“Cops Moonlighting as Strip Club Bouncers Charged with Tax Fraud”

Posted on April 9, 2005 by Russ

The headline says it all.

>From the Chicago Tribune, this story (one-time registration required) details the sordid details, which include:

– The strip clubs owner, Michael G. Wellek, had $12 million in cash (in bags) seized in 2003 from his clubs;

– The government says Wellek owes $11 million in taxes, penalties and interest (to be resolved in Tax Court later this year); and,

– Wellek’s attorney has the line of the day, “its unfortunate if these gentlemen are in the circumstances of not having reported it on their income-tax return.” Well, that’s what tax fraud is: not reporting income you earned on your return.

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Poker Strikes Out in North Dakota

Posted on April 6, 2005 by Russ

The proposal that would have legalized Internet poker sites based in North Dakota was crushed in the North Dakota senate 44-3, as reported by the Grand Forks Herald. As Senator Carolyn Nelson noted, “There are at least three federal laws out there that make this legislation suspect.” Additionally, the US Department of Justice sent North Dakota a letter informing them that the proposed legislation violated US law. Don’t expect any state to pass pro-Internet gambling legislation in the near future.

Next up on the Internet gambling front is the WTO decision on the US appeal of Antigua’s complaint regarding US anti-Internet gambling regulations. That decision is due out later this week.

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Question: When Is a Tax Cut a Tax Increase?

Posted on April 6, 2005 by Russ

Answer: When it’s proposed by our Democratic led legislature.

As reported in various news stories (here, in the Los Angeles Times (one-time registration required)), Democrats are proposing to lower California’s gasoline tax. (As you may remember, earlier this year the State floated the proposal to add a “per-mile” tax to increase gasoline tax revenues.) The actual package would:
(1) Decrease gasoline taxes by $0.11/gallon
(2) Increase sales taxes temporarily by 0.25%
(3) Increase gas tax over the next ten years by $0.04/gallon
(4) Decrease the sales tax if the Federal estate tax increase in 2010-2011 actually happens. (The California estate tax is tied to the Federal. Thus, an increase in the Federal estate tax will increase revenue to California.)

I haven’t read the legislation (as you might imagine, I’m a bit busy this time of year); I’ll look at it in a week or two. But frankly the Republican comments that this looks like a Rube Goldberesque scheme to increase taxes appear dead-on accurate.

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Tony Serra Pleads Guilty (Again)

Posted on April 6, 2005 by Russ

There’s a couple of cliches I can think of to describe Tony Serra, who pled guilty to tax fraud, again. First, history repeats itself. And second, if at first you don’t succeed, try, try again.

Of course, Mr. Serra, who describes the government’s action as “political” has not paid taxes since 1991. I’d describe the action as late in coming.

Hat tip: Roth & Company Tax Updates

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If It Sounds Too Good to be True (2)

Posted on April 3, 2005 by Russ

Forbes Magazine’s cover story is on tax fraud—specifically, the Son of Boss shelter-scheme. I’ll post a link to the article when it hits the web (in about two weeks). Until then, a good rule of thumb: if it sounds too good to be true, it probably is.

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If It Sounds Too Good to be True (1)

Posted on April 3, 2005 by Russ

The Franchise Tax Board arrested Jon Gunderson, the owner-operator of Outdoor Media Group, Inc., a California billboard company. Mr. Gunderson allegedly invented phony transactions to alleviate $53 million in tax he would have owed the state. Mr. Gunderson is being held on $5 million bail in Riverside.

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Thievery and Cheating on Taxes

Posted on April 1, 2005 by Russ

Sometimes you just can’t win. Indeed, for local attorney Albert M. Graham, he was faced with a dilemma. His bookkeeper embezzled money from him. And that bookkeeper was the one who aided in your keeping of income away from the prying eyes of the IRS. What do you do?

Mr. Graham called the police. The net result was nasty for all concerned: the bookkeeper was arrested, fired, and Mr. Graham recovered much of the money; Mr. Graham sued his accountant because he didn’t detect the embezzlement; and the IRS went after Mr. Graham because he didn’t report all of income. The Tax Court ruled that Mr. Graham is liable for fraud penalties for understating his tax liability.

Hat tip: Roth & Company’s Tax Updates.

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They’re Alive, THEY’RE ALIVE!!!!

Posted on March 31, 2005 by Russ

By the thousands, by the tens of thousands, by the, well, you get the idea, Orange County has been invaded. The invader is Vanessa Cardui, the Painted Lady Butterfly. While the sun is shining (and it’s been shining a lot for a change), they’re everywhere. Apparently, the record winter rainfall led to an abundance of wildflowers where the Painted Ladys spend the winter. Now their broods are heading north.

A news story can be found here (free one-time registration required).
You can get a brief background on the Painted Lady here.

And here’s a picture:

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$312 Billion (and counting)

Posted on March 30, 2005 by Russ

According to this story in the Boston Globe, the US’s “tax gap” is between $312 billion and $353 billion for individuals (not corporations). This gap consists of underreporting of income, underpayment of taxes, and nonfilers. While the IRS’s enforcement efforts reduce this gap somewhat (to around $250 billion), the US still has a noncompliance rate of about 15%.

The biggest culprit is underreporting of income, generated from business income.

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Tsunami: California Complies

Posted on March 22, 2005 by Russ

California has passed (and the Governator has signed) SB50, a law allowing tsunami-related charity donations made in January 2005 to be taken on your 2004 tax returns. The same conditions that apply to donations on the Federal (US) tax returns apply.

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