Author: Caleb Newquist

Founding editor, Going Concern.

Tiger Woods Mistress: Candidate for IRS Audit?

Maybe! Our imagination tends to run wild so if you’ve got reason to believe that hush money paid to Tiger’s mistresses is of no interest to the IRS, please advise.

TMZ is reporting, based on “sources — and they are good” that Tigger paid Rachel Uchitel $10 million to keep her mouth shut regarding their affair.


Or maybe we’re not giving either of them enough credit. Maybe Rachel has a tremendous business acumen that we’re not aware of and she requested a 1099 from T. Dubs.

Plus, Tiger employs more people than Alaska, so someone on his team may have been looking out for this girl. TW, on the other hand, there’s NFW he considered the problems this could possibly create. Considering the fact that he has trouble communicating, we’re guessing the financial ramifications for his F-buddies slipped his mind.

10 Million Reasons Tiger Was Afraid of Rachel [TMZ]

It Literally Took an Act of God* for the IRS to Do Something Nice

There’s a slew of “reasons” that people have for hating on the Internal Revenue Service. They’re responsible for discourse on television, they don’t observe Shabbos, perverts (alleged!), etc.But every now and again the IRS gives you a reason to say, “well, that’s nice of them,” even if it takes rainfall that makes you consider cobbling an ark together and rounding up the animals in the neighborhood.


The Service is not unreasonable. Apologetic? Never. But not unreasonable. Accordingly, if you live in eastern Massachusetts or Rhode Island the IRS took notice of the rising waters and is extending the April 15th deadline to May 11th (?).

It’s unlikely that this will garner much favor with the IRS haters outside of the Northeast but at least the Service won’t have to ignore the flood of calls from Bay State and Ocean State residents about whether they’ll still be expected file on time. Grab a bucket.

IRS will delay April 15 deadline for many in Mass. [Boston Globe]
Flood weary Rhode Islanders get tax extension [AP via Globe]

*For the militant atheists – Calm down, wouldja? It’s a religious week. Just sub “Nature” and move on.

Accounting News Roundup: KPMG Dodges Madoff Feeder Fund Lawsuit; SEC May Disclose More Details in Settled Lawsuits; Tax Code? Now There’s an App for That | 04.01.10

• KPMG wins dismissal of Madoff feeder fund lawsuit [Reuters]
A class action lawsuit brought against KPMG by Meridian Horizon Fund, L.P. and other investors in Tremont Partners was dismissed yesterday in New York. Tremont had more than half of its assets were Berns andKPMG audited Tremont funds in 2006 and 2007.

Judge Thomas Griesa ruled that the plaintiffs’ case did not show that KPMG had any intent to deceive the investors in Tremont. Emily Chasan reports that Judge Griesa wrote, “Merely alleging that the auditor had access to the information by which it could have discovered the fraud is not sufficient,” and that the firm would have had to botch the engagements so badly that it would have amounted to “no audit at all.” He did not rule out the possibility of Meridian re-filing their lawsuit in the future.


• SEC may require more details of wrongdoing to be disclosed in settlements [WaPo]
The SEC is thinking about disclosing more details in their civil action settlements; a move that would do away with the quick and dirty “neither admitted nor denied the charges.” This could result in a more transparent process where violations of the law are — God forbid — disclosed in detail.

Securities lawyers said a more detailed public record of cases could make defendants less likely to settle and make it easier for shareholders to file class-action lawsuits piggybacking on the SEC’s claims. It could also lead to embarrassment for executives if the agency publicized their roles in violating securities law, even if they are not personally charged.

God knows we can’t have executives embarrassed.

• The Tax Code and Regs for Your iPhone [TaxProf Blog]
Who wants to schlep around the physical tax code?

Apparently the Porn Problem Has Spread from the SEC to the IRS

This is the last thing the IRS needs. Well, maybe next-to-last.


“An IRS employee is charged with having child pornography on a laptop computer that police said he left in a garbage bag in a wooded area in Sterling Heights. Alan E. Erickson, 45, of Sterling Heights is charged with one count of using a computer to commit a crime and five counts of possession of child sexually abusive material, officials said.”

Dumping a laptop in the woods? And child porn to boot? Jesus. You thought the death threats against IRS agents were bad before…

IRS employee charged in porn case [Detroit Free Press]

Image source: Sterling Heights Police via DFP

Overstock.com Turns a Profit; Patrick Byrne Writes a Very Un-Patrick Byrne Letter to Shareholders

This morning we thought the KPMG audit team working on Overstock.com would continue slaving away through the extension deadline tomorrow to get that beast of 10-K finished. Well! Turns out they’ll bet of you tonight because the OSTK 10-K has been filed and, as promised Overstock shareholders, your humble servant Patrick Byrne and Co. are reporting an annual profit for the first time ever!


