Sales Tax…On Lap Dances!?!

Posted on July 22, 2006 by Russ

Sometimes you just can’t make this stuff up. If you’re a proprietor in New York state of “Gentleman’s Clubs,” make sure you add sales tax on those lap dances, if they’re in a private room at your establishment. That’s definitely taxable because “…it’s an admission fee to that particular room,” according to Michael Bucci, a spokesman for the New York State Department of Taxation and Finance. And, as this news story notes, Bucci noted that lap dance in the public part of the club are not taxable.

Still, Richard Snowden and his “Tally-Ho Club” of Cheektowaga, NY (suburban Buffalo) are in trouble with the Department of Taxation. New York alleges that he owes $216,000 in sales taxes on private lap dances. Additionally, he has a residency dispute with New York. Snowden believes his primary residence was in Nevada in 2002 and 2003 (he owns a Las Vegas strip club, too); however, New York tax authorities disagree and want another $250,000 in income tax.

Still, the idea of a tax on lap dances is certainly intriguing…and different. Which is one reason I believe that the chances for uniform sales tax rules and regulations throughout the United States is essentially zero.

Posted in Sales Tax | Tagged | Comments Off on Sales Tax…On Lap Dances!?!

Former Strip Club Owner Accused of Tax Evasion

Posted on July 21, 2006 by Russ

It appears that owning a strip club is an occupation more likely to lead to tax evasion; today’s story is definitely not the first time we’ve seen this charge. In any case, Timothy Ray Cline of Justice, WV (the name of the town is somehow fitting) is charged with failing to pay $84,000 in taxes from his “Adult Entertainment Clubs” in West Virginia. Cline is also alleged to have inappropriately gotten $35,000 in disability benefits.

News Story Here

Posted in Tax Evasion | Tagged | 3 Comments

Where There’s Smoke, There’s a Tax

Posted on July 21, 2006 by Russ

Pity the smokers in California, home of one of the US’s top cigaratte tax rates. Why not buy the cigarettes over the Internet and save on the tax?

That’s not a bad idea, except that the Board of Equalization, California’s watchdog agency for cigarette taxes, is auditing out-of-state companies shipping cigarettes into California. (The Federal Jenkins Act allows California review online vendors’ invoices.) And they’re sending bills to Californians. The BOE estimates that it will collect $52 million from California smokers.

Hat Tip: Kerry Kerstetter (The Tax Guru)

News Story: Sacramento Bee

Posted in California, Sales Tax | Comments Off on Where There’s Smoke, There’s a Tax

Waste Not, Want Not

Posted on July 21, 2006 by Russ

Today the Citizens Against Government Waste came out with their list of wasteful and not wasteful legislators. Given Congress’ propensity to spend on pork, this is an interesting list, and you can find it here.

My Congressman, John Campbell, gets a 100% ranking from CAGW (100% is good in this poll). Our two Senators, Barbara Boxer and Dianne Feinstein get 22% and 35% rankings, respectively.

Thanks to the TaxProf Blog for the heads-up.

Posted in Legislation | Comments Off on Waste Not, Want Not

Hovind Pleads Not Guilty; Dinosour Land Defunct

Posted on July 18, 2006 by Russ

Kent Hovind, who we wrote about last week, has pled not guilty to 58 counts (mainly tax fraud). His trial was set for September 5th. Hovind claims he’s employed by God; among the charges are violations of bank reporting requirements on the withdrawal of over $400,000.

We’re also sad to report that the same news story reports that Dinosaur Adventure Land has gone the way of the dinosaurs. The web site is still working, though.

Posted in Tax Fraud | Tagged | Comments Off on Hovind Pleads Not Guilty; Dinosour Land Defunct

Changing Planes Can Be Hazardous to Your Wealth

Posted on July 18, 2006 by Russ

Almost everyone prefers to fly nonstop rather than changing planes. However, sometimes we just can’t avoid it. Seasoned travelers have learned to avoid certain airports when changing planes because of delays. For one traveler, that delay may end up as 20 years.

David Carruthers, a UK citizen, needed to travel from London to San Jose, Costa Rica. You can’t fly nonstop, so he ended up changing planes at DFW. That was a mistake. Unknown to Mr. Carruthers, a federal grand jury had handed down an indictment against him on June 1st. When the US government learned he was heading to DFW, the Marshals were waiting. (Lists of all travelers from overseas heading to the US are sent to the US government just after the plane departs.)

Carruthers is an executive at Betonsports.com, an Internet sportsbook. While Betonsports may be legal under UK and Costa Rican law, it’s decidedly illegal under a wealth of US statutes, including the Wire Act. Carruthers is accused of being part of an alleged conspiracy in violation of the Wire Act, the Travailing Act, Mail Fraud, Wire Fraud, and RICO. And tax evasion, of course.

