According to this news story, California will soon unveil a $600,000 ad campaign to fight back at Nevada’s attempt to lure California businesses. California, according to the new ads, is, “…the place where the smartest companies are located.”
While this may be true—after all, Silicon Valley is in California—it’s going to be a hard sell. Costs in California compared to neighboring states are noticably higher. Whether California can battle back remains to be seen.
While I scampered about on my recent trip, plenty of tax crooks were being led away. Here’s the weekly update:
As reported last week, bad news is piling up for Kent Hovind. After his defeat in Tax Court, he found himself behind bars—he was arrested and charged with 58 charges, including tax evasion. His wife was indicted on 44 charges. Their indictment is set for Monday. (News story here.)
A Memphis man has been convicted of failing to file tax returns and tax evasion charges. Billy Severence didn’t file his 1990 – 1993 taxes. For 1991 through 1993, he was convicted on felony tax evasion charges. Severence could face 19 years in prison, though a sentence of 3 to 5 years is more likely. (News Story here.)
James Hubb, who faced eight years in prison for his tax fraud conviction, was sentenced to 18 months and fined $10,000. He must also make restitution and pay back taxes. Hubb paid personal expenses from his business, and did not accurately report the transactions on his tax returns. We reported on Hubb’s conviction here. You can read about Hubb’s sentencing here.
Thankfully, the tax crime blog was fairly light this week. And that’s a good thing.
Our blog host has switched servers, so it will take about 72 hours for this change to move through the Internet. If you’ve gotten a “403” error when you attempted to see us, we apologize for the inconvenience. Rest assured, we’re still here.
If you ever have problems viewing our site at https://taxabletalk.com, you can go to http://taxabletalk.powerblogs.com
I will be traveling over the next few days on business, and postings will be limited until next Wednesday or Thursday. Take a look at some of the other excellent tax blogs noted in the blogroll to the right.
If all we had to do to avoid paying taxes was form our own church, with just our own family as the congregation, wouldn’t we do it? And if we could just declare that John and Jane form a “trust” that is exempt from taxation, we’d do that too, right?
There’s a problem with this, of course: such schemes are illegal. A church needs to be real; a trust needs to have a reason for existence. Purveyors of phony trusts are regular targets of IRS enforcement activities, and the Tax Court is not amused by their activities.
Today, the Tax Court looked at Kent Hovind, who allegedly formed a religious ministry in Florida. He also formed Dinosaur Adventure Land, a theme park in Florida. According to its website, “It is run by Creation Science Evangelism, the world-changing ministry of Dr. Kent Hovind who travels internationally speaking (and debating) on the Creation vs. Evolution controversy.”
Mr. Hovind did not file or pay income tax in 1995, 1996, or 1997. His organizational structure is, according to the Tax Court, “…based on various questionable trust documents purchased from Glenn Stoll, a known promoter of tax avoidance schemes.” Mr. Stoll was barred in 2005 from promoting his scheme.
In any case, the IRS sent demand notices to Mr. Hovind. They served him through certified mail, and even in person. The IRS made jeopardy assessments against Mr. Hovind. Mr. Hovind didn’t contest them. The IRS served Mr. Hovind with a lien notice; Mr. Hovind didn’t contest it. And when the IRS sent Mr. Hovind the notice of the filing of the tax lien, Mr. Hovind returned it, writing on the notice, “Refused for fraud.” The Tax Court case decided today was whether the IRS’s levy actions were appropriate given the jeopardy assessments.
Unfortunately for Mr. Hovind, he didn’t contest either the original demand notice or the notice of the filing of a tax lien. And that’s a big problem, because:
Petitioner actually had two opportunities (upon receipt of the Lien Notice — which receipt petitioner does not dispute — and upon receipt of the notice of deficiency) to challenge the existence and amount of his 1995, 1996, and 1997 Federal income tax liabilities. Under section 6330(c)(2)(B) petitioner may not now, in this proceeding involving respondent’s proposed levy action, dispute the amounts of his underlying Federal income taxes and additions to tax for 1995, 1996, and 1997.
So Mr. Hovind’s trusts join the dinosaurs, relics of the past. But his tax liabilities aren’t relics, as interest keeps accruing. And the levy goes forward.
