M Is For More Taxes

Posted on July 25, 2006 by Russ

The Orange County Transportation Authority unanimously voted yesterday to ask the Board of Supervisors to put a 30-year extension of Measure M, Orange County’s 0.5% sales tax that funds transportation improvements, on the November ballot. Given that all fives supervisors are on the OCTA board, approval seems certain today.

The current Measure M expires in 2010. About $4.2 billion will have been raised over the life of the measure. Improvements made under Measure M include the widening of the Santa Ana Freeway (Interstate 5) from three lanes in each direction to six from the El Toro Y to the Los Angeles County line, widening of the Garden Grove Freeway, and major improvements at the El Toro Y (the junction of the Santa Ana Freeway and the San Diego Freeway (Interstate 405)).

The extension targets specific transportation improvements. One target is widening of the Riverside Freeway (Route 91) through the Santa Ana Canyon. Local commuters know that this freeway is usually bumper to bumper every weekday despite previous widening of the road and the toll lanes that run down the middle of the freeway.

In order for the measure to pass, it must receive two-thirds of the vote in November. Supporters, besides the Board of Supervisors, include the Orange County Business Council and the Automobile Club of Southern California. The measure still faces a tough fight, given most voters anti-tax stance. We’ll keep you updated as November approaches.

News Story: Orange County Register

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Survivor: Oklahoma City; Is Victorville Next?

Posted on July 25, 2006 by Russ

Earlier this year I speculated that Richard Hatch, Survivor winner and now convicted tax cheat, might spend some of his 51 months in prison in beautiful Victorville (where it was 115 F yesterday). Well, Hatch has just been moved from Plymouth, MA to Oklahoma City’s Federal Transfer Facility. Inmates rarely remain there, so perhaps Mr. Hatch will get to visit the wonderful California high desert after all.

Hat Tip: TaxGuru & Roth Tax Updates

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Arena Tax for Sacramento?

Posted on July 23, 2006 by Russ

Arco Arena is the home of the Sacramento Kings of the NBA. The 442,000 square foot arena opened in 1988. But the owners of the Kings, the Maloof brothers, want a brand new arena, so that they can have more revenue from the team.

And like most businessmen, they’d prefer others pay for it. So through a complex deal (reported here in the Sacramento Bee), the sales tax for Sacramento County would be increased from 7.75% to 8.00% for 15 years to pay for the arena.

But two groups must approve the measure. First, four of the five Supervisors on the Sacramento County Board of Supervisors must approve that the measure go before voters this November. Then, voters must approve the measure; through allocating some of the funds to general usage the measure requires just a majority vote rather than the state-mandated 2/3 vote for most tax measures.

The tax would raise over $1 billion; of that, a little less than half would be used to build a new arena. The Maloofs would pay $4 million in rent for 30 years and contribute $20 million to a capital improvements fund.

But there’s opposition in California to publicly funded sports complexes. Sacramento Assemblyman Dave Jones is rushing home from a vacation to campaign against the project. It will be an interesting battle in Sacramento, with the Maloofs, their radio station (KHTK 1140 AM), and private developers eying the current Arena for redevelopment, versus an unusual combination of taxpayer organizations and liberals who don’t like government funding of arenas.

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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.

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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

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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

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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.

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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.

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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

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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

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