Category: Tax

Today in Tax-Related Violence: Man Shoots at H&R Block Employee for a Mistake on His Tax Return

It’s been far too long since we’ve heard about violent and/or completely irrational behavior as it relates to taxes, hasn’t it?

Thank God for Ohio, where bulldozers are commonly used to show disdain for pretty much anything. This time it’s firearms.

Police said a man opened fire on a woman after she apparently made a mistake on his taxes. Officers said the man threatened to get revenge on the H & R Block employee because he was audited by the IRS. Dayton police said they [sic] shooter fired several shots into the tax worker’s car. However, she managed to dodge the bullets.

There are lots of things that might conjure up murderous rage but a mistake on a tax return prepared by a H&R Block employee? The good news is that this lunatic is still on the loose somewhere.

Police: Shots Fired At Tax Worker [WHIOTV]

For Everyone in North Jersey, Mass and Rhode Island That Squandered the Last Four Weeks Away, Your Tax Deadline Is Tomorrow

If you were (un)lucky enough to live in one of the flood ravaged counties in North Jersey, Mass, or the entire Ocean State, hopefully you remembered that your extended period of procrastination ends tomorrow.


Yes, unfortunately the last four weeks have flown by and we’re sure that some of you have managed to piss away this time not preparing your tax return. Do yourself a favor and file the extension. You’re hopeless.

Relax, here’s the form.

Closely-Held Corporations May Want to Take a Bullet Over the Pending Dividend Tax Hike

As a role model, Andrew Jackson has serious shortcomings, not least his penchant for genocide. But some of his policies are back in vogue, like the casual destruction of the national banking system. Taxpayers may be choosing to be like Andy in another way before the end of t had the bad fortune to get crossways with Charles Dickinson, one of the best pistol shots in Tennessee, when dueling was still fashionable. He met his antagonist across the state line in Kentucky, where duels were legal. Jackson was serious about this one, so he decided to take all the time he needed to do Dickinson in. Given Dickinson’s marksmanship, that meant accepting a bullet. Sure enough, Dickinson’s shot hit home:

The bullet struck him in the chest, where it shattered two ribs and settled in to stay, festering, for the next 39 years. Slowly he lifted his left arm and placed it across his coat front, teeth clenched. “Great God! Have I missed him?” cried Dickinson. Dismayed, he stepped back a pace and was ordered to return to stand on his mark.

Blood ran into our hero’s shoes. He raised his pistol and took aim. The hammer stuck at half cock. Coolly he drew it back, aimed again, and fired. Dickinson fell, the bullet having passed clear through him, and died shortly afterward.

Taxpayers owning C corporation stock might also want to take a bullet, figuratively speaking, this year. That’s because the tax rate on dividends will either leap or soar in 2011.

The increase in the dividend rate is a consequence of the scheduled expiration of the 2001 Bush tax cuts after this year. Prior to the Bush administration, dividends were taxed as ordinary income. As dividends are distributions of corporate income already taxed at a corporate rate as high as 35%, that meant a combined rate of 57.75%. The Bush tax cuts tied the dividend rate to the capital gain rate, now 15%.

When the Bush tax cuts expire, the capital gain rate is set to return to 20%. But without Congressional action, dividends will again be taxed as ordinary income. Given the size of the deficit, the poisonous election-year political atmosphere, and that the President promised to hold the dividend rate to 20%, it’s likely that dividends will be taxed as ordinary income in 2011. That would means a 164% increase the top dividend rate.

But wait, there’s more! Starting in 2013, Obamacare will tack another 3.8% to the top rate on investment income, resulting in a top dividend rate of of 43.4%, making the total tax increase over 189%.

This makes it tempting to take the bullet – a big 2010 dividend out of a closely-held C corporation. It will be especially attractive for shareholders who lack the ability to suck out corporate cash using the usual tricks of shareholder bonuses or rent payments.

Yes, it means taking a bullet. Taking dividends out of closely-held corporations breaks the rules of the C corporation tax planning crib book. Taxpayers go to elaborate lengths to avoid taking income before they have to. But a 189% tax increase might be enough to make some taxpayers take the bullet, like Andy, for the greater good.

