At Least Here Our DMV Offices Aren’t Being Evicted…

Posted on September 6, 2010 by Russ

California certainly has a budget crisis. But it’s nothing compared to the crisis in Illinois, where the Land of Lincoln is a reported $4.3 billion behind in paying the bills. Meanwhile, the Libertyville Drivers Services Facility office may be closed permanently for failure to pay their bills.

Stephen Martin, whose family owns the Brookside shopping center on the 300 block of Peterson Road that houses the Secretary of State office, has sent a letter to state officials saying he wishes to terminate the lease agreement because of the long-overdue payments. Martin said the state owes him nearly $43,000 in back rent and expenses.

The news article in the Daily Herald notes that several state legislators’ officers were being closed for failure to pay the bills.

When I saw this story, I immediately thought of this:

It will be interesting to see how this turns out.

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The Annoying Ringtone Tax

Posted on September 5, 2010 by Russ

A friend sent me the following, asking me if I had heard about this new tax?

Any cell phone user having a ringtone other than Rrrring, Rrring, John Philip Sousa’s stirring “The Internal Revenue Service March,” or–in homage to Colbert–“La Marseillaise” would be subject to having their bank accounts confiscated, their cattle slaughtered, their lands put to the torch, and their rollover minutes forfeited.

Well, it’s not real. It’s from Christopher Buckley’s article in ForbesLife titled “But Enough About You IRS, Mon Amour.” It includes such gems as the Driving While Texting Tax, the Nonsmoking Tax, the 3-D Movie Glasses Tax, Aircraft Lavatory User Fees, and the Celebrity Tax. I’m actually annoyed that Mr. Buckley put in the Aircraft Lavatory User Fees; I would not be shocked to see that at some future date.

You can read Mr. Buckley’s article here.

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Uh, Wesley, Your Guru Just Got 20 More Years

Posted on September 1, 2010 by Russ

Wesley Snipes is still fighting his upcoming visit to ClubFed. The troubles he got into are all courtesy of his tax guru, Eddie Kahn. Mr. Kahn received ten years at ClubFed for his ‘advice’ to Mr. Snipes. He just got 20 more years for conspiracy to defraud and mail fraud. Joe Kristan has more.

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Indians and Yankees Head to Extra Innings

Posted on September 1, 2010 by Russ

No, not the Cleveland Indians and the New York Yankees. Instead, it’s the on-again, off-again battle between the State of New York and the Indian tribes of New York state on collecting cigarette taxes.

The Indian tribes sell cigarettes, and they don’t want to collect New York taxes on cigarettes. They view themselves as sovereign nations, and New York law doesn’t count.

On the other hand, the State of New York believes that it doesn’t matter: If you’re located within the boundaries of New York state (and these tribes are, at least geographically), then cigarette taxes must be collected.

This is a big money maker for the tribes, so this is a battle that will likely drag on and on and on. Today’s salvo had a judge putting a halt to the collection of taxes for at least the next two weeks. It’s as if the Indians scored a run in the top of the 13th inning. We’ll soon see if the Yankees can either tie the score or go ahead.

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Guess Who’s Coming to Dinner!

Posted on August 30, 2010 by Russ

Our favorite convicted tax felon has made the ballot in Ohio. James Traficant has seven signatures more than required and will be running as an Independent for Congress in Ohio’s 17th Congressional District. The Mahoning County Board of Elections will reportedly meet today and approve his name to be on the ballot; the Trumbell County Board of Elections will meet later this week and do the same.

For those who don’t remember the bombastic former Congressman and convicted felon, James Traficant was known for one-liners; “Beam me up” was one of his favorites. Back in 2002 he was indicted on federal corruption charges. He was convicted of ten counts including bribery and tax evasion. He was released in 2009.

Somehow this Congress deserves to have Jim Traficant. I’m not sure the American people do, though.

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No Progress in California Budget; May Soon Impact Tax Refunds

Posted on August 30, 2010 by Russ

There’s nothing new to report on the California budget. The unstoppable force has collided with the immovable object, and nothing’s happening for now. California Controller John Chiang is warning that he will soon be forced to issue registered warrants (aka IOUs).

This brings up an interesting issue. Assume you’re a California taxpayer (or a professional who prepares California tax returns). You’re waiting for that last Schedule K-1 to file Aunt Hilda’s tax return. However, that K-1 won’t be in your hands until September 20th or so. Aunt Hilda’s going to get a large California refund; the amount of the refund won’t change based on the K-a. Should you file the return now (and amend the return to report the K-1 when you receive it) so that Aunt Hilda can get her refund before California starts to issue IOUs, or should you wait?

Normally, it’s almost always correct to wait: You don’t want to amend a return unless you have to. However, if Aunt Hilda needs her money it may be right to file that return today so that she can get the refund (rather than an IOU). This is especially true if you believe that the K-1 won’t have an impact on the final numbers of her return.

One thing is certain, though: The budget mess will start to have an impact on many Californians soon. It will be interesting to see if that forces a change on either the unstoppable force or the immovable object.

