).

For business, that means uncertainty. Here’s what that does to businesses:

Meanwhile, here’s what happens to many individuals who want to start businesses today:

Finally, I’ll point out that I’m impacted by all of this. With California facing a $30 billion budget deficit, and Democrats in full control of the legislature and a new Democratic governor about to come on board, I expect tax increases here in the Bronze Golden State. For those who want to hear some different (edgier) music, that brings to mind this tune:

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