Shaming in Sales Tax for the Fourth Quarter

Posted on December 1, 2010 by Russ

The Board of Equalization posted its fourth quarter 2010 list of the 250 most delinquent taxpayers. The BOE collects sales and use tax in California. (Now, if you’re asking me how the fourth quarter results can be posted at the end of November, well, I can’t answer that question. It’s likely the New Math.)

The BOE’s news release notes the newest 22 (or should that be bottom 22) tax delinquents. Sizzler restaurants are apparently having trouble remitting sales taxes, as several franchisees are shown with large dollar balances. The largest balance is from 2002, and is from California Target Enterprises, Inc. of Downey; they owe $18.1 million. It took a balance of $646,587 to make the list: Mira Loma Marine Commander Boats of Huntington Beach is shown owing that amount.

To date, $4.1 million has been collected through this program, with another $27 million to be paid through installment agreements. Unfortunately, there’s a total of $393 million owed by the 250 on the list so there’s definitely a way to go.

Posted in California, Sales Tax | Comments Off on Shaming in Sales Tax for the Fourth Quarter

The Light at the End of the Tunnel Is the Oncoming Train

Posted on November 30, 2010 by Russ

The headline is apropos for the 111th Congress which likely won’t act on much of the budget, the extension of the Bush Tax Cuts, or the Estate Tax before the 111th Congress mercifully fades into oblivion. It will be difficult if not impossible for the 112th Congress to be worse than its predecessor.

However, that’s not what I’m writing about this evening. Rather, I’m writing about California. Steven Greenhut penned a superb op-ed that appeared in yesterday’s Orange County Register. Mr. Greenhut’s key point is stated almost at the beginning of the piece (though you should read the entire piece):

I think of my beloved California in the same light. What a great state, but it remains on a collision course with reality. We can’t keep spending money we don’t have, punishing those who pay the bills and ignoring the advice of truth tellers.

The problem is that Democrats in Sacramento appear completely clueless regarding basic economics. There solution to almost every problem is to increase taxes. Voters want it both ways, too: They want great services but don’t you dare increase our taxes. The major liberal-leaning newspapers write about eliminating Proposition 13 (at least as to how it applies to businesses, though they would prefer it vanish completely).

There’s a harsh reality that must be faced sooner or later by the Golden State: You can’t spend your way out of economic trouble. Those wonderful pensions will need to be cut with an axe, not massaged with a hand eraser. Remember those wonderful bureaucratic agencies you set up to regulate everything; you won’t just cut a regulation here or there but entire agencies will need to be cut. That’s the only solution to the problem.

Well, I guess there is another solution that would work in an alternate universe: Force all businesses to leave the state by increasing taxes to such a point that anyone who can leave does. Given what many Democratic legislators are saying in Sacramento, it appears they’re in that alternate universe.

Posted in California | 1 Comment

High Fashion or Really Big Tax Evasion?

Posted on November 29, 2010 by Russ

I’m not a fashion snob. But even I have heard of Dolce and Gabbana, the Italian fashion powerhouse. So the news that Dolce and Gabbana are accused of evading income tax on €1 Billion of income ($1.324 Billion) should be really big news.

According to the UK Guardian the alleged tax fraud stems from funneling royalties to a company in Luxembourg. Luxembourg has a much lower income tax rate than Italy, and the prosecutor alleges that led to €616 Million of the possible tax evasion. (It’s unclear from the article what are the alleged causes of the other €384 Million of income where tax wasn’t paid.)

What is clear from the article is that the Italian newspapers more or less ignored the story, and Domenico Dolce and Stefano Gabbana (the principals behind Dolce and Gabbana) are escaping the probable negative publicity that normally accompanies such charges. Whether this turns out to be the Italian tax evasion case of the century will have to wait until Italian justice is served.

Posted in Tax Evasion | Tagged | Comments Off on High Fashion or Really Big Tax Evasion?

Wesley Snipes to Appeal to Supreme Court; Wants Bail

Posted on November 29, 2010 by Russ

According to the BBC, actor Wesley Snipes has requested bail to be continued pending a further appeal of his convictions for income tax evasion. Judge William Terrell Hodges gave the Department of Justice until Tuesday to respond to Mr. Snipes’ request.

Very few tax cases are accepted by the Supreme Court; it is highly unlikely that the Supreme Court would elect to hear Mr. Snipes’ appeal. In my view Mr. Snipes is just prolonging the inevitable.

Still, I do agree with Mr. Snipes’ attorneys who stated in court filings,

Mr. Snipes has honored the court’s trust before, during trial, as well as pending sentencing and appeal…There is no reason to change the court’s judgment now. His ongoing and successful projects in the movie industry further ensure he would not consider fleeing.

Unfortunately for Mr. Snipes, I expect the DOJ to be less forgiving regarding bail.

Posted in Tax Evasion | Tagged | Comments Off on Wesley Snipes to Appeal to Supreme Court; Wants Bail

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.

Posted in Tax Evasion | Tagged | Comments Off on Paul Hogan Cleared of Criminal Tax Evasion

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.

Posted in Legislation | 1 Comment

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.

Posted in Taxable Talk | Tagged | Comments Off on Rasmussen College Spotlights Tax and Accoungting Blogs (Including Us)

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.

Posted in Tax Evasion | Tagged | 1 Comment

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….

Posted in Tax Evasion | Tagged | Comments Off on Snipes Heading to ClubFed