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:

Posted in Taxable Talk | Comments Off on They’re Alive, THEY’RE ALIVE!!!!

$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.

Posted in IRS | Comments Off on $312 Billion (and counting)

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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Unorthodox Attorney’s Method: Don’t Pay the IRS

Posted on March 22, 2005 by Russ

The San Francisco Chronicle reports that J. Tony Serra, a criminal defense attorney, has been charged for “at least the third time” with failure to pay federal income taxes. He’s expected to plead guilty to at least one of the charges.

Posted in Tax Fraud | 6 Comments

Un-Amnesty

Posted on March 16, 2005 by Russ

California currently has a tax amnesty program. It has a little carrot and a BIG stick. If you haven’t filed (or are otherwise delinquent) for a tax year before 2003, you can file an amnesty application by March 31st; you then must file and pay your taxes by May 31st (June 30, 2006 if you file an installment agreement). Full details of the amnesty program are available on the FTB’s website. The FTB projected that the program would generate $550 million for California.

It won’t.

To date, according to this article in the San Francisco Business Times the state has received $25 million. While there will be quite a few applications received in the last two of the program (and perhaps another $100 – $200 million received by May 31st), the program doesn’t make sense for most taxpayers who haven’t paid. Why haven’t they paid? Because they don’t have money! And you expect them to come up with the money in two months?!?

When the amnesty program was announced last year, our local chapter of Enrolled Agents were unenthusiastic and thought it wouldn’t meet its’ goal. It appears we were right.

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If We Can’t Win, Let’s Change the Rules

Posted on March 15, 2005 by Russ

On the Federal level, the Democrats in the Senate want to filibuster President Bush’s judicial nominees. Whether the Democrats in the Senate like it (or not), there’s nothing in the Constitution saying that you can filibuster appointments. The Democrats are trying to change the rules.

Here in California, after property taxes went crazy in the 1970s, Proposition 13 was passed. That limited property tax increases and mandated a 2/3 vote for new taxes.

The education establishment, unhappy that many of their tax increases aren’t being approved by the voters, now wants to change the rule so that it takes a 55% vote for passage. The next time you’re approached by anyone from the education establishment, ask them:

– Does money spent correlate with improved learning for our children? [No, according to numerous studies.]
– Why do the school districts that spend the most money have some of the worst results?
– Why are you against standardized tests that mandate our children meet basic education levels before being advanced to the next grade?

Remember, it’s our money being spent–that’s what tax dollars are.

Posted in Legislation | Comments Off on If We Can’t Win, Let’s Change the Rules

Richard Hatch: CBS Should Have Withheld Taxes

Posted on March 13, 2005 by Russ

When we last left Richard Hatch, the $1 million winner from Survivor who didn’t pay his income taxes, he withdrew his plea of guilty. He now claims, in an interview with AP, that CBS should have withheld his taxes because under California law he should have been classified as an employee.

Ignoring, for the moment, the merits of his claim, ignorance of withholding does not alleviate one’s responsiblity for paying income tax. Penalties, however, could be eliminated depending on the truth of Mr. Hatch’s claim.

What will add to the confusion during trial (if this goes to trial) is that Mr. Hatch is a resident of Rhode Island. CBS (now part of Viacom) is headquartered outside of California. Survivor was filmed in the South Pacific. Frankly, Mr. Hatch is probably going to be forking over the ~$300,000 the government says he owes, along with interest. After all, there were only 300 million witnesses to his winning the $1 million…

Posted in Tax Evasion | Tagged | 6 Comments

The Disneyland Impact

Posted on March 9, 2005 by Russ

According to the Daily News, Disneyland brings $3.6 billion annually to the local economy. This story details the positive impact of the theme park: $1.62 billion to Orange County (45% of the impact). That mouse brings in a lot of money.

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Hatch Backs Away From Plea

Posted on March 9, 2005 by Russ

While I was on the East Coast, Richard Hatch backed off from pleading guilty to tax fraud. Hatch, who won $1 million on Survivor, allegedly did not declare his prize on his tax return. The government has dismissed the charges, and will present all possible charges to a grand jury.

We’ll keep you informed.

Posted in Tax Evasion | Tagged | Comments Off on Hatch Backs Away From Plea