Taxable Talk

Last week I had a story about a Taco Bell franchisee around the time that the chain had a talking chihuahua. Today I have a story where a tax evader compares himself to a chihuahua.

Bohdan Senyszyn is a CPA who worked for the IRS for 25 years. Back in 1998 Mr. Senyszyn did some accounting work for a New Jersey developer. As part of the work he set up shell companies for the developer so that the developer could hide income. However, the developer cooperated with the IRS which led to the arrest of Mr. Senyszyn. Oh yes, Mr. Senyszyn did one other thing: he skimmed money off the top from the developer and didn’t report the stolen money as income. The government put the tax loss at $80,000 on $250,000 of income.

Mr. Senyszyn earlier pleaded guilty to filing phony tax returns, tax evasion, structuring a financial transaction and bank fraud. On Thursday he tried to change his guilty plea to innocent on the tax evasion charge but the judge refused. Mr. Senyszyn then, in asking for leniency, said, “I’m nothing more than a Chihuahua. I run around and bark a lot, but I don’t bite anybody.”

However, his actions might be taken otherwise. The Star-Ledger reported, “Senyszyn’s conduct included writing letters to the prosecution team, government officials, witnesses and the victim, as well as vandalizing a sign on property be longing to the informant in the case, said Assistant U.S. Attorney Thomas Calcagni.” Judge William J. Martini told Mr. Senyszyn, “I can’t take the risk you’re a Chihuahua and find out you’re a bulldog.” Mr. Senyszyn received 34 months at ClubFed and a $12,500 fine.

There’s one certainty: Chihuahuas don’t evade taxes but people do.

Two reports this weekend about athletes having tax troubles. First, former baseball player Lenny Dykstra refused to pay his accountant’s bill. Well, he was billed $111,097. I guess I don’t charge enough. Anyway, Dykstra told the New York Daily News, “Did they actually think I would pay that much for a tax return? That’s insane.” The accounting firm claims that such charges are “fair and reasonable” given their retainer agreement and that the charges have now grown to nearly $140,000 (including interest). (Hat tip: TaxProf Blog)

Meanwhile, seven current or former NFL players have been ensnared in a phony gold mining scheme sold as a tax shelter. Joe Kristan reported on this and a phony chicken farm scandal. I think it’s easy to see how a phony mining scheme can be done. But how do you invent a phony farm? Even better, the chickens on this farm laid liquid eggs. Sounds like a book about cows that give chocolate milk.

The tiny principality of Liechtenstein is known as a tax haven. A few months ago an ex-employee at a bank in Liechtenstein apparently leaked details of some bank accounts held by Germans. The German finance ministry has said that they paid €4 million to get details of German accounts held in the tiny country.

To date one German, Klaus Zumwinkel, the former head of Deutche Post, has been hit by the scandal. He resigned from Deutche Post. AFP reports that Germany believes that there are 45,000 trusts with accounts in Liechtenstein and the German tax authorities would like details. Liechtenstein has, so far refused.

Germany might give an ultimatum to Liechtenstein. The German government would like a deal similar to the one that the principality has with the US (and the IRS). Crown Prince Alois told AFP, “Does a state have the right to obtain information by breaking the law in a friendly state and probably also contravening its own laws? Spying on our clients is unthinkable…We are going to see what we can do to protect our citizens and also our investors, who trust us, against such methods of investigation. The principle of confidentiality also applies to our foreign clients.”

Thinking about using one of the creative arguments in the Tax Protester FAQ? You may want to think again. Besides the fact (and yes, it’s a fact) that all of those arguments won’t hold up the IRS and the Department of Justice have decided to step-up activity against the tax protester movement.

Bloomberg is reporting that beginning in March the DOJ and IRS will aim at the movement. Assitant US Attorney General Nathan Hochman, head of the Tax Division, told Bloomberg, “Too many people succumb to the fallacy, the illusion, that you don’t have to pay any tax under any set of conditions.”

Kay Bell of Don’t Mess With Taxes including a link to another webpage debunking tax protester myths (this page is from a law professor at George Washington University).