Darryl Strawberry, the former major league baseball player, has been in lots of trouble over his life. He’s battled drugs, cancer, ex-wives, and baseball players. Today he agreed to settle a tax dispute with the IRS.
Back in 1995 Darryl Strawberry was convicted of tax evasion. He still owes almost the whole debt—$430,000 (he’s paid $8,600). He has agreed to reimburse the IRS in full including interest and penalties.
You have a small dispute with the IRS. The IRS alleges that you owe $554 and $1142 for the two years in question. You elect to file a Tax Court petition. When most people go to Tax Court, they work with the Court and the IRS (the respondent in a Tax Court action) so that their case can be heard and the judge can determine who is right.
However, today we look at what happens when a bozo petitioner brings a Tax Court action. Would he: (a) allege that respondent’s counsel has, “engaged in serious misconduct”; (b) allege that the “presiding judge has failed and failed again to show any semblance of impartiality”; (c) refuse to accept service of court documents (sent by certified mail); (d) send the IRS an ultimatum demanding settlement on his terms and not appear in any of the pre-trial hearings/motions; or (e) all of the above.
You already know the answer—we’re dealing with a bozo here. All of the above happened and is documented in this case.
The IRS moved for dismissal because of lack of prosecution (the petitioner never brought the facts out on his case), and as the Tax Court noted, dismissal was a “relatively simple matter.”
The IRS also asked that the petitioner face a penalty under section 6673. The Tax Court noted that in a different case the Fifth Circuit Court of Appeals held,
“it is difficult to imagine a lesser sanction that would vindicate the integrity of the court proceedings and deter * * * [taxpayers] from similar misconduct. Wasteful and dilatory appeals unjustifiably consume the limited resources of the judicial system: “While judges, staff and support personnel have expended energy to dispose of this meritless appeal, justice has been delayed for truly deserving litigants.” Foret v. S. Farm Bureau Life Ins. Co., 918 F.2d 534, 539 (5th Cir. 1990). [Id.; fn. ref. omitted.]”
As the Court concluded, “Petitioner’s attempts to delay and his belligerence must be sanctioned to vindicate the integrity of this Court’s proceedings and to deter petitioner from similar misconduct in the future.” He received $1000 sanctions for each of the two cases heard.
Cases: Mack v. Commissioner, T.C. (two cases), T.C. Memo 2008-29
Apparently some of our legislators are unhappy with California’s low ranking as a place to do business. They’d like to make this just as bad a place for non-profits. AB624 would require foundations and non-profits in California to collect gender, ethnic and sexual orientation data on their board, members, staff and grant recipients. Yes, a non-profit would have to ask their Board members what their sexual orientation is.
This is, of course, ridiculous, but nothing surprises me about the Bronze Golden State anymore. Hopefully, the Legislature will realize that this is as ridiculous a measure as it truly is and it will die a quick death in some committee.
Every year the Orange County chapter of the California Society of Enrolled Agents and local CPAs donate their time to answer tax questions by phone for four hours. Tomorrow (Tuesday) you can call 714-796-5000 between 5pm and 9pm PST and get your tax question answered. It’s sponsored by the Orange County Register; I’ll be one of the volunteers answering your questions.
Anthony Pendleton ran Payless Tax Services of Inglewood, California. Mr. Pendleton allegedly had an interesting way to ensure that his clients got refunds: He allegedly invented employers for his clients, generated phony W-2s, and fabricated educational expenses. It’s a trifecta of trouble, and it’s surprising that a former IRS employee wouldn’t realize that phony W-2s would certainly be investigated. Mr. Pendleton was arrested on charges of conspiring to defraud the government on claims (for tax refunds). Also under indictment but not yet arrested are two employees of Payless, Christopher Michael Edwards, Sr., and Asha Delilah.