Houston Tax Prep Shop Duped Homeless People into Taking Free Cash

If somebody is handing out free money, why would you ask questions?


Some favorite moments:

Homeless dude: “Here’s a stack of cash. It’s yours.”

Homeless dude: “Boom, it sounds good, so you’re going to jump on it.”

Tax worker: “Your return is $1,266.”
Homeless person: “How can that be?”
Tax worker: “Um, uh, for housekeeping.”
Homeless person: “This isn’t going to get me in trouble or anything?”
Tax worker: “Nuh uh (no), because it was cash, you know, you could have done housekeeping at your friends, family.”

Reporter: “You had no idea this was going on?
Dubious businessman: “No sir.”
Reporter: “And you expect us to believe that?”
Dubious businessman: “Yes.”
Reporter: “And you expect our viewers to believe that?
Dubious businessman: “Yes.”

Houston tax office filing bogus returns for homeless people to make big bucks [KHOU.com]

Pennsylvania’s Tax Amnesty Ad Will Work on the Most Paranoid of Citizens

Pennsylvania’s tax amnesty program started on April 26th and to help taxpayers get off their non-complying asses, this ad has been introduced to motivate Keystone Staters that owe back taxes.

If this doesn’t get Quaker stoners into compliance, nothing will:


Personally, we would liked to have seen the PA Dept of Rev go the route of PICPA and incorporate Snuggies or breathlessly judgmental friends. Although we understand that scare tactics may be effective, a state must be pretty desperate to run this to get taxpayers motivated.

Btw, Philadelphia’s tax amnesty program started today and, so far, is considerably less Orwellian.

Earlier:
Tax Amnesty Programs: A Gold Mine for States or Bad Policy?

The IRS Is Ruining Its Weekend Plans for the Sake of the American Taxpayer Again

The April 15th deadline has come and gone but that does not mean the IRS’ work is done. In fact, getting money in the Treasury Department’s door is a 24/7/365 sorta deal and in case you didn’t notice, there’s a bit of a deficit problem.

Accordingly, the IRS has decided to host open houses at 200 facilities in all 50 states, DC, and Puerto Rico on May 15th from 9 am to 2 pm local time (locations here). IRS staff will be there to help individuals and small businesses sort out any issues they may have (See? Filing that extension was a good idea).


This marks the second time in 2010 that the IRS has opened its arms to public on the Sabbath, having done so on March 27th. According to the Service, that particular National Day of IRS Friendliness was a resounding success, with 88% of taxpayers getting their issues resolved that day.

Doug Shulman all but assures your satisfcation in the press release, “Our goal is to resolve issues on the spot so small businesses and individuals can put any issues they have with the IRS behind them. If you have a problem filing or paying your taxes or resolving a tough tax issue, we encourage you to come in and work with us.”

Okay, maybe it’s not exactly a 100% money-back guarantee but the Service is going to work their cans off to get you in compliance and cutting a check that day. Unless of course you’re a Tea Party type trying to get on the six o’clock news, in which case you’ll be dealt with in a swift and decisive manner.

Open House on Saturday May 15 to Help Small Businesses, Individuals Solve Tax Problems [IRS.gov]

Don’t Bank on a Tax Refund Loan Next Year

JP Morgan has sent out notice to 13000 tax preparers that it plans to discontinue its refund loan operations, leaving tens of thousands of taxpayers with a snowball’s chance in hell of getting a front on money due back from the government come tax time.


This is nothing new for tax preparers. Last year, Jackson Hewitt announced that its RAL (Refund Anticipation Loan) funding was down to about 50%, meaning it could only cover half of the RALs it anticipated it would be asked to process come tax time. The problem came from Santa Barbara Bank & Trust, who funded about 75% of Jackson Hewitt’s RALs, after it was told by the Comptroller of the Currency that it had to increase its capital ratios and quick. SBBT may not have been able to buff up its capital levels but you can buff up your own by following these tips to decrease your “rebate” from Uncle Sam so you aren’t standing around waiting for Treasury to cut you a check:

Keep your exemptions in check This is the easiest, simplest, most obvious solution. If you’re waiting for a huge refund check every year, maybe it’s time to reevaluate the tax position you’ve held since you were in college.

