Methods Gauranteed to Get You in Trouble

Posted on April 26, 2009 by Russ

Below I present a trifecta of guaranteed methods to get you in very deep trouble with the IRS and your state tax agency. If you follow one of these methods you will likely find yourself on your way to ClubFed. Follow all of them, and a lengthy stay is almost guaranteed.

Let’s head first to Niles, Ohio. Niles is near Youngstown, and happens to be the home of the William McKinley Memorial and Library. I visited it two years ago, and it’s well worth the trip. But I digress….

John Matuszwski used to operate Matuszwski Roofing and Siding. He allegedly liked to pay his employees partially in cash. That’s not illegal. He also allegedly only included the portion of the money he paid his employees by check on their reporting forms. If true, that’s a crime. He also allegedly didn’t pay the trust fund (FICA) taxes to the government. As I’ve said before, not remitting those taxes is a sure-fire way to get in trouble. Mr. Matuszwski faces one charge of attempting to evade employment taxes totaling over $165,000.

Our second method of getting in trouble is one that has been tried many times. Just skim some of the revenue off the top from a business, and not report it on your tax returns. Mohammed Arif, Mohammed Memeon, Haji Memon, Mohammed Naemm, andd Mohammed Jaweed pleaded guilty earlier this week to tax evasion. The five, who are brothers, skimmed “significant” amount of revenue from their Dollar Dreams stores. They had their store managers keep good records of the skimming. That probably wasn’t a brilliant idea, as it gave the government good records of the skim, too. The five have agreed to make $1.2 million of restitution (in total) and will be sentenced in September.

Our third method comes straight from the Tax Protester FAQ. If you try to argue that there is no such thing as an income tax, or that it doesn’t apply to you, or that it has never been ratified, or that it’s unconstitutional, I guarantee bad things will happen to you.

And if you’re an attorney, you definitely should know better. Bernard Bagdis of Norristown, Pennsylvania, believed that neither he nor his clients had to file tax returns because of various business losses. (Hint: He’s wrong.) We’ve written about Mr. Bagdis before.

Mr. Bagdis boasted he was going to write Federal Tax Fraud: The User’s Guide. Instead of writing a book, he may have the book thrown at him. He was convicted last week of helping clients evade over $5 million in taxes on $24 million of income.

As I’ve said before, there is an income tax. There are also laws on withholding of income from employees’ checks. If you follow one of the methods outlined above your new home could be ClubFed.

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Marciano and Snoop Dogg in Tax Trouble

Posted on April 26, 2009 by Russ

I would think it would be hard to legitimately put rapper Snoop Dogg and Guess clothing co-founder Georges Marciano in the same situation. Yet they’re both facing tax troubles in California.

Website tmz.com reports that Snoop Dogg owes $284,053.59 to the Franchise Tax Board. Meanwhile, the FTB has filed a $1.7 million lien against Mr. Marciano. The Guess co-founder is also planning on running for governor. I suspect that the tax issue will be settled before the 2010 campaign begins.

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A Right to Evade

Posted on April 26, 2009 by Russ

We’ve written in the past about American Rights Litigators/Guiding Light of God Ministries. That organization allegedly issued bogus “Bills of Exchange” that somehow wiped away your taxes. Bills of Exchange are about as useful as Confederate Dollars.

One of the four accused of organizing the ARL/GLGM program has pleaded guilty to mail fraud. Jerry Williamson made that plea last week; he’ll be sentenced in September. Meanwhile, the trial for the three others accused in the alleged scam is set for November. Although not mentioned in the article, I suspect that Mr. Williamson might make an appearance at the trial in November.

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Castroneves Not Guilty

Posted on April 26, 2009 by Russ

We had reported on Helio Castrovenes’ trial for tax evasion. The automobile race car driver and Dancing with the Stars contestant was found not guilty a week ago in Miami.

Attorney Roy Black noted, “Nobody wants to hear the excuse that ‘I didn’t know what I was signing; I didn’t know what my accountants were doing.’ But in a criminal context, the government has to prove you knew what you were signing and you intentionally, deliberately did it to evade taxes.”

Castroneves participated in last weekend’s Long Beach (California) Grand Prix. He finished seventh.

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Minnesota Democrats Pass Tax Increases, Face Veto

Posted on April 26, 2009 by Russ

California isn’t the only state where the legislature is ignoring the current economic climate. In Minnesota, the Democrats who control that state’s legislature, have ignored Republican Governor Tim Pawlenty’s veto threat and passed a series of tax increases.

