Mandated Health Care in California’s Future?

Posted on December 20, 2006 by Russ

State Senator Don Perata would like all Californians to have health insurance. Having everyone covered isn’t a bad idea. Senator Perata would do this by mandating that all businesses provide health insurance for their employees (with minimum coverage guarantees), or they would have employees and employers pay into a state fund that would purchase health insurance, with the hope that the state would be able to negotiate low rates. Oh yes, and everyone would have to submit proof of coverage on their tax returns, turning the Franchise Tax Board into the policeman in this effort.

Hmmm, this looks like a tax on employers. And if it walks like a duck, talks like a duck, and looks like a duck, it probably is a duck.

The Orange County Register editorializes on this misguided measure today. And Jon Coupal, head of the Howard Jarvis Taxpayers Association, has an op-ed piece in the Metropolitan News-Enterprise today.

Read them both, and let your legislators and the Governator know your view.

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Fraud in the Swamplands

Posted on December 20, 2006 by Russ

If you’re going to submit phony tax returns, it’s a good idea to vary the names you use. Even poorly run tax agencies might catch on if they receive several hundred refund checks from the same address.

That bring us to the present, in the swamplands (aka New Jersey). Three individuals were arrested today for allegedly committing the largest tax fraud in the state’s history. The three defendants cashed $826,974 in refund checks, having submitted 540 allegedly fraudulent tax returns. New Jersey officials were able to stop payment on over $1,000,000 in other checks.

What made New Jersey officials suspicious? This news story indicates that the defendants used similar names and employers and common addresses. When arrested, the three defendants were found with $200,000 in cash, blank social security cards, and tax forms (including W-2 forms).

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Definitely Not in Vogue

Posted on December 16, 2006 by Russ

Two months ago I wrote about the owner of Club Vogue (a strip club) in Columbia, Missouri. James Andrew Yaeger, the owner, paid his lap dancers in cash, and didn’t report the income. He got caught, and is looking at a term at ClubFed. Yesterday, the General Manager of Club Vogue admitted his part in the scheme.

Dan Marcum earned about $82,000 from Club Vogue in 1999, but didn’t file a tax return according to this story. The US Attorney noted he didn’t file in 2000 and 2001 either. If you’re paid in cash, it’s just as much income as if you’re paid by a check. Although Marcum faces up to $250,000 in fines and five years in prison, he’ll likely receive a short prison term at ClubFed.

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A Bit More Fraud

Posted on December 14, 2006 by Russ

While I was in Palm Springs there was more fraud and evasion. In New York, an operator of a trucking company pleaded guilty to evading federal taxes to the tune of $2.5 million. Anthony Guido, of Pelham, New York, took his salary in cash (along with some relatives) for eight years. He’ll be spending a bit of time at ClubFed after he’s sentenced in 2007. (News story here)

Back in May, we reported on the indictment of the owners of the La Shish restaurants in Michigan. Earlier this week the wife of the owner pleaded guilty to tax evasion. Under her plea agreement, she’ll be spending about three years at ClubFed. Her husband is still a fugitive from justice. Elfat El Aouar admitted that she helped to evade about $1.5 million in taxes. (News story here)

Finally, from Pennsylvania comes another story of someone who says that you don’t have to pay the income tax. Yeah, right. Arthur Farnsworth of West Rockhill, Pennsylvania was found guilty in Philadelphia of tax evasion after admitting he hadn’t filed a tax return. The former Libertarian candidate for Bucks County Commissioner has a web site where he notes his views. Unfortunately for Mr. Farnsworth, the Supreme Court (and all the courts of appeals) has held that you must pay the income tax. Mr. Farnsworth faces up to 15 years at ClubFed and a $750,000 fine when sentenced next year. (News story here)

So the government has taken yet another bite out of crime.

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Off the Deep End

Posted on December 14, 2006 by Russ

Mike Finneran was the head diving coach for North Carolina State University. College athletics pays reasonably well, even for a “minor” sport such as diving; Mr. Finneran made between $60,000 and $180,000 a year.

However, that’s not what he allegedly put down as his income on his state tax returns. Apparently Mr. Finneran is a disciple of the Wesley Snipes school; the North Carolina Revenue Department says that Mr. Finneran wrote $0 as his income.

Not surprisingly, Mr. Finneran has been fired as head diving coach of NC State. Whether he’ll end up at another state institution — a North Carolina prison — will be determined in 2007.

News Story: Associated Press

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First Property Tax Payment Due Today

Posted on December 11, 2006 by Russ

Just a reminder that the first installment of property taxes for Californians must be postmarked today. Alternatively, most County Assessor/Treasurer offices will remain open late for you to make payments.

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On the Road Again

Posted on December 10, 2006 by Russ

I’m hitting the road again tomorrow, heading to Valencia and then to Palm Springs. Posting will be light to nonexistent until Thursday.

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The New York Times Mentions Taxing Virtual Worlds

Posted on December 10, 2006 by Russ

This morning’s New York Times has a brief piece on taxing income producing transactions of virtual worlds. The Times notes that a precedent does exist for taxing such activities: barter. Indeed, back in the 1970s the IRS implemented regulations on the taxation of barter (thus, today’s Form 1099-B).

Luckily for participants in the virtual worlds, it will probably take the IRS some time to determine what they’ll do (besides saying, “That’s so weird.”).

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Hatch Appeals

Posted on December 10, 2006 by Russ

Richard Hatch, the Survivor winner who is now a convicted tax offender, has formally appealed his conviction from earlier this year. The Associated Press reports that Hatch caught the producers of Survivor cheating (they allegedly gave food to other contestants); CBS denies the charges.

In any case, Hatch is now at the Morgantown, West Virginia Federal Correctional Institute, serving a four-year term. Hatch’s appeal was filed with the 1st District Court of Appeals in Boston.

Perhaps Hatch is jealous of Wesley Snipes stealing the tax offender spotlight.

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Murphy’s Law

Posted on December 8, 2006 by Russ

The Seventh Circuit Court of Appeals today ruled on the appeal of Glen Murphy, a Wisconsin Chiropractor, who had earlier been convicted of seven counts of filing false tax returns and three counts of not filing tax returns. After being sentenced to 41 months at ClubFed, Mr. Murphy appealed.

Judge Easterbrook gave the unanimous opinion of the Court. Here are some excerpts:

“After being charged, he tried to game the system and drag out the proceeding as long as possible.”

“AAA, from what we can tell, offered no legitimate services; it instead specialized in international-scale tax fraud. Murphy, himself no fan of taxes, turned to AAA in 1997 in an effort to dramatically lower his past and future income tax liability. AAA obliged, helping Murphy set up a sham, zero-income partnership that took on huge, predetermined losses in sums perfectly tailored to eliminate Murphy’s present and past tax liability. AAA also served as a conduit for Murphy to direct money to offshore bank accounts under the guise of advertising expenses. As a grand finale, Murphy did not even file income tax returns from 2001-2003, despite telling his bank that he had done so (and even producing a completed 2001 form) as part of a home refinancing application.”

“During the 10 months leading up to and including his trial, he employed a pattern of delay and misdirection that would make an NFL offensive coordinator jealous.”

“Information not available to the district court at the time, but highly revealing now, is Murphy’s sudden ability to quickly secure paid private counsel within weeks of his convictions.”

If you get the idea that Mr. Murphy lost his appeal, you’re correct. The ruling by Judge Easterbrook is quite revealing of someone who tried to evade justice, but lost.

Hat Tip: Decision of the Day

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