The IRS today released the schedule of when the stimulus payments will be received:
By Direct Deposit:
| Last Two SSN Digits | Payment Will be Transmitted By: |
| 00 through 20 | May 2 |
| 21 through 75 | May 9 |
| 76 through 99 | May 16 |
By Paper Check:
| Last Two SSN Digits | Payments will be mailed by: |
| 00 through 09 | May 16 |
| 10 through 18 | May 23 |
| 19 through 25 | May 30 |
| 26 through 38 | June 6 |
| 39 through 51 | June 13 |
| 52 through 63 | June 20 |
| 64 through 75 | June 27 |
| 76 through 87 | July 4 |
| 88 through 99 | July 11 |
What happens when you start paying personal expenses out of your business and call them corporate expenses rather than salary? Very bad things, and a family in Jackson, West Virginia is accused of that.
Five family members are accused of cheating Uncle Sam out of $9 million. The accused are Eddie Burl Smith, his son Edward Michael Smith, his brother, Donald Paul Smith, Donald’s wife, Judith E. Smith, and their daughter, Jaclyn E. Smith.
They are alleged to have diverted proceeds from three family businesses—Carl E. Smith Inc. (CESI), Carl E. Smith Petroleum Inc. and Carl E. Smith Real Estate Inc—and used the proceeds for personal use.
According to the indictment (which runs 33 pages), Donald Smith used $800,000 to purchase horses. Edward Michael Smith is accused of spending over $300,000 on vehicles.
The defendants are accused of filing false tax returns. Further, they allegedly embezzled pension funds and health care premiums. But we’re only getting started.
Edward Michael Smith is accused in the indictment of burning documents after they were subpoenaed. CESI went into bankruptcy in 2003 but the defendants are accused of diverting funds after the bankruptcy filing into another family business (so there are bankruptcy fraud charges, too). There are charges of money laundering, too. Needless to say, the defendants are looking at very lengthy stays at ClubFed if found guilty on all charges.
As the news report notes, “In 2003, Fayette Circuit Judge John W. Hatcher ruled that Eddie, Edward and Donald Smith illegally depleted $21 million of assets of Carl E. Smith Real Estate Inc., in a case brought by Larry D. Smith, former company treasurer and brother of Eddie and Donald, and other minority owners.”
There are far better ways for a family to stick together than to evade taxes together.
Who is Heinrich Kieber? Mr. Kieber is the man who took €4 million from the Bundeskriminalamt, the German Federal Criminal Police, and gave Germany the list of Germans who had bank accounts in the tiny principality of Liechtenstein. The Landespolizei, Liechtenstein’s police, has issued an international arrest warrant for Mr. Kieber.
The statement issued by the Landespolizei states, “The Liechtenstein law enforcement agencies demand his immediate extradition…According to media reports, Kieber received a new identity and travel documents from the German secret services.”
Somehow I think Mr. Kieber will either remain in Germany (where he presumably has protection from extradition to Liechtenstein) or will carefully check his new country’s extradition treaties.
One of my favorite television shows is Get Smart. In the episode called “The Decoy,” Maxwell Smart is brainwashed back to his childhood, is doing multiplication tables, and can’t figure out that 7 x 2 = 14. It’s one thing for a character not being able to complete that equation; it’s another thing for an accountant to not be able to add or subtract correctly…on Form 1040-EZ.
Yet the IRS announced that there were 1,161 errors made on Form 1040-EZ, including “Amounts in the payments section was added incorrectly: 30.” Of course, these were returns done on paper. It’s hard for me to imagine a paid preparer messing up the easiest tax form around. Unfortunately, it’s true.
Political theater occurred last night in Sacramento. The Assembly held a rare evening session, and the Democrats’ oil tax fell to defeat 45-30 (it needed a 2/3 vote to pass). The vote was party line, except for one. Assemblywoman Nicole Parra (D-Bakersfield) voted no.
The Democrats framed the issue as “Save our children, tax the rich low-taxed oil companies.” Republicans called it political theater. Democrats want to increase taxes; there’s no room in the budget to cut spending. Republicans want to cut spending; there’s no room in taxpayers’ pockectbooks to pay for additional taxes.
I think it’s well worth remembering these two themes as we vote this year. Over the last four years spending increased 44% while revenues increased 40%. I think that’s food for thought.
As expected, Assembly Democrats introduced AB9. It would add a 6% tax on oil drilling and a 2% tax on oil profits that exceed $10 million. Because it’s a tax the measure requires a 2/3 vote for approval—and it won’t get that.
Assemblyman Chuck DeVore (R-Irvine) told the San Jose Mercury, “It’s just bad political theater. If this bill ever made it into law, it would increase the cost of gas at the pump and . . . increase our reliance on foreign oil from places like Venezuela and Iran.”
Fortunately, Democrats don’t have the votes to pass this measure. You can follow the progress (or lack thereof) of this measure here. State Senator Tom Harman (R-Huntington Beach) has an excellent commentary on what truly ails California. I doubt the Democrats are listening.
The joy of being a Californian. The gas stations at Culver and Walnut in Irvine are having a price war—they’re seeing which station can reach $3.60 for a gallon of regular first. And if the Democrats in California’s Assembly have their way we’ll be paying even more.