Case: Hovind v. Commissioner, T.C. Memo 2006-143
New Jersey legislators and Governor Jon Corzine agreed on a budget deal today. The deal includes the sales tax increase from 6% to 7%, but with half the proceeds of the increase being used to reduce property taxes this year and all of the proceeds being used to reduce property taxes next year. Of course, what the legislature grants they can take away, so it will be interesting to see what happens in 2007. And in the election this fall.
It is expected that casinos will reopen either tomorrow or Saturday. The shutdown has already cost New Jersey coffers an estimated $2.6 million just from lost casino tax revenues.
Assume you run an organization, and you discover that your revenues (income) are being exceeded by your expenses. What would you do? Would you, (a) Immediately close down your sixth largest source of income, (b) Close down your fourth and fifth largest sources of income, (c) Increase your budgeted expenditures by 9%, (d) Anger your customers by eliminating their recreational options, or (e) Increase your prices by 16.67% to cover the revenue shortfall (further angering your customers)?
If you’re Democratic Governor Jon Corzine of New Jersey, you would do all of these. Already the New Jersey Lottery is closed; horse racing and casinos will close tomorrow morning at 8am EDT (the New Jersey Supreme Court rejected their appeals); state parks and beaches will close tomorrow; and the only option that Governor Corzine is offering the state legislature (controlled by Democrats, by the way) is a sales tax increase. The Speaker of the State Assembly, Joseph Roberts (D-Camden) has rejected the tax increase.
So Governor Corzine moves down a path where he has put thousands of state workers on unemployment. Tomorrow he hits the private sector, casting thousands in Atlantic City to the unemployment lines. He has exacerbated the problems dramatically. Governor Corzine even makes Gray Davis look good! Today, as we celebrate Independence Day, his actions stand in stark contrast to what our Founding Fathers wrought. Luckily, the voters in New Jersey will head to the polls in November to vote for Governor. I haven’t seen any polls for New Jersey, but I’d expect that the Republicans in the Garden State won’t have any shortage of issues to campaign on.
Democratic Governor Jon Corzine ordered all nonessential New Jersey government offices to close, and road construction projects, motor vehicle offices, and the state lottery all went dark. Governor Corzine wants an increase in the state sales tax of 1%; the state legislature, which is controlled by the Democrats has refused to go along.
Already Corzine’s shut-down order has stopped lottery sales, New Jersey’s fourth largest source of revenue. A threatened closure of casinos (New Jersey casinos must have Casino Control Commission officers on their premises at all times) would deprive the state of about $1.3 million a day in tax revenue. Also closed are state beaches and parks during the long holiday weekend.
We heard yesterday that one of the reasons that the leaders of the State Assembly are opposing Corzine’s proposed sales tax increase is not the increase in rate; rather, that it would also tax many additional items and services. For example, legal fees would be subject to sales tax. This has not been reported in the press, so we can’t verify this.
We would be remiss to not comment on the political impact of tax increases and government shutdowns. Some of you may remember when the Republicans shut down US government in a dispute with the Clinton White House. It was not a political success for the G.O.P. And very few taxpayers enjoy tax increases while government spending rockets up. New Jersey Democrats, in control of all wings of government, may have major problems this election cycle.
News Stories: FoxNews, Home News Tribune, New York Times.
Editorial: Wall Street Journal
In the United States, when you’re accused of tax evasion you have lots of legal recourse, including fighting the charges within the IRS’ appeals process, and then Tax Court. However, in Argentina it appears things work differently.
Just two days before Argentina’s match in the World Cup, Buenos Aires Province tax authorities confiscated a taxpayers’ $2000 plasma television. According to Juan Manuel Prada, a provincial tax official, quoted in All Headline News, “We’ve taken the plasma as a guarantee against the debt he owes.”
The unlucky taxpayer will have to either find a sports bar or perhaps his old television will suffice.
Senator Charles Grassley (R-Iowa) has proposed making some tax crimes felonies if the underlying issue is a pimp or sex trafficker who fails to file employment tax forms. The penalties would be a 10-year prison sentence and a $50,000 fine for each offense. Senator Grassley commented to the Associated Press, “The thugs who run these trafficking rings are exploiting society’s poorest girls and women for personal gain. The IRS goes after drug traffickers. It can go after sex traffickers.”
Grassley plans on introducing the legislation in his committee tomorrow.