Tax evasion, you ask? If the enterprise is overseas (and there’s no dispute about that), how can it owe US taxes? Well, when the government first went after bookmakers a new tax was passed—a federal excise tax on wagering. The tax is based on wagers accepted fromUS citizens. The tax is 2% of each illegal wager. The indictment alleges around $4 billion of wagering; the tax on that is $80,000,000.

Given that this case involves a foreign national, RICO allegations, and comes just after the House passed anti-online gambling legislation, you can expect to hear a lot more about it in the coming weeks. Meanwhile, the founder of bodog.com (another online sports wagering site), Calivn Ayre, is supposed to be headed to Las Vegas for a marketing conference next week. Any bets on that?

News Story Here

Posted in Gambling | Comments Off on Changing Planes Can Be Hazardous to Your Wealth

Demotion In Italian Soccer Scandal

Posted on July 15, 2006 by Russ

Italy may have won the World Cup, but it’s soccer scandal continues. Three teams have been demoted from Italy’s top league, Serie A, to Serie B. Juventus, of Turin, Fiorentina, and Lazio, of Rome, were all thrown into Italy’s “Junior League.” This is especially galling for Juventus, who won the last two Serie A titles. And those titles were also by the Italian sports tribunal that decided the case. AC Milan, another first division powerhouse, was penalized fifteen points and cannot compete in European matches during the next season.

Juventus was also penalized 30 points in the scandal. Points apparently have something to do with the rankings in soccer; if you get a lot of points you get promoted to a higher division and can earn more money.

I will be honest: I really don’t care much for soccer. But I do find the idea of sports courts quite intriguing. The verdicts, by the way, can be appealed to a “higher” sports tribunal. Can you imagine the US Supreme Court for Sports?

News Story here

Posted in Tax Evasion | Comments Off on Demotion In Italian Soccer Scandal

It’s Going, Going, Gone…To Court?

Posted on July 15, 2006 by Russ

It’s rare when we get to talk about the sports world on this blog. However, there are a couple of stories that are worth some discussion.

Barry Bonds, home run hitter extraordinaire, and alleged steroid/performance enhancing drug user, appears to be facing an imminent indictment on tax evasion and perjury according to his attorney. Laura Enos told this to the Associated Press, in a story appearing on Sports Illustrated’s website. Apparently the term of the grand jury investigating Bonds expires on July 20th. The story does not detail how or why Bonds will be indicted for tax evasion (the alleged perjury charges appear to stem from Bonds’ testimony to a different grand jury). The story also notes that money laundering charges could also be involved.

Luckily, I’m a Cubs fun and don’t have to deal with such allegations. Or wins for that matter.

Posted in Tax Evasion | Tagged | Comments Off on It’s Going, Going, Gone…To Court?

“Tax Relief Is Good. Taxes Are Bad.”

Posted on July 14, 2006 by Russ

If you’d ask John Q. Public his opinion on taxes, the answer you would receive would probably be the title of this post. And politicians who forget this are usually in for a surprise.

This November Californians will vote for Governor. On one hand, current Governor Arnold Schwarzenegger has pledged no new taxes. Meanwhile, his Democratic opponent, Phil Angelides, pledges new taxes, or cuts in what his spokesman calls “corporate tax loopholes.”

One of those loopholes is a 5% sales tax exemption on liquid petroleum gas (lpg), farm equipment, and diesel fuel. Angelides wants to close this loophole. And surprise, farmers aren’t happy about this.

Benny Jefferson told the Monterey Herald, “Farming is good. Tax relief is good. Taxes are bad. Phil Angelides is disrespectful.”

This isn’t good news for Agnelides. Another farmer, Wayne Gularte, stated in the same story, “[This tax change] certainly could put me out of business.”

Angelides may want to study California’s election history. Close elections are invariably decided in the agriculturally rich, politically conservative Central Valley. And the major industry of the Valley is agriculture.

Contrast Angelides with the Governator, who told the Sacramento Bee, “I totally rule it out. I will not raise taxes.” Polls currently show Schwarzenegger ahead 44% to 37%.

News Story Here

Posted in California | Comments Off on “Tax Relief Is Good. Taxes Are Bad.”

IRS Digital Fraud Detection System Out of Order

Posted on July 14, 2006 by Russ

The IRS acknowledged that the system they use to detect digital fraud was not updated before the 2006 tax year. This failure may have led to $300 million being paid in bogus tax returns.

The “Electronic Fraud Detection System,” or EFDS was supposed to have been updated before the filing system began. But it wasn’t, and the IRS estimates that only about one-third of fraudulent returns were discovered. The Treasury Inspector General for Tax Administration (TIGTA) is conducting its own investigation into the mess.

Congressional response was predictable—anger. Senator Chuck Grassley (R-IA) noted, “I wonder if the IRS ever would have come clean if Congressional committees hadn’t started looking into this issue.”

In our opinion, the answer is easy—No.

News Story Here

Posted in IRS | Comments Off on IRS Digital Fraud Detection System Out of Order