If you’re still in a rush, e-file Sure, it’s not instant, but you’ll get your refund a lot quicker by e-filing than you will the good old fashioned snail mail way. National figures show 60% of Americans used e-file last year, leaving the USPS SOL once again.

File early Again, this seems obvious but if you want your money quicker, file at the front of the line. Americans are procrastinators so if you’re one of the first anxious little taxpayers out of the 1040 gate, chances are your refund will get processed faster.

Wednesday Addams’ $180,000 Tax Trouble

Go figure, Christina Ricci has been hit with an IRS lien to the tune of $179,568.30 for unpaid 2008 taxes. Though the lien news seems to have taken her quite by surprise, Ricci’s rep told TMZ that she is taking “immediate action to address it in a responsible manner.”

That’s funny, I thought a responsible manner would have meant paying the IRS $179,568.30 before April 15th, 2009 when it was due but maybe that’s just me.


Oddly enough, if you’ve ever been hit with an IRS lien (hello, Nic Cage) you know that the Service doesn’t just one day decide to slap a lien on you without first attempting to give you a hint that the proverbial shit is preparing to hit the fan. Generally this comes in the form of correspondence (lots of it) indicating that there is an issue.

Helpful bunch that they are, the IRS will almost always work with tax delinquents as long as said delinquents return their letters and get in touch to say “Hey, sorry, totally forgot to give you that $180,000 that I owe you.” In the case of Christina Ricci, we’re pretty sure her IRS letters must have gotten lost in the fan mail and creepy stalker packages. Yeah, that must it.

Christina Ricci — Ya Got $179k Layin’ Around? [TMZ]

Help the IRS Improve Its Service on the Taxpayer Advocacy Panel

If you are some kind of tax activist, not a felon and ready to serve your country, we may have the volunteer opportunity of a lifetime for you: Serving on the IRS’ Taxpayer Advocacy Panel (TAP). The deadline for applications is this Friday and we’re pretty sure the Service has been swamped with would-be heroes vying for a chance to provide a voice to the poor, abused little taxpayer.


“TAP members represent the typical taxpayer and provide the IRS with invaluable insights that are crucial to sound tax administration,” said IRS Commissioner Doug Shulman.

To qualify, you must pass an FBI fingerprint check (sorry, Lone Wolves, you’re pretty much disqualified right off the bat and will have to stick to crashing planes into IRS buildings if you want your voice to be heard), not be a lobbyist, and of course be caught up on your own tax bills.

Think of it like a focus group for taxes except unlike traditional focus groups, you won’t be getting $75 for an hour’s worth of opinions. TAP members serve a 3 year term and are expected to commit 300 – 500 hours per year serving the Service taxpayer. Members are required to attend a yearly meeting in Washington, DC each fall, at least one face-to-face subcommittee meeting with other members in their region and must participate in a monthly conference call.

So go on, little taxpayers, give the IRS a piece of your mind. And 500 hours of your time, of course.

Strip Club Owner, Sans High School Diploma, Blames His Accountant for Tax Troubles

When you own a strip club there are certain things that you understand. Things like, knowing that there is large portion of the male species that will pay women to take off their clothes regardless of the fact that sex is not happening. And while this is going on, they’ll imbibe lots of booze. And eventually, they may get hungry and with the last sliver of will power they have left, pull themselves away to pay $5.99 for a prime rib buffet. AND since there’s no windows in the place these men will stay in your strip club and spend money until you throw them out or they’ve spent every last dime. Oh, and poles are imperative.

On the other hand, there are things that strip club owners are less savvy about. One of these things may be tax compliance. Accordingly, many proprietors find a local accountant, they swap services, everyone wins.


