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Archive for the ‘IRS’ Category
Friday, July 30th, 2010
About Conrad Murray
Some celebrities are famous for their skill in acting or singing, but not Conrad Murray. Murray is famous for being the doctor to The King of Pop, Michael Jackson, and is now embattled with legal problems for the alleged role he played in Jackson’s death.
It is said that Conrad Murray has a history of owing people money: According to the Huffington Post, Murray’s medical practice owed thousands of dollars in fines and judgments and overdue fees on loans and credit cards. To top of the “nice guy” image, he also owes thousands in child support and even had a fine of nearly $1,000 for driving with an expired license plate and no proof of insurance.
Conrad Murray tax problem
The Huffington Post also reported that Murray owed back taxes so we went hunting for them and found a tax lien of over $23,000 owing in back taxes in 1993, 1996, and 2003.
Tags: celebrity tax problems, conrad murray, Income Tax, IRS, Tax Lien, tax owing, unpaid taxes Posted in IRS, Tax Lien, Tax Problems | No Comments »
Tuesday, July 20th, 2010
Hearing you have been selected for audit will concern anyone. When two Minnesota businesspeople received their audit letter, they were likely dismayed. However, like good law-abiding citizens, they met with their accountant and the IRS auditor, Roger Anthony Coombs, at their attorney’s office. You can imagine their surprise when the auditor offered to minimize their taxes owing with a $9,000 payment to himself!
That’s right! He requested a bribe in exchange for a favorable audit result. Fortunately, the quick-thinking businesspeople met again, recorded the conversation, and brought it to the attention of the authorities.
Coombs was arrested early in June and, if found guilty, could serve up to 15 years in prison. (Read the full story about the us IRS officer being bribed here).
This is a shocking news story but it prompts me to think further. Coombs only started working for the IRS in June 2009. If this was his very first foray into bribery, it took him a total of 11 months. Eleven months! Was this guy not vetted before his job? Did he have a squeaky-clean record and only turned bad in less than a year? Is this, in fact, his first attempt at stealing from taxpayers?
Another thing I’m prompted to think about is this: There are about 120,000 people working for the IRS. This is one story of one tax agent who was caught. How many more are there are operating a successful bribery scam? I’m sure it is incredibly tempting for anyone facing an income tax audit and a lot of money owing to the IRS to instead give a small amount to an agent to make the situation go away.
The last thing I’m prompted to think about: If the businesspeople in the story really do owe $60,000 in back taxes, is the IRS still going to send in an auditor to finish the job? These people did the right thing in the face of a very tempting crime. Their possible reward might be an actual audit!
[Image source: AMagill]
Tags: corrupt irs, corrupt IRS agent, irs audits, irs bribery, tax audit, tax bribery, tax crime Posted in IRS, Tax Audits, Tax Crimes | No Comments »
Monday, July 19th, 2010
In zombie movies, the dead rise from the graves and shuffle around the neighborhood looking to feast on human flesh. This past year, life imitated art (and I use the term “art” loosely), and the dead rose to file tax forms.
Yes, you read that correctly. This past year, 16 accountants in the Bronx and Manhattan were charged with filing numerous income tax returns of a dubious nature. These tax returns included making claims on dependents that were not actually dependent (or even related), and filing the tax forms of deceased people to get tax credits.
You can read the article here.
Fortunately, they were caught by undercover IRS agents who recorded these accountants offering a variety of illegal services.
This is truly a frustrating news story for me because it makes it harder for regular, honest, tax-paying citizens like you and I to get the tax solutions we deserve to our tax problems. For the 16 who were caught, I imagine far more have gone unnoticed and our current “redistribution of wealth” system is taking money from hard workers and funneling to people who would rather file tax returns for dead people than do real work.
[Image source: DanHollisterDuck]
Tags: Income Tax, income tax filing, IRS, tax crime, Tax Crimes, taxes Posted in IRS, Income Tax, Tax Crimes | No Comments »
Saturday, July 17th, 2010
Our country was founded on certain inalienable rights and millions of people flocked to the United States of America because we enabled opportunity. We were a land where, if you worked hard, you could prosper and avoid excessive taxation by the King. Our history books may not be as long as other, older countries, but our history books are filled with the names of people who have come to America with nothing and built personal fortunes from hard work, perseverance and ingenuity.