After such a high, restatement or not, we’re guessing Sam Antar definitely won’t be getting an apology but Gary Weiss has already noted a couple of things:

First–stop the presses! Overstock’s auditors at KPMG says that Overstock has insufficient internal controls.

Second, the Marin County District Attorney and four other DAs in northern California want the company to fork over $8.5 million to settle consumer ripoffs by Overstock. The company disagrees and is fighting it, so …. No, wait a moment, make that read “$7.5 million.”

First off, we share Gary’s shock — SHOCK! — on the insufficient internal controls revelation. Second – AUDITORS! We talked about this, remember? Read the 10-K carefully. Overstock’s “Risk Factors” section runs 25 pages for crissakes. A million fucking clams can’t get missed!

You know what though? Mistakes happen, so we’ll let it slide.

Oh, and about that letter to shareholders. Patsy doesn’t bring up former auditor Grant Thornton once, doesn’t quote Nietzsche, compiain about short sellers, bring up Facebook, or say anything remotely antagonizing (although on page 32, the Company’s states he still might).

This makes think: 1) Is he not feeling well? 2) We want the old Patrick back! Read for yourself:

Dear Owner:

In Q4 our revenues grew 27%, twice the ecommerce industry’s rate, and we earned $12.7 million in net income. In 2009 we grew revenues 6%, earned $7.7 million in net income, generated $46 million in operating cash flow, and generated $39 million in free cash flow. It’s nice to be profitable.

I am proud that, for the second year in a row, we rank number 2 in the NRF/Amex survey of American consumers, behind only LL Bean and ahead of Amazon, Zappos, eBay, Nordstrom, and many other fine firms.

As you may know, at the end of Q4 we engaged KPMG as our independent auditors, and announced that we were restating our FY 2008 and Q1, Q2 and Q3 2009 financial statements. I thank you for being patient with us as we worked through the questions raised by the SEC, the transition to the KPMG team, and the extra time it took to ensure that our financial statements are accurate.

I look forward to our conference call next Monday. Until then, I remain,

Your humble servant,

Patrick M. Byrne

KPMG Gets a Less Than Desirable Photo Op

This month students around the world have been celebrating spring break. That usually means one thing – young people get cop-slugging drunk and maybe, if you’re really unlucky ruin your chances of employment.


The Daily Mail reports that 5,000 British students descended upon the seaside Spanish town of Salou, getting over-served, running around in their birthday suits and pissing off the townies. The gem above is one of several photos that accompanies the article.

The tipster that sent us the link wondered if Phil Mickelson would approve of this. Other than the obvious, “OH HELL NO!” We think Mick’s response would be something to the effect of, “Those little bastards are lucky they aren’t wearing my hat otherwise I’d rearrange their face with my LW.” But forget Lefty for two; now that Tim Flynn is focusing his efforts on being the international chair of KPMG this is the type of crap that causes T Fly to grit his teeth into dust.

“Saloufest” is described as a “sporting event” so maybe these shirts/jerseys are KPMG giveaways and no one is in danger of poorly representing the House of Klynveld. That being said, this probably isn’t what TF and Co. had in mind when they slapped the four squares on a shirt. Btw, if you’ve happen to have some extras, get in touch.

SEC Deadline Watch: Try Not to Make a Scene

So today marks the last major deadline for those working on SEC filers and that could mean that your life belongs to you once again. We should also mention that March 31st is a major deadline for many non-SEC clients so there are a lot auditors rejoicing today (or completely losing their shit).


Whether you plan on celebrating the end of your busy season by drinking yourself blind or sleeping at home rather than the office, is matter of personal choice. There will be no shortage of celebrations anyway – clients, team members and if you’re lucky, a firm-wide celebration after the tax trolls cross their finish line.

This also means that the talk of merit increases, promotions and layoffs will start swirling. PwC and E&Y have already re-reassured their troops that raises are coming this year. Some offices have seen the exodus begin so things will remain interesting and we definitely want to know about it.

Not everyone will be raging however. The aforementioned tax return jockeys still have two weeks of listening to ball-baby clients. For those that are still chasing their CPA, maybe you take a breather or maybe you just keep killing yourself and granted, some audit teams (e.g. Overstock.com) are still working but if you passed the finish line today, congrats, well done, yada yada yada.

More Tax Clients for Ludacris (or His CPA)

As you’re no doubt aware, the IRS has taken exception with the notion that many of our favorite celebrities and athletes can do no wrong. As detestable as this thought might be, Doug Shulman and his merry band of tax collectors are not impressed with these pillars of the community turning a blind eye to their patriotic obligations.


Some of the latest examples of celebrity tax avoidance:

• Corey Feldman – Technically it’s Corey Feldman Inc. that owes the IRS $31k but same diff.

• Faith Evans – Widow of Notorious B.I.G. Grammy winner. Soon-to-be reality TV star. The combination of these things somehow doesn’t allow her to scrape together $360k.