Assemblyman Anthony Adams (R-Claremont) reports on the Flash Blog that Assembly Speaker Fabian Nunez (D-Los Angeles) wants to add a 6% tax on all oil from California and a 2% surcharge on oil companies that earn more than $10 million.
I wonder if Speaker Nunez has interests in office building in Nevada, Arizona, and Oregon. Why am I asking this? Because if I were running an oil company and I was faced with a gross profits tax I’d relocate as much as my business as possible out of California and into neighboring states.
And does Mr. Nunez understand basic economics? What does a tax do? It increases the price of a good or service. When a business is taxed it always passes the cost of the tax onto its customers. If this tax increase passes Californians will see a 2% to 10% increase on the prices of products from oil companies. That’s economic reality.
While the goal of Mr. Nunez’s proposal is laudable (the money would be used for education), I agree with Assemblyman Adams. “I guess the $60 Billion plus a year we spend on education isn’t getting the job done. Here’s a thought: Give the school districts back the money we already take instead of tying it up in countless layers of State bureaucracy and ridiculous ‘one-size-fits-all’ testing standards that force every teacher to teach to the test.”
California needs fundamental reforms in the bureaucracy. It may be painful, but the time has come to seriously confront the bloated workforce of government workers in this state. It’s time for limited government, and it appears that at least some in California’s legislature understand that. Unfortunately, Assembly Speaker Nunez doesn’t.
A good friend of mine called me late this afternoon and asked me for a referral. I asked him what he needed, and he told me, “Your side business.” I’m a writer (and I’m certain he knew that), so this made no sense. After I expressed my bewilderment he said, “Can’t you provide me with the same kind of service you did for Eliot Spitzer?”
Ah yes, the Governor of New York. Mr. Spitzer, a Democrat who decided to partake of the world’s oldest profession, chose a rather expensive prostitution ring. He apparently paid somewhere between $1000 to $4300 an hour, and may have spent $80,000 of his own money.
So why did my friend call me? He had heard that the ringleader of the prostitution ring (called the Emperors Club VIP) was an Enrolled Agent. Of course, ABC gets some details of what an Enrolled Agent is wrong:
“He is also a licensed “enrolled agent” of the IRS, spokesman Rob Marvin confirmed. That means Brener was allowed to prepare and submit other people’s taxes, represent others in tax court and in negotiations with the IRS, and receive information directly from the IRS on behalf of others.”
For the record, an Enrolled Agent represents taxpayers before the IRS; we are not employees of the IRS. We do prepare tax returns and represent individuals and businesses in negotiations with the IRS and other tax agencies.
I had to disappoint my friend; I didn’t have a Kristen to send his way. My side business doesn’t earn me $4000 an hour in illegal income. Unless your name is Tom Clancy or John Grisham writers just don’t make that kind of money.
On the positive side, at least Enrolled Agents are making the news….
It wasn’t that big of a week on the tax fraud front, with the exception of the German-Liechtenstein scandal that’s still around. But there’s a smidgen here and there to report on.
In nearby Camarillo there’s a business owner who is finding out that concealing smidgens of revenues can be a big deal. Giancarlo Pertile was the owner of Art Marble Design until 2002 allegedly decided that if he didn’t tell his bookkeeper and accountant about some revenues he wouldn’t have to pay taxes on them. The government alleges that his corporate tax returns from 1998 through 2002 understated revenue, and his personal tax returns during the same period were also off. Mr. Pertile is looking at up to 25 years at ClubFed if found guilty on all charges.
Farmers have it tough. I worked in agriculture for many years and still have many friends who have to deal with freezes, water issues, and other thorny problems. But one way of helping your business is to undercount revenues. Of course, that’s illegal but they’ve got to catch you. That’s what a farmer in Austin, Minnesota did. Kevin J. Morse filed his taxes between 1996 and 2000 and showed that he owed less than $1,000 a year in taxes. That’s a neat trick when your gross income is about $1,000,000 and your net income is just under $700,000 each year. And when you’ve already been convicted once for tax evasion (for 1991-1994), it’s a safe bet that the IRS will be watching you carefully. And when an accountant tells you that you owe $100,000 in back taxes but you choose not to file the return (shades of Richard Hatch) you can bet that only bad things will happen. Mr. Morse is looking at some time at ClubFed and restitution.
It may just be a smidgen of stories but it does show that bad things happen if you choose to avoid taxes and get caught.
That’s the opinion of the Reason Foundation, a nonprofit 501(c)(3) organization dedicated to “advanc[ing] a free society by developing, applying, and promoting libertarian principles, including individual liberty, free markets, and the rule of law.” In an article titled “California Won’t Fix Budget Until It Cuts Spending” Reason notes:
“Despite what some lawmakers would like us to believe, this is a budget crisis borne of an addiction to spending, not a revenue problem. In the past four years, the state’s general fund revenues have increased approximately 32 percent. In fact, total revenue has grown steadily since the early 1990s, shortly after major tax increases were imposed under Gov. Pete Wilson’s administration…
“It is time for Californians and their elected representatives to undertake a serious re-evaluation of the proper role of government. Government has simply gotten too big and too intrusive. The casualty is individual liberty. Only when we rediscover the truth of the maxim – ‘That government is best which governs least’ – will we be able to restore any fiscal sanity to our state government.”
Any bets on our legislators listening? I for one am not hopeful.