And let’s not forget the millions more, like my forebears, who never got rich, but have been able to provide a decent living for their families through honest work.
My hat goes off to those who have dreamed the American Dream and have achieved it. Unfortunately, for many of those who have worked hard to become financially successful or provide more for their families, the American Dream has turned into a tax nightmare: A bad dream where you work hard while others take your hard-earned money. We’ve turned into a nation that redistributes wealth, with the IRS taxing the higher income earners a disproportionately high amount while writing a check to those who have not worked and sacrificed for their income.
Now, let me say this: I believe America should be a land of equal opportunity, but not a land of equality. I believe people should be treated fairly regardless of their skin color, national origin, religion, etc. I think that’s something that makes America great. But we aren’t helping by heavily taxing what one person has honestly earned and giving to others. By this we are teaching them that wage theft, in the name of being “fair”, is permissable.
A society that offers its citizens an equal opportunity to work hard and advance themselves is all that can be expected of “fairness”. A society that forcibly takes earned income away from one person to give to another person is actually discouraging hard work. Entrepreneurs work unhuman hours to create the future, while undertaking significant risks. Entrepreneurs and successful businesspeople should not have to pay more to the Internal Revenue Service if their risks pay off, just as they would not receive an award if their startup venture failed.
We want to encourage every American to stand on their own two feet and to push forward, not enable them to continue lying down and not contribute to society.
We have become a nation of takers and givers, as Sherman Frederick points out in his article Tax Man Comes For Half of Us. We have become a nation of that says “wealthy” people (however the takers want to define it at any given moment) should be forced to give their income away to others.
Those receiving the handouts from massive taxes should rise up in revulsion and say they don’t want what they didn’t produce, and that they don’t want to treated like a charity case.
Have we reached the point where receiving free handouts is no longer shameful, and considered a “right”?
If we create a nation of people who expect a “hand out”, then we’ve fallen so far from our founding ideals that we may not recover.
Who’s to blame? Sherman Frederick points to Obama and Democrats in general (and a few Republicans). I think it’s easy to blame Obama, and he certainly deserves to shoulder a large share of the blame, but I believe it extends far beyond the current President. From eroding values to disengaged parenting, there are a lot of reasons that we’ve become a country of people seeking instant, selfish gratification without lifting a finger.
Let’s initiate change: Work harder. Seek the pride and satisfaction of a job well done. Sacrifice to get a better education. Save money and spend it less frivoulously.
Contact your government representatives at all levels and demand fairer taxation and aggressive government representation. Commit to working to change things in your own circumstances through hard work, a determined will, and guidance from your core beliefs.
And remember – pay your taxes, but take every legal tax-minimizing break you can to avoid redistributing more of your wealth than is necessary.
Through social change there may be a day when our tax debts decrease instead of the current increasing trend.
Tags: Income Tax, obama tax programs, redistribution of wealth, tax burden, taxing entrepreneurs, unfair taxation Posted in IRS, Income Tax, Tax Collection, Tax Reform | No Comments »
Thursday, July 15th, 2010
Adam Smith wrote the book “The Wealth of Nations”, a massive work that set the tone for employment, economics, and industrialization in the US. Published in 1776, much of Smith’s work is as relevant today as it was back then.
Among his many insightful economic positions, he believed that taxes were a good thing but they should be “certain, and not arbitrary”.
No one here disputes that we shouldn’t have taxes. Taxes are necessary to pay for roads and police and the many other services that come with living in the US. But what we do have a problem with is that the tax code has become a tool to redistribute wealth, taking it from some and giving it to others, ultimately redefining the American Dream into something that looks more like a socialist economy.
Adam Smith believed that taxes should be “certain, not arbitrary” but our taxes right now are anything but certain! Filling out tax forms – accomplished by wading through an overwhelming number of forms and documents – is akin to pulling the lever on a slot machine… but a slot machine that punishes you instead of rewards you!