• Mel Blount – Okay, we have to admit that we don’t know who the hell this guy is but the sports historians and the entire city of Pittsburgh are probably familiar. For everyone else – he’s a former Steelers’ cornerback that was elected to the Hall of Fame in 1989. He owes taxes for every year from 1994 to 2006 (with the exception of ’07) for grand total of $652k. Seriously, this is f—ing ridiculous. Even Nicolas Cage manages to file a tax return once a decade. There’s not one CPA in all of the ‘Burgh that can help this guy?

As the title indicates, our advice to these people is to get in touch with Luda “I pay more in taxes than most people would ever imagine” cris ASAP. Whether he’s mastered TurboTax or managed to find a solid CPA, it doesn’t matter because, as you might recall, “you will never hear about Ludacris owing the damn IRS no damn money.”

Source: Tax Watchdog

Accounting News Roundup: Tax Freedom Day Is Nigh; Does the U.S. Government Need a Going Concern Opinion?; Google CFO Does Okay for Himself | 03.31.10

• Tax Freedom Day 2010 Is April 9; Historically Massive Deficits Promise Later Tax Freedom in the Future [Tax Policy Blog]
This year April 9th marks, Tax Freedom Day. That’s 99 days of work for you to pay all your federal, state and local taxes for 2010. This is only one day later than last year but two weeks earlier than 2007, according to the Tax Policy Blog. However, TPB notes that the earlier tax freedom isn’t really much to get excited about.

Tax Freedom Day does not count the deficit even though deficits must eventually be financed. Since 1948, when Tax Freedom Day was first calculated, the difference between what governments are spending and what they’re collecting has never been as great as during 2009 and 2010. If Americans were required to pay for all government spending this year, including the $1.3 trillion federal budget deficit, they would be working until May 17 before they had earned enough to pay their taxes—an additional 38 days of work.

• Expressing a Going Concern Doubt on the United States Government, Not According to GAAP [JDA]
Speaking of deficits, what does the U.S. Government’s deficit look like on a GAAP basis? Somewhere in the nabe of $4 trillion. But before you get all huffy about spendy Democrats, this is true bipartisanship at work. The deficit that includes social security and medicare was $11 trillion in 2004 and was all over the map throughout the aughts. Anyone thought of giving the U.S. a GCO?? AG notes that it’s a bit of problem when the government can’t even make things look rosy, “[W]hen even the government accounting makes things look bad (see: pensions), you really know you’ve got a problem on your hands.”

• Google’s Schmidt Got $245,322; CFO Paid $24.7 Million [Bloomberg BusinessWeek]
The $24.7 million in total comp that Patrick Pichette received for ’09 was up from $7.63 million in ’08, the year he joined the company. Most of this year’s haul was from $10.9 mil in stock awards and $10.8 in stock options. His salary was only a measly $450k.

States Are Coming Up with Some Really Bad Ideas for Taxing Services

Yesterday we explained why sin taxes can work, despite the feelings of those that just want to tell the religious types to GTFO of the legislative process. While we agree that religious based legislation is a bad — nay — a horrendous idea, since more states refuse to legalize and tax certain things like marijuana, gambling, prostitution, among others, our elected officials have started coming up with even far worse ideas that the Texas pole tax.


The Times ran a story over the weekend that examined various states and what types of services they are taxing to close their budget gaps. While many states are considering taxes on professionals like lawyers and accountants, legislators in other states have gotten so desperate it appears they’re just pulling ideas straight out of their asses:

In Nebraska, a lawmaker has introduced a bill to tax armored car services, farm equipment repairs, shoe shines, taxidermy, reflexology and scooter repairs. In Kentucky, Jim Wayne, a state representative, and some fellow Democrats are proposing taxing high-end services: golf greens fees, limousine and hot-air-balloon rides, and private landscaping.

In June, voters in Maine will decide whether to accept a state overhaul of its tax system that would newly tax services like tailor alterations, blimp rides, and entertainment provided by clowns, comedians and jugglers.

We get it. States are desperate for revenues but these are the ideas? A juggler tax? Taxing your shoe shines? How’s this idea for taxing a service? Prostitutes! A service is being provided, yes? Make it a 50% tax, whatever the hell you want. Plus, more people getting laid might actually cut down on the crazies taking matters into their own hands.

We decided to get a service provider’s (not a prostie) thoughts on the matter, so we asked resident GC tax expert Joe Kristan for his thoughts:

Being a service provider myself, I can’t say I’m excited about the idea. Still, standard tax theory would say that services should be covered to make the tax as broad as possible, allowing (in theory) a lower rate. Iowa taxes a bunch of services, including foot reflexologists (you’d thank that would take care of the budget right there), but CPAs and lawyers are exempt. I’d say it’s because we’re special, but mostly it’s because we have special lobbyists.

All right, so maybe there’s a “theory” to it but something tells us it has nothing to do with taxing clowns.

States Seeking Cash Hope to Expand Taxes to Services [NYT via Web CPA D&C]