Are California Government Employees Overpaid?

Posted on March 9, 2008 by Russ

An interesting question is whether California government employees are overpaid. We can now find out. Thanks to the Sacramento Bee we can now find out. The Bee has a searchable database of California government employees so we can now find out exactly what our government employees actually make.

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ePassporte Is a Foreign Bank Account

Posted on March 5, 2008 by Russ

I’ve been asked by some of my gambling clients about ePassporte, an e-wallet that’s now in widespread use. The question that has arisen is whether ePassporte is a foreign bank account like Neteller was.

It’s hard to figure this out from ePassporte’s web site. Their official name is “ePassporte, N.V.” which certainly doesn’t sound like an American entity. The whois for their domain returns an address in Curacao. ePassporte offers banking services, so if they’re a foreign company they would meet the requirements of a foreign bank under Treasury Department regulations.

So where is ePassporte headquarted? They’re headquartered in St. Kitts, part of the Federation of Saint Kitts and Nevis, the smallest independent nation in the Caribbean. So if you have an account at ePassporte it is a foreign bank account. If you’re a US citizen and your high balances in any foreign bank accounts when added together add up to $10,000 or more, you must file Form TD F 90-22.1 and check the box on Schedule B. If you willfully don’t file Form TD F 90-22.1 the minimum fine is $100,000.

So if you have foreign bank accounts and meet the threshold of reporting make sure you comply. You have until June 30th for your report to make its way to the Department of the Treasury (this form is file with the Treasury, not the IRS).

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What Sacramento’s Democrats Want

Posted on March 5, 2008 by Russ

If you’re a California resident (and taxpayer), you may want to buy a padlock. A big padlock. That’s because Democratic legislative leaders have resolved that the only solution to the budget crisis is to increase taxes.

Senate President Pro Tem, Don Perata (D-Oakland) told a news conference in Sacramento when asked how the budget deficit will be made up, “Raise taxes. That clear enough? Raise taxes.” I applaud his honesty though I disagree with the message.

Meanwhile, Jim Batten (R-Palm Desert) told the Flash Report, “If last year’s Democrat rage at the Senate Republicans refusing to vote for a budget until spending was reduced by just $750 million is any indicator of what we’re in store for this year, I’m going to start wearing body armor to work.”

We may need to start a pool on when the state budget will be finalized. I think the only certainty this year is that it won’t be done by July 1st (the constitutional deadline).

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Watch Your Wallets Californians

Posted on March 4, 2008 by Russ

What’s the difference between a tax hike and the elimination of a deduction? In politics, everything. For the taxpaying public, the impact is the same. We’re talking words or nomenclature.

It appears that some legislators in Sacramento are considering eliminating the mortgage interest deduction for state tax returns. While I don’t expect that to pass, I do believe we’ll see a few tax hikes when a budget finally passes in Sacramento this year. Please don’t ask me what they’ll be—it’s way too early for that—but do realize that Democrats don’t want to cut any programs. This editorial in the Los Angeles Daily News sums up the problems with eliminating tax deductions.

Thanks to Kerry Kerstetter for pointing out the editorial.

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$1 = $300

Posted on March 4, 2008 by Russ

If I told you that $1 equals $300, you’d rightly tell me that I need to take remedial math. However, there is an instance where that’s the case.

The IRS issued Revenue Procedure 2008-21 yesterday. This Revenue Procedure allows an individual to add $1 as Adjusted Gross Income when that individual would normally have $0.

Why would you do that? So that you can electronically file and get the tax rebate (stimulus) payment this Spring of $300. Joe Kristan has more.

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The Gilbert Hyatt Case Inches Forward

Posted on March 3, 2008 by Russ

Remember Gilbert Hyatt? Mr. Hyatt is the inventor who fled the Bronze Golden State seeking lower taxes. He filed a lawsuit against the Franchise Tax Board alleging that the FTB “…directed “numerous and continuous contacts … at Nevada” and committed several torts during the course of the audit, including invasion of privacy, outrageous conduct, abuse of process, fraud, and negligent misrepresentation.” This case was filed in 1998 and will finally go to trial in April.

Why did it take so long? Because the FTB claimed that it was immune from the lawsuit. That issue was litigated up to the US Supreme Court which ruled that the lawsuit could go forward.

We got some more news about the case in a roundabout way. The Las Vegas Review-Journal reported last week that the Clark County District Court is modernizing its computer system so that only sealed information is withheld from online computer records. Previously, if any information was sealed in a case all of the records were sealed. The first case chosen to see the public light was the Gilbert Hyatt case.

Everyone seems to be happy about the additional information becoming available. I am pleased because the Hyatt case is one where the FTB is alleged to have overreached and it will be interesting to see what happens when the case is tried.

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Tax Fraud in Spades

Posted on March 3, 2008 by Russ

Lots and lots of fraudsters have been at work recently. Here are some of the lowlights:

Charles Jones, the accused former Louisiana State Senator, pleaded not guilty to three federal tax charges. I wrote about his case earlier this year when the news first broke. His trial is not expected to begin until late summer at the earliest.

