When accounting goes unaccounted for
“These changes appear to be limiting the scope of whistleblowers and the type of recoveries that would be eligible for an award. The fewer people eligible for rewards, the fewer people coming forward with information that might check out as tax fraud.”
~ Senator Charles Grassley (R-IA), wants more whistleblowers to get paid.
Soon-to-be failed Presidential candidate Herman Cain is best known for being the former CEO of Godfather’s Pizza. When he took the job in 1986, the Journal reports “Mr. Cain cut costs and closed unprofitable locations and said that he returned the business to profitability in just 14 months.” An impressive feat to be sure and he continued to sling pie as the CEO until 1996 when he presumably figured he could cash in nicely.
Unfortch for Cain things didn’t really work out. And whose fault would that be? The IRS, of course!
Mr. Cain said that in 1996 he struck a deal to sell his stake in Godfather’s to his partners. That’s when the IRS showed up and commenced an audit of his tax return for the year 1994, coincidentally the year he publicly challenged President Clinton on the impact of his health-care reform plan. Simultaneous audits of Godfather’s and Mr. Cain’s partners were quickly concluded, but Mr. Cain said that the audit of his personal finances dragged on until 1999.
When he finally concluded the sale of his Godfather’s stake, Mr. Cain said that its value had fallen by 75% and yielded only enough money for him to “buy new golf clubs and move to Atlanta.” As for the IRS, they claimed he owed $1.8 million in back taxes, but he said that as soon as he appealed this decision, they immediately dropped the claim and asked only for $40,000 to cover interest on “the money I didn’t owe.” Outraged, he nevertheless paid the bill to resolve the matter. He said that such treatment at the hands of the IRS happens all the time.
Godfather vs. Tax Man [WSJ]
After suffering in tax and appellate court purgatory for several years, Wesley Snipes is finally reporting to prison today for his conviction of willful failure to file tax returns. There’s a whole slew of stories out there on the subject because a celebrity is going to prison, in case you weren’t aware, is important news.
However, as we told you about last week, some people aren’t convinced that the sentence is fair.
Responding to a post by Tim Cavanagh at Reason, rather than embrace mostly inflammatory nonsense, our friend Joe Kristan writes an objective analysis to get to the bottom of the debate:
Mr. Snipes was convicted of three counts of willfully failing to file tax returns for three years. The federal guidelines for prison sentences on tax crimes are largely based on the “tax loss” determined for the crime. Mr. Snipes’ “tax loss” was determined to be over $40 million, which would by itself indicate a sentence of at least 78 months – 6 1/2 years — under the guidelines. Since the maximum sentence for three counts of failure to file is the three years he got, the sentence is actually smaller than the guidelines would indicate.
Now, you may be saying to yourself, “The sentence is longer because a nasty judge is making an example out of one of the most important American artists in vampire cinema!” Joe checked into that too:
But Mr. Snipes still has a legitimate complaint if he’s the only person getting jailed for criminal failure to file, or he’s getting a much longer sentence than others. Is his sentence exceptional?
I don’t know of any statistical study of tax sentences, so we’ll go to the Google. (prison failure to file -snipes). The first page of results includes:
Anthony Kevin Slicker: $265,477 tax loss, 12 month sentence for failing to file for 1 year.
Steven A. Roebuck, Dentist: unknown tax loss, two-year sentence for failing to file for two years.
Arlan Turley, Dentist: 18 months, unknown tax loss, failure to file for two years.
Contrary to Tim Cavenaugh, then, other people get the maximum sentence 12-month per-year for willful failure to file, even with much lower tax losses.
Will the culture suffer? That’s up for debate. But willful failure to file taxes still happens to be a crime with punishment guidelines. If Wes was really saving all of us from vampires maybe the judge would have a good reason to make an exception. Although, that could make for a decent screenplay (straight to video, natch). Three years should be enough time to nail it down.
With nearly $80 billion allotted over the next 10 years thanks to the Inflation Reduction […]