Two different packages passed: one in the Minnesota House and one in the Senate. Both contain a variety of tax increases, including increases in the income tax, cigarette taxes, alcohol tax, and an increase in what is covered by the sales tax. The mortgage interest deduction would be limited.

These measures are probably irrelevant, as no Republican voted for them and Governor Pawlenty guarantees they’ll be vetoed. There’s clearly not enough votes for the vetoes to be overridden.

What will be heading to Minnesota and California? Major cuts in government spending. And that’s as it should be.

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We’re Back: A First Look at Propositions 1A – 1F

Posted on April 22, 2009 by Russ

After April 15th, and my mandatory cooling off vacation, I’ve returned and posting will now resume at the usual rate.

First up on the agenda is the May special election on Propositions 1A through 1F. These six ballot measures are designed to implement the bad budget that passed in Sacramento last February. I’ll have more about these measures in depth next week; for now, these measures look and feel just as bad as the budget. One of these is a tax increase (though you would have to go into the fine print to realize that), and none of them will go towards a long-term solution of California’s budgetary fiasco.

There still remains just one such solution: massive cuts to programs and spending. Sooner or later these cuts will occur.

Unfortunately, we are left with these ballot measures on the ballot on Tuesday, May 19th.

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Very Light Posting This Week

Posted on April 20, 2009 by Russ

I am out of town this week with extremely limited computer access. Posting will be light to non-existent until I return back to Irvine on Friday.

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New Hampshire Gambling Tax Not Yet Law

Posted on April 20, 2009 by Russ

Last week I wrote about New Hampshire’s proposed tax increases. Those taxes passed the lower house of New Hampshire’s state legislature. However, they still must pass the state senate in New Hampshire. If you live in New Hampshire you may want to let your legislators (especially those in the state senate) know of your opinion of the proposed tax increases.

For the moment, New Hampshire isn’t yet on my list of bad places for gamblers to reside. However, it’s really knocking on the door.

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New Hampshire Adds Gambling Tax

Posted on April 16, 2009 by Russ

Live Free or Die may be the motto of New Hampshire, but the formerly conservative state that believed in very low taxes elected a Democratic majority in the state legislature last year. Shock of shocks, tax increases are coming. And a particularly insidious tax increase will hit gamblers.

The New Hampshire House today passed a new budget that includes numerous new taxes and tax increases. As the Manchester Union-Leader reported:

The House, by a 182-165 vote, created or increased taxes on tobacco, rooms and meals, gambling winnings, estates and capital gains. The bill, HB 2, also raises the gasoline tax, with all those funds to go toward state and local road construction and improvements.

The gambling tax is particularly bad. The new tax is 10% on all gambling winnings above $600. While proponents noted that it would only impact big-time bingo games, what will be the impact on New Hampshire residents who head to a casino? The way the legislation is written it could impact professional gamblers residing in New Hampshire, and subject them to a 10% tax on their winnings. (Frankly, the legislation is so poorly written towards gambling that it will take court cases to determine what is or isn’t being taxed.) I for one don’t think it’s worth taking a chance and for the professional gamblers out there it’s definitely time to consider voting with your feet.

So what should a New Hampshire gambler do? For the amateur gambler, you may want to consider Maine or Vermont. Unfortunately, Connecticut and Massachusetts don’t allow gambling losses while New York tax rules will cause phase-outs of itemized deductions. Professional gamblers can also consider Connecticut and Massachusetts as both states have relatively low income taxes. (Professional gamblers are allowed to net their wins and losses, so they are not impacted by the inability to deduct losses in Connecticut and Massachusetts.)

Here’s the complete list of states for gamblers to avoid:

Connecticut*
Illinois*
Indiana*
Louisiana (itemized deduction limitation)
Massachusetts*
Michigan*
Minnesota (because of its AMT)
Mississippi (Only MS gambling deductions are allowed)
New Hampshire (10% gambling tax on winnings over $600)
New York (itemized deduction limitation)
Ohio*
West Virginia*
Wisconsin*

*Losses not allowed; impacts amateurs only

Posted in Gambling, New Hampshire | 1 Comment

Tea Party on Tax Day

Posted on April 15, 2009 by Russ

Today is Tax Day, so for the procrastinators out there it’s time to file your extension. For those of you who aren’t tax accountants, it’s time to let our politicians know whose money they spend.

There will be a series of tea parties protesting our tax system and the current increases in taxes. Locally, there will be a Tea Party from 12:00 noon to 2:00 pm at the Plaza of the Flags at the Santa Ana Civic Center. Later today, from 4:00 pm until 7:00 pm there will be a rally at the intersection of Marguerite Parkway and La Paz Road in Mission Viejo.

While I wish I could attend I will be otherwise occupied.

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