IRS special agents interviewed found 21 witnesses (or almost certainly, clients of Payless) who hadn’t worked for the employers noted on their returns. The IRS also found eight ‘clients’ who, “…disclaimed any knowledge that Payless Tax Services and defendants Pendleton, Edwards, and Lenard were filing tax returns on their behalf with the IRS and stated that did not sign any of the documents relevant to the investigation, indicating that the defendants had stolen their identities.”
The defendants are alleged to have filed 185 false claims totaling $609,000. If found guilty, they’re looking at significant stays at ClubFed. Not surprisingly, when the Associated Press called Payless, “Staff at Payless could not be reached for comment, as the service’s phone had been disconnected.”
Right after Wesley Snipes found out that he’ll be sentenced on April 24th, news came out that Wesley Snipes owes $70,000 in back property taxes for his home in Alpine, New Jersey (in suburban Bergen County). The home is in the name of his production company (Kymberlyte Production Services); Snipes sold it to them for $5.6 million in 2002.
The back property tax lien has been sold to Crusader Lien Services. I’d expect this problem to be taken care of, unless Mr. Snipes now also believes that property taxes are illegal….
In years past, if I took a position on a tax return it needed “Substantial authority.” That’s equivalent to about a 30% chance of being upheld. Congress changed the law; now in order for me to take a position it must be “more likely than not” to be upheld. Joe Kristan has a great post on what this means for taxpayers.
The Swedish tax agency, Skatteverket, is targeting online poker players and affiliates. Skatteverket uses an online “spider,” or web crawler, to find web sites that appear to be income producing. They then investigate to see if they’ve reported income and/or paid their Swedish income tax. A report in Poker News says that Sweden has found 47 cases of unreported income totaling €44.5; poker players, according to Poker News, represented €5 million of this.
Sweden apparently, like the United States, taxes all gambling income. I’ve reported on spiders before, and noted that the IRS won’t confirm or deny whether they use such software. However, the IRS doesn’t need that sophisticated software to make some headway into determining who has and hasn’t reported their online gambling income. Neteller is cooperating with the US Department of Justice. What agency in the United States might want information about gambling income besides the Department of Justice? As I’ve said before, not reporting your online gambling income is not only a violation of US law, you’re now likely to get caught given Neteller’s cooperation.
There are losing streaks and then there are really long losing streaks. Larry Harvey has not had a good year battling IRS attorney Randall Preheim. Yesterday, as Joe Kristan noted, Mr. Harvey lost his 64th and 65th cases. Today, that streak reached 67.
Look, the Washington Generals did win six games. (Well, they lost 13,000 games during that same time span….) And the Cubs are celebrating the 100th anniversary of their last World Series triumph so there is hope, Mr. Harvey.
Tax agencies love computerized notices. The computer does the work, finds probable tax scofflaws, and the notices are mailed in an automated fashion. This saves the agencies money. Assuming the tax debt is real, it’s a good bargain for everyone.
However, there are problems when matching programs are used based on people’s names. It appears that the Franchise Tax Board is doing just that. This story details that a retiree living in Omaha, Nebraska received a notice from the FTB about a $200 tax debt from 1999. The problem is that Wally Grant, the man who received the notice, hadn’t stepped foot in California since 1943.
Sure, the FTB rescinded the debt and the past due notice. But why did the FTB send out a notice like this in the first place? The notice refers to someone with the same name who lived in Pasadena. I have to assume (like the television station that covered this story) that the FTB used a matching program of names. When the computer found a Wally Grant, it sent out the notice. I doubt a human looked at the notice until the telephone rang at the FTB.
Of course, it’s possible that I’m wrong. It could be that the FTB matched social security numbers rather than names. If that were the case the social security number of Mr. Grant of Omaha could have been used by anyone, causing the problem. However, given the reference in the notice this seems unlikely.
In any case I’m wondering what’s going on. The FTB refused to comment to the Omaha television station. I’d love to hear from someone at the FTB (or the Board of Equalization) as to what’s going on. I’m all for the FTB going after tax scofflaws but this appears to be a case of big brother and it disturbs me deeply.