Butler County (Ohio) Auditor Kay Rogers pleaded guilty to one count of filing a false tax return and one count of conspiracy to commit mail and bank fraud. Rogers’ charges stem from two unrelated issues. First, she prepared tax returns from 2001 to 2006 and didn’t report the $56,000 of income on her own tax return. And she’s been ensnared in a scandal involving fiber-optic cable contracts in Butler County. She’s looking at about five years at ClubFed.

If you want a sure-fire way to get federal authorities upset with you, here it is. Just collect federal payroll taxes and keep them rather than remitting them to the IRS. You can get bonus points if you use phony payroll companies with foreign addresses. That’s what Gary Trebert, an attorney who ran nursing homes in the Midwest, did. He pleaded guilty to conspiracy to defraud the IRS and the Department of Health and Human Services. The total skimmed was $34 million, so we’re not talking peanuts here. AP is reporting that the government will recommend Mr. Trebert serve eight years at ClubFed.

Earlier this year I reported on the case of Sabi Atteyih. Mr. Atteyih had reported zero income to the IRS but had told the truth while obtaining a loan. He’ll do a year and a day at ClubFed and have to make restitution of $47,000 to the IRS.

We’ve had lots of fraud cases of individuals diverting business funds to pay personal expenses. From Baltimore comes yet another. Stilianos Mavroulis and his son, Kyriakos Mavroulis, are accused of diverting $1.9 million from their mortgage business to pay personal expenses. The government alleges that they coded these personal expenses as “other expenses” on their business tax returns. That’s over $500,000 in taxes, and that’s felony charges of tax fraud. Their accountant, Joseph Poole, also faces charges. They’re looking at several years at ClubFed if convicted.

Lloyd Batsfield belonged to the Bozo wing of tax preparers. Just about every one of his clients got a refund. And almost every one of his clients took education credits. A coincidence? Not hardly. It was tax fraud big time, with the loss to the government of $6 million. To compound matters, Mr. Batsfield also stiffed the IRS for $171,000 on his own taxes. He pleaded guilty last year. He was sentenced last week to six years at ClubFed.

Finally, yet another story about Renaissance, the Tax People. Michael Craig Cooper, the founder, was convicted on 72 counts including mail fraud, wire fraud, money laundering, money laundering conspiracy, and engaging in illegal monetary transactions. While Mr. Cooper can say he was acquitted on 74 counts he has plenty to worry him. He’s looking at a very long sentence at ClubFed. To compound matters, he also faces a forfeiture hearing on $75 million of assets that a co-conspirator, Todd Strand, admitted were proceeds from the scam. Remember our advice: if it sounds too good to be true, it probably is.

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German Scandal Spreads

Posted on March 2, 2008 by Russ

I wrote earlier about the tax scandal in Germany. Well, that scandal that began in Germany over hidden funds in Liechtenstein has spread. Countries now investigating Liechtenstein-related accounts include France, England, Australia, Italy, Canada, Sweden, New Zealand, Greece and Spain. And one more: the United States.

Yes, the Internal Revenue Service is investigating about 100 individuals who had accounts in Liechtenstein.

Meanwhile, Liechtenstein authorities are threatening to prosecute the Germans who bought the list for $7.3 million. I’m guessing there’s a German (or two) who won’t have the principality on their vacation plans for the near future.

There is one truism that comes out of this. Linda Stiff, the acting IRS Commissioner, told UPI, “It should be clear from recent events that there is no safe hiding place for the proceeds of tax avoidance and evasion.”

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Chicago, Chicago, That Taxin’ Town

Posted on March 2, 2008 by Russ

Congratulations, Chicago! You now have the highest sales tax rate in the country at 10.25%. Chicago earned that distinction when Cook County doubled its county sales tax to 1.75%.

Who will benefit from this tax increase? Cook County passed the tax increase to balance its budget. Of course, the idea of cutting bureaucracy didn’t get considered….

The actual beneficiaries will be stores and malls located just outside of Chicago and/or Cook County. Lake County, Indiana (just over the state line and Chicago city limits) has a sales tax of 6%. The sales tax in Joliet (county seat of Will County, to the southwest of Chicago) is 7.75%. Wheaton, just to the west of Chicago, has a sales tax rate of 7.25%.

Who are the losers? Those who aren’t mobile and are stuck paying the higher tax rates. Chicago businesses. Cook County businesses (the tax increase impacts the entire county). And the residents of a great American city stuck with politicians who know tax and spend all too well.

Hat Tip: Tax Prof Blog

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Shameless Self Promotion

Posted on February 28, 2008 by Russ

There’s nothing at all about tax in this post. You’re all forewarned.

Instead, this post focuses on my avocation—writing. My third book has just been released. Written with my good friend Nick Christenson, it’s called Winning Strategies in No-Limit Hold’em.

We consider in depth a few aspects of no-limit hold’em that have received little attention by other authors. We concentrate on betting in no-limit hold’em. We consider when bets and raises are in order, why we bet, and how circumstances change when we bet. As the centerpiece of the book we provide four chapters, one per betting round, discussing exactly how much to bet based upon many circumstances.

This book is aimed for the intermediate to advanced player. If you’ve been playing in the limited buy-in no-limit hold’em games and want to try deep-stacked no-limit hold’em, this is the book for you.

You can purchase this book today at Amazon.com. It should be available in book stores such as Barnes & Noble in about three weeks.

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