However, every once in awhile this traditional arrangement may run awry. Kevin Moury, owner of Kittens (NSFW), is suing his accountant, Michael Walsh, for negligence in preparing his returns that resulted in “criminal charges, penalties, costs, fines, loss of income, medical expenses, loss of life’s enjoyments, emotional distress and mental anguish.”

Okay, before we continue, we have to ask – “loss of life’s enjoyments” and “medical expenses” because of a CPA? Where do we draw the line people? Next thing you know, accountants will be blamed for the collapse of the entire financial system…

Anyhoo, Moury pleaded guilty in October to “federal charges of falsifying tax returns and failing to report substantial cash income.” He spent one night in jail, got nine months of house arrest and had to pay back taxes of $88k, etc. etc.

This all came up because Moury apparently thought it was a-okay to deposit money from various revenue streams like fining dancers for tardiness or bolting early, massages for customers, and Jell-O shots (you know, the usual stuff) and then not report it as income. Obviously the IRS was not cool with this, prosecutors threatened to go after his wife and daughters (all employees at Kittens, btw) and that got him to plead guilty.

As a result of his guilty plea, Moury lost a sweet $90k/year gig as a “superintendent of environmental management” (which sounds a lot like “boss of the garbage collectors” but whatevs) and this resulted in lost future earnings of $1.3 million, allegeth the lawsuit.

Regardless, this shit ain’t fair and the accountant needs to be held responsible (his attorney the allegations or “groundless”) and Moury’s attorney isn’t shying away from the stupidity defense:

The lawsuit claims Moury’s lack of formal education — he didn’t finish high school and has a high school equivalency certificate — led him to rely on Walsh to accurately report his income and prepare his tax returns.

“Mr. Moury gave his accountant anything and everything for his business, his real estate and the salary from his job with Methuen,” Cote said. “He signed the returns, but did he looked at them? No. Is he responsible? Yes.

Strip club owner blames accountant for his tax woes [Eagle-Tribune]

Tip for Pro Athletes: Getting Fined May Have Tax Advantages

[caption id="attachment_8735" align="alignright" width="260" caption="Chad, sans sombrero"][/caption]

Misbehaving athletes (or fun hating NFL, NBA, MLB administrators) should take note, getting fined can apparently do wonders for your itemized deductions.

That’s according to a report from Darren Rovell at CNBC, anyway. He cites sports accountant Robert Raiola of Van Duyne, Behrens & Co. who says that fines are “classified as ordinary business expenses,” so once the amount of those expenses exceed 2% of the taxpayers adjusted gross income, the expenses are deductible.


Of course, what isn’t mentioned is that it’s likely that a professional athlete’s itemized deductions would probably be limited since it’s safe to assume that their itemized deductions are greater than $166,800. So in other words, it might work out well for Chad Ochocinco to get fined on a weekly basis for wearing sombreros, bribing officials, and/or any other tomfoolery that the NFL finds fineable but without all the information it’s difficult to determine if this is actually a worth tax-planning strategy. Athletes – please consult your tax advisor that is probably already robbing you blind.

Need A Tax Deduction? Get Fined For Something [CNBC via Tax Policy Blog]

Tea Party Tax Day Photos

As you’re well aware, some Tea Partiers are out and about today (not everyone stayed at home) and the Mile High City was no exception.

Being in close proximity to the Capitol, I decided to run over and check out the festivities. While it was definitely a raucous (yet peaceful) bunch they didn’t seem to mind that I wasn’t listening and was obviously more interested in sociological aspects of the gathering.

With the crowd oblivious to my mission, I was able to snap a few pics (yes, total amateur hour) of some of the more, shall we say, interesting signs.


[caption id="attachment_8580" align="alignright" width="260" caption="Child exploitation!"][/caption]

[caption id="attachment_8575" align="aligncenter" width="560" caption="Creative Algebra"][/caption] [caption id="attachment_8566" align="aligncenter" width="560" caption="Obvious stencil job on the hammer and sickle"][/caption] [caption id="attachment_8582" align="aligncenter" width="560" caption="Does anyone else find unnecessary quotation marks annoying?"][/caption]