Tag: Taxes

Thankfully, Most Americans Show Hatred for the IRS in Less Violent, More Passive-Aggressive Ways

Okay, so the past few weeks we’ve seen some psychotic behavior as it pertains to IRS. And yesterday, someone’s llelo (yes, it’s Utah, but that’s the best we’ve got right now) was mistaken for Anthrax and it caused the FBI and Hazmat to storm the building and leave with bodies wrapped up like mummies. If you’re getting worried that people might be freaking out, you’ve got some solid evidence in your corner.

The good news is that not everyone who hates the IRS with every fiber of their being is so cold that they’ll fly a plane into a building, shoot a gun at their spouse or destroy the very home they live in.

Michelle Lowry knows first-hand how much people hate the Internal Revenue Service.

The 37-year-old Leander woman, who processes forms for the IRS in Austin, confronts that venom regularly. People slip razor blades and pushpins into the same envelopes as their W-2 forms. They send nasty notes with their crumpled documents. Last year during the height of the Tea Party movement, hundreds of taxpayers included — what else? — tea bags with their returns.

See? It is possible to show hatred for the IRS without trying to killing someone or destroying your own property. Let’s try thinking things through before we start going completely batshit insane, shall we?

Passive-aggressive protest seems like a more modern way of showing contempt for the government anyway.

Threats, contempt come with job for IRS workers [Austin American-Statesman]

More IRS Violence: Joseph Stack Was Not the First Violent Tax Protester…and He Won’t Be the Last

Even More Tax-Related Violence: Wife Shoots at Refund Hogging Husband

As we still tread in the wake of the Joe Stack attack on the IRS, it seems that bizarro things are happening all over this great land of ours and many of them have to do with taxes and/or the IRS. Jailbirds requesting fraudulent refunds and receiving them, IRS-inspired bulldozing of houses and now we’ve learned about a woman who tried to kill her husband who wouldn’t share their tax refund money.

And like Joe, Bulldozer Terry and the Florida inmates, the woman is pretty satisfied with her actions:

Investigators say the woman then went into the city of St. Louis and threw the gun in a sewer. Police contacted the woman a short time later and she turned herself in. Police say she didn’t seem sorry.


“She felt more than justified. She cooperated very well, with the reasoning why she fired the shots, as well as recovering the gun. She said she didn’t want a child to find the gun in the sewer,” says Daniel O’Conner, the Assistant Chief of Police for Pine Lawn.

This lady can’t be all bad; she was thinking about the kids when she threw that gun in the river. There’s no indication that the husband in this little caper was just a greedy SOB or if his not-so-good sharing skills were justified due to a spendy Mrs.

Regardless, it’s seems that every hour brings another story that strengthens the argument that taxes are the cause of all the strife and violence in this country. We should have taken the IRS shotgun shopping spree as a sign.

[h/t TaxProf and Tax Update]

Accounting News Roundup: Bipartisan Tax Reform Bill to be Introduced; PCAOB Offers More Documentation Guidance; Iowa Congressman “Emphasizes” with Joe Stack | 02.23.10

• A Bipartisan Plan for Tax Fairness [WSJ]
Senator Ron Wyden (D-OR) and Judd Gregg (R-NH) co-wrote an op-ed to introduce their bill for tax reform: The Bipartisan Tax Fairness and Simplification Act of 2010.

The magic word! Bipartisanship! No one will argue against this bill with the magic word in there. Well, we’ll see. In the meantime they plugged all the things voters like to hear:

• Most taxpayers will be able to use a one-page 1040.

• In some cases the IRS will prepare the return for you; all the taxpayer will have to do is sign date and return.

• Reduce the six tax brackets to three: 15%, 25%, and 35%.

• Tripling the standard deduction.

• The first 35% of long-term capital gains income would be tax exempt.

• Flat corporate tax rate of 24%.

Sounds simpler, anyway.


• PCAOB Offers Guidance on AS7 Documentation [Compliance Week]
Don’t worry auditors, this is just a little guidance on Auditing Standard 7: Engagement Quality Review that was requested by the SEC. All it says is that if your engagement happens to be royally f—ed up (i.e. “significant engagement deficiency is identified”) then you have to include enough documentation so that some strange auditor, with some experience, can understand why your engagement is such a mess. Nothing extra but don’t leave out the gory details.