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Can I Add Some Snake Oil to that Pension Plan, Too?

Posted on August 30, 2010 by Russ

If I were a business owner, wouldn’t I want this wonderful pension plan? Under this plan, I’d (a) be able to turn personal expenses into deductible pension contributions; (b) the pension plan would only cover me (and my family), not those pesky employees; (c) I’d be able to change (through alchemy, perhaps) my salary into a pension plan contribution, and then get this back through a phony loan; and (d) even the down-payment on my condominium could be considered a deductible pension plan contribution.

The only thing missing is the snake oil.

Last week, the US Department of Justice sued a Pasadena (California) man who allegedly promoted this scheme. The DOJ sued William Alexander, and his two businesses, Retirement Plan Services Inc. and Lyons Pensions Inc. The government is asking that they be barred from promoting such pension schemes. The government estimates they’ve lost $30 million in tax revenue from Mr. Alexander’s pension plans.

There are many good choices for retirment plans. However, if someone comes to you and tries to sell you on such a wonderful scheme like Mr. Alexander’s, run (don’t walk) in the other direction.

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Paying Taxes with Phony Money Isn’t a Good Idea

Posted on August 30, 2010 by Russ

If you owe money to the IRS, I recommend you pay with US Dollars. Of course, it’s not only a recommendation; it’s required by law. Still, once the Bozo contingent gets involved, you never know what will happen.

So I’m reading a story about a dentist from Glen Mills, Pennsylvania who allegedly decided to pay his taxes with “bonded promissory notes” (whatever those are). Now, this rings a bell: I recall reading something just like this in the last week. Joe Kristan noted a Tax Court case where an individual rather unsuccessfully tried to pay his taxes with pretend bonds. Not only was the Tax Court unimpressed with that idea, they fined the Bozo $15,000 for a frivolous appeal.

In any case, the dentist, Richard Kaufman, has also been accused of claiming he had $7 million in tax withheld in 2008. Add to this the aforementioned promissory notes (to the tune of $10 million), allegedly moving his house into the names of various nominees to hide it from the IRS, and supposedly not filing an accurate tax return since 1991 and you have a heap-load of problems. Dr. Kaufman is looking at a lengthy term at ClubFed and a fine of up to $1.4 million if found guilty on all charges.

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Unladylike Behavior or Election Year Politics?

Posted on August 26, 2010 by Russ

Earlier this week California Attorney General (and Democratic candidate for Governor) Jerry Brown filed a $34 Million lawsuit against the Roni Deutch Law Firm. Ms. Deutsch (who has a tax blog) and her law firm focus on representing taxpayers in Offers In Compromise. Her firm is one of several that have television infomercials. From the press release of the California Attorney General:

“Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems,” Brown said. “She promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills.”

Deutch manufactures credibility by boasting that her tax resolution law firm, which has annual revenues of at least $25 million, is the largest of its kind in the nation. She spends $3 million a year on advertising, much of it on late-night cable TV, and frequently offers tax advice on NBC’s Today Show, CNN, and CNBC.

Desperate debtors turn to Deutch based on her misleading ads that feature fictional testimonials claiming she secured large reductions in the featured clients’ federal tax debts.

However, Ms. Deutch has a very different view of the lawsuit. Her response appeared on her tax blog today, where she stated:

I believe the California Attorney General’s civil complaint against my law firm and me to simply be election year politics. My law firm has been representing taxpayers before the IRS for almost 20 years. We have saved thousands of people tens of millions of dollars. And I have fully cooperated with the California Attorney General’s Office over the past few months. As a result, I am very disappointed in their decision to file a complaint, but I look forward to a full and fair airing of this matter in a court of law where my law firm and I will aggressively and vigorously defend the claims against us, and I am absolutely confident we will prevail.

For the record, I’ve had clients who have come from firms where they can settle for “pennies on the dollar.” Sure, some truly destitute individuals do get such offers through the IRS bureaucracy; however, most individuals do not. Many of these firms require extremely large up-front payments before they will do any work on your behalf. (I have never had a client come to me from the Deutch firm, and I have no idea if that is the case for them or not.)

Mr. Brown is locked in a very tight battle with Republican Meg Whitman to be the next governor of the Golden State. Time will tell whether this lawsuit had basis in facts or electioneering.

Posted in California | Tagged | 1 Comment

That DUI Wasn’t a Good Omen

Posted on August 25, 2010 by Russ

A week ago I wrote about former Louisiana State Senator Charles Jones. Just before his retrial on tax evasion, he was cited for driving while under the influence. That apparently wasn’t a good omen for Mr. Jones.

His trial was last week, and the jury began deliberating on Monday. After three hours, they found him guilty of all three counts of tax evasion. The IRS and Department of Justice showed, to the satisfaction of the jury, that Mr. Jones evaded taxes on about $750,000 of legal fees (around $190,000 of taxes). Mr. Jones will be sentenced in December.

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