Smith proposed a flat tax. While I realize that there are many challenges to implementing a flat tax, and there are reasons why a flat tax might not work, it is the most equitable form of taxation because it is certain and knowable. In fact, a flat tax might actually decrease the amount of bureaucracy and expense incurred by the IRS every single year in trying to understand their own tax code and then trying to enforce it.
The Washington Times has a fascinating article that starts by talking about the IRS and how IRS employees are receiving a growing number of threats for trying to enforce Congress’ tax laws but then, on page 2 of the article, it launches into a scathing examination of IRS employee culpability and ultimately concludes with other great thoughts by Adam Smith. Read the full article here.
Tags: Congress, economy, fair tax, IRS, redistribution of wealth, tax, taxes Posted in IRS, Income Tax, Tax Law | 1 Comment »
Sunday, July 11th, 2010
Our neighbors to the north have their own version of the IRS, called the “Canada Revenue Agency” (CRA). Recently, a news item came to my attention that may not have an immediate impact on US taxpayers but should be a warning sign that immoral behavior by revenue agency officials can happen anywhere!
The CRA, which is staffed by 40,000 people and serves a similar function to the IRS, recently uncovered a shocking number of cases in which CRA employees used government information inappropriately: It seems that sometimes they snooped on spouses or friends and other times they accessed income tax data to give their family and friends preferable tax treatment. In fact, the article reported that in one office alone 13 employees accessed tax records and confidential information inappropriately, with 10 of them providing preferential treatment to people.
(Read the article here)
What does that mean for Americans?
There are about 120,000 IRS employees. If it can happen in Canada’s CRA with only one-third of staff that the IRS has, it can certainly happen in the IRS. In fact, I’d suggest that the size of our highly bureaucratic system could make it even more susceptible to such nefarious usage simply because the bigger things are, the more complex they tend to be.
So, while you might be suffering with a tax problem and hopeful of a resolution, you need to wonder if those exact same people that are knocking on your door demanding money are not also extending preferential treatment to their friends and family!
Even the current Treasury Secretary Timothy Geithner admitted to tax problems due to “irregularities” in past 1040 tax returns.
We can only hope that periodic tax audits and careful watchdogging will keep this from happening… but we can never be completely sure. The IRS is the largest collection agency in the world, and they have nearly unlimited power to enforce tax collection.
[image credit: scazon]
Tags: canada income tax, Canada Revenue Agency, CRA, immoral tax agents, Income Tax, preferential tax treatment Posted in IRS, Income Tax, Tax Crimes | No Comments »
Saturday, July 10th, 2010

The IRS wants taxpayers to pay their outstanding taxes. If those taxes aren’t paid, the IRS has a growing arsenal of actions it can take, from garnishing wages to seizing assets.
That’s right, the IRS can and will seize your assets in lieu of your tax payments. Now, don’t think of them as a giant pawnshop where you can get your favorite chair or your mother’s wedding ring back once you’ve paid. The IRS will put your stuff up for auction! Airplanes, boats, vehicles, homes, property, the list goes on and on. (Check out the IRS Auction Site… if you don’t see something you like today, new items are listed regularly, all “donated” by tax payers who are unable to pay their taxes).
Now, more than ever, people with tax problems need to take an active approach to fighting the IRS to clear up their tax issues and their good name. Leaving your tax problem and hoping it will go away could mean that you’ll get a knock at your door and they’ll be asking for the clothes on your back (figuratively speaking)! Wishing that the IRS won’t come after you isn’t much of a game plan, and it isn’t going to work. If you have tax problems, they’re looking for you so they can look through your stuff like a kid with a catalog at Christmas.
[image source: bsabarnowl]
Tags: Income Tax, IRS, Tax Collection, tax owing, unpaid taxes Posted in IRS, Tax Collection, Tax Problems | No Comments »
Sunday, June 27th, 2010
Although most of us don’t take this into consideration, some people choose their citizenship based on tax exposure. They may live in the US because taxes are cheaper here (than