• Steve King To Conservatives: ‘Implode’ IRS Offices [Talking Points Memo]
Congressman Steve King (R-IA) is the winner of open-mouth-insert-foot (Joe Biden is awfully quiet these days) this week after saying that he “emphasized” with Joe Stack and that he encouraged listeners at the Conservative Political Action Conference to “implode” other IRS offices.

This may be blown out of proportion since no one typically gets hurt in an implosion but we don’t think the likes of Glenn Beck should be allowed near explosives of any kind.

Joseph Stack Was Not the First Violent Tax Protester…and He Won’t Be the Last

While the apparent kamikaze raid on the Austin IRS offices yesterday may be the first air assault on an IRS office, it’s not the first time somebody on the wrong end of the tax law attempted an entirely stupid and futile gesture of violent tax resistance.

Take Minnesota computer entrepreneur Robert Beale. Rather than showing up for his tax trial, he hit the road and spent 14 months on the run. When in jail awaiting his rescheduled trial, he arranged a “common law court” of associates to “arrest” his judge. He unwisely made these arrangements through a wired prison phone, and got an extra 11 years in prison for his trouble. He had a solution for that, too, telling his sentencing judge: “’I do not consent to incarceration, fine or supervised release,’ he said. ‘I have not committed a crime.’” Amazingly, convict consent is not required in the Federal prison system, and Mr. Beale is currently residing in Yazoo City, Mississippi.


A Florida contractor, Randy Nowak, chose a different path. In 2008, he was concerned that an IRS agent was closing in on offshore bank accounts. As the IRS offshore amnesty wasn’t yet up and running, he attempted to hire out the murder of the IRS agent. For good measure, he wanted to burn down the local IRS office. He met with a mean looking 6-4 biker nicknamed “The Reaper” to arrange the work. Plans went awry when “The Reaper” turned out to be an undercover FBI agent wearing a wire. Mr. Nowak had an explanation:

Nowak’s attorney argued that his client was actually afraid of the biker and that a friend had gotten him unwittingly involved in the plot. His lawyer pointed to a number of phone calls between Nowak and his friend, who secretly alerted the authorities to the plot. The attorney claimed that Nowak had been trying to persuade his friend to call off the hit, but the friend warned him against angering the gang.

The jury didn’t buy it, and Mr. Nowak received a 30 year sentence. Still, he is only in his early 50s, so he has more to look forward to than 67 year-old Ed Brown. When Mr. Brown’s trial on tax charges seemed to be going badly, he retreated to a fortress-like New Hampshire homestead filled with food and ammo and surrounded by booby traps. He held out for months until he was captured by U.S. Marshals posing as sympathizers. He will begin his 37-year sentence on federal weapons charges when he completes his 63-month tax sentence. He is scheduled for release in 2044, when he will be about 111 years old.

The Austin Kamikaze’s plans did sort of resolve his tax problems, but at a price beyond what most people with tax problems are ready to pay.

‘Subversive’ Organizations Must Register in South Carolina; Terrorist Tax to Follow?

Do you have a client thinking of starting a subversive organization in South Carolina? Are they looking to expand their network of businesses to include one with the expressed mission of overthrowing the U.S. government? Thought so!

Just so you know, they are required by law to register with Secretary of State and declare their intentions or they will be subject to a $25,000 fine and 10 years in prison. Let’s keep the ship tight people.

The Subversive Activities Registration Act was passed last year by the Palmetto State legislature and is now officially on the books. Oh! And there is a $5 filing fee (we attached for the form below for your convenience).


If you’re not sure if the new entity will qualify, the law defines subversive organization:

(1) “Subversive organization” means every corporation, society, association, camp, group, bund, political party, assembly, body or organization, composed of two or more persons, which directly or indirectly advocates, advises, teaches or practices the duty, necessity or propriety of controlling, conducting, seizing or overthrowing the government of the United States, of this State or of any political subdivision thereof by force or violence or other unlawful means

South Carolina, clearly not satisfied with the job being done at DHS, obviously enacted this little gem of legislation to exploit these organizations’ propensity for full disclosure. What’s the point of organizing a business with such an important purpose if everything isn’t going to be on the up and up?

The Raw Story reports that enacting redundant legislation is the norm for the Palmetto State as “[it] is among those states which require drug dealers to declare their illegal income, or face additional criminal penalties on top of the already established penalties for buying, possessing and selling drugs.”

We can only assume that the SC pols will now get to work on a new “Terrorist Tax” that will be known as the Super-Anti-American Business Sucks Act. It seems like a natural progression of the legislation there.

No joke: South Carolina now requires ’subversives’ to register [The Raw Story]
Terrorists Must Register With SC Secretary Of State [Fits News]
[h/t Joe Kristan and Russ Fox of Taxable Talk]
SubversiveAgentForm

This Man Hates Taxes More Than He Loves His Family

Well, he doesn’t come right out and say that but actions speak louder than words, amiright?

This is Guy Hands, Founder, Chairman and Chief Investment Officer of Terra Firma a private equity firm with locations in London, Frankfurt, and Guernsey where he currently resides.

He moved there last April from Kent, a county in Southeast England, to “protest at higher income and capital gains tax rates,” and that “he has ‘never visited’ his school age children since he left the [the United Kingdom]. They have remained with his wife at their former family home in Kent and they now have to travel to Guernsey to see him.”


Guy “Father Knows Best” Hands also doesn’t visit his parents any more “and would not do so except in an emergency,” so he’s not much of a son either.

The devoted family man is an “‘outspoken’ critic of UK tax levels,” so this level of commitment to avoid paying taxes shouldn’t be a surprise. Non-resident tax status is at stake here; he won’t set foot in a UK airport even to transfer.

GH’s shrewd sensibilities were revealed in court papers last week as the venue for his dispute with Citigroup over Terra Firma’s purchase of music group EMI is being decided. If the proceedings are moved to London, Hands’ tax planning could be completely thwarted and — gasp — he might see his children in the UK (if time permits of course).

I save tax by never visiting my family, says tycoon Guy Hands [Guardian]

White House Backs Down on Corporate Foreign Earnings Tax

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

The Obama administration is slowly starting to pick its battles; starting with taxes on corporations’ foreign earnings.

The administration has abandoned its proposal to eliminate U.S.-based multinationals’ ability to defer tax on income by shifting assets to foreign subsidiaries, according to a published report.

While details are sketchy, Bloomberg reported on Tuesday that the administration’s proposed budget for fiscal 2011 shows that it has abandoned its plan to eliminate the so-called “check the box” system under which U.S. companies can defer U.S. tax on income by shifting income-generating assets to foreign subsidiaries without recognizing gains on the transfer.


The proposal would have eliminated companies’ ability to avoid tax on such transfers and forced the repatriation of earnings shifted in this way.

According to Bloomberg, the administration backed down in the face of intense opposition from multinationals. Observers note that Congress has tried to squelch the efforts of the Internal Revenue Service to clamp down on U.S. companies getting foreign tax breaks at the same time as U.S. tax breaks, although many of those breaks are facilitated by the check the box system.

“Maybe the administration figured this was one it did not need to pick a fight on,” Jasper Cummings, a partner in the Raleigh, N.C., office of Alston & Bird and a former associate chief counsel of the IRS, said in an email to CFOZone Tuesday. “They have enough fights as it is.”

Still, Cummings noted that the administration still has “a pretty long list of other changes” in international taxation that it is pursuing. Chief among them is a plan to tighten the pricing rules for transfers of intangible assets.

As CFOZone reported last fall, one such proposal would crack down on asset transfers of employee compensation. In a paper released in May outlining its budget for the last fiscal year, the administration said it would “clarify” the treatment of transfers of intangible assets to include shifts of such expenses.

At present, many companies avoid paying tax on gains resulting from transfers of so-called “workforce in place” under rules that also allow goodwill and “going concern” to go untaxed. In early 2007, however, the IRS issued a staff directive and audit guidelines warning that it was “improper” for taxpayers to classify workforce in place as goodwill and going concern. And an IRS official in September indicated that transfers of workforce in place should include the value of products or services the employees create if much of the work is complete at the time of the transfer.

According to Bloomberg, the administration’s proposals to toughen the rules on transfer pricing would generate $15.5 billion in tax revenues for the coming year and along with other international tax changes produce $122.2 billion over a decade.

Tax Court: “…religious, charitable, scientific…literary, or educational purposes…” Doesn’t Mean “Sex with Kids.”

Private charitable efforts are as American as can be. Toqueville noted our vigorous civil society back in the early days:

Americans of all ages, all conditions, and all dispositions constantly form associations. They have not only commercial and manufacturing companies, in which all take part, but associations of a thousand other kinds, religious, moral, serious, futile, general or restricted, enormous or diminutive. The Americans make associations to give entertainments, to found seminaries, to build inns, to construct churches, to diffuse books, to send missionaries to the antipodes; in this manner they found hospitals, prisons, and schools. If it is proposed to inculcate some truth or to foster some feeling by the encouragement of a great example, they form a society.

The tax law recognizes this all-American tendency in Sec. 501(c)(3), which grants a tax exemption for associations with the proper purpose, like those in the headlines.

So along comes Eddie C. Risdal from Iowa. Eddie wanted tax exemption for a cause dear to his heart, “Mysteryboy Incorporation”:

MENBERS SHALL NOT PROMOOT, BUT WILL NOT DENY THE FACT OF PAST & PRESENT HUMAN HISTORY THAT HUMANKIND FROM YOUTH ON-THROUGH ADULTHOOD HAS IN MAJORITY BEEN SEXUAL ACTIVE WHETHER BE IN PROMISIOUS, DEVENTCY, OR EXPERIMENTATION SEXUAL ACTS, AND MENBERS WILL PROMOOT SAFE SEX EDUCATION AND SAY NO TO ILLEGAL DRUGS USES UNTIL THE EVENT THAT THEY BECOME LEGALIZED, MENBERS WILL PROMOOT FEED THE HUNGARY, SUEICIDE PREVENTION AND ANY AMENDED PROGRAMS AS THE INCORPORATION FINDS SUCH A PUBLIC NEED TO ADD SUCH PROGRAMS THAT WILL BENEFIT SOCIETY AT LARGE.

The IRS somehow found this suspicious and asked a few more questions. They came to this conclusion:

The facts of this case show that Mysteryboy Incorporation was organized and operating primarily for influencing a change in the laws concerning sexual exploitation of children.

The Tax Court found that cause a bit too close to Eddie’s heart (my emphasis):

The activities in which petitioner proposes to engage seek to decriminalize the type of behavior (1) for which Mr. Risdal, petitioner’s founder, sole director, sole officer, and executive director, was convicted and incarcerated and (2) which formed the basis for his having been adjudicated a sexually violent predator subject to civil commitment under Iowa Code Ann. ch. 229A (West 2006).10 On the record before us, we find that petitioner has failed to show that those activities will not provide Mr. Risdal with a platform from which he will seek to legitimize the illegal behaviors in which he has engaged, for which he was convicted, and which formed the basis on which he is civilly committed under the laws of the State of Iowa. On that record, we find that petitioner has failed to carry its burden of establishing that its proposed activities will not further the private interests of Mr. Risdal in violation of section 501(c)(3) and the regulations thereunder.

The moral? Civil society ends where civil commitment begins.

Cite: Mysteryboy Incorporation v. Commissioner, T.C. Memo 2010-13.

Joe Kristan is a tax shareholder for Roth & Company, a Des Moines, Iowa CPA firm, where he works with closely-held businesses and their owners. Prior to helping start Roth & Company, he worked for two of what are now the Final Four CPA firms. He writes the Tax Update Blog and is available for seminars, first communions, Bar Mitzvahs, etc. You can see all his posts for GC here.

Quote of the Day | 01.20.10

“The White House should take note from the Massachusetts Senate election that making life harder for small and medium-size businesses is not the right answer.”
~ Dean Zerbe, National Managing Director of alliantgroup on the Obama Administration’s urging of Congress to crack down on corporate tax cheats.

Double-dipping the Economic “Recovery”

Thumbnail image for tax man.jpgIn case you haven’t heard, it’s go time for the Obama administration to cover its continually-growing deficit with no sign of increased foreign investor demand for unstable and uncertain US debt. What happened to passing a health care overhaul before Christmas? And what about those 140 failed banks in 2009? And hey! What became of that $700 billion in stimulus money that was supposed to save and create bazillions of jobs?
Here’s the solution. Tax their asses.
NYT:

President Obama will try to recoup for taxpayers as much as $120 billion of the money spent to bail out the financial system, most likely through a tax on large banks, administration and Congressional officials said Monday.


In a desperate scramble to come up for cash, the administration has thrown out a couple of unpopular ideas (unpopular if you’re a banker, of course) including excessive taxes on bonuses and bizarre financial transaction taxes. Like squeezing blood from turnips, apparently these guys forget that it was less than a year and a half ago that Hank Paulson appeared on the Hill threatening full-on financial doomsday were TARP not instituted rightf*ckingnow. So much for pulling out the bazooka in his pocket.
And let us not forget that shit rolls down hill. Who do you think would ultimately be responsible for these additional monies? The banks or the idiot customers who continue to shovel out ever-increasing fees to said banks? Exactly.

Lobbyists for bankers, taken by surprise, immediately objected to any new tax. They said financial institutions had been repaying their portion of the bailout money in full, with interest. Losses from the $700 billion bailout fund — estimated to run as high as $120 billion — are expected to come from the automobile companies and their finance arms, the insurance giant American International Group and programs to avert home foreclosures, and the president is aiming to recoup that money.

I really, really hate to side with the bankers here but they are absolutely right. If retribution for the financial crisis is our goal, taxing them to death isn’t the way to achieve that. If paying our government’s bills is the goal, however, I could see how this could easily be spun into populist payback for the pain and suffering of the last 2 years.
Hate to break it to you, America, but any money potentially recouped by this genius scheme has already been spent and certainly wouldn’t result in any long term benefit to us as a country. I’d use the pay day loan analogy again but hell, isn’t it played out by now?

Review Comments | 12.29.09

Thumbnail image for Joe-Francis.jpg• ‘Girls Gone Wild’ Founder Sues IRS – The newly crowned Douche of the Decade is in a litigious mood. After threatening to sue Gawker for the prestigious honor he was bestowed, DOTD is now suing the IRS for freezing his assets. Will someone stop to this man douche?[Web CPA]

• Bill Would Require Comptroller General to be a CPA – Now there’s an idea. [Web CPA]

• Lehman administrators PwC repay $11bn to creditors – Seems like good news. [BBC]

• 2010: Get Ready for a Tax-a-palooza – “Facing trillions of dollars of expiring Bush-era tax cuts, President Obama and Congress will be forced to make some critical decisions in the new year.” [Tax Vox]

• SEC Seeks PAFs: Jan. 13 Deadline – Professional Accounting Fellows. You. [FEI Financial Reporting Blog]

• Let’s Talk About the Terrorist Underpants, Shall We? – Yes. Let’s. [DI]

• Revealed: How Oscar Nominee Ballots Are Counted – Because we know you were wondering. [The Wrap]

• Tax Court Channels Kenny Rogers – Raj isn’t the only fan. [Tax Update Blog]

• Shareholders Win Settlement in Comverse Suit – Deloitte pitched in $275,000. That’s roughly the equivalent to one partner’s Starbucks budget. [Web CPA]

• Bouncing Back: Overcoming a Negative Performance Review – Anyone? [FINS]

• Tax Accountants to Get Biggest 2010 Raise – Good news already! [TaxProf Blog]

Luckily for Nicolas Cage, Ghost Rider 2 Is In Development

raising.arizona.073007.jpgToday in getting-sued-by-your-ex-but-my-name-isn’t-Steven Cohen news, Nicolas Cage is now being sued by his ex-girlfriend, Christina Fulton for $13 mil.
She’s claiming that Ghost Rider and his accountant, Samuel Levin (no relation), were really not very fucking good with the money and now she owes $1 million to the IRS annnnnd she has $250,000 in credit card debt annnnnd she lost her house.
If that’s not enough, Cage and Levin already don’t think too much of each other as they’ve been suing/countersuing each other over whether Cage sucks more at spending money ($1.6 million comic book collection) or Levin at managing it (risky real estate investments).
Good luck lady. The ex-Mrs. C’s chances seem better.
Nicolas Cage’s Ex Sues Him and His Former Accountant [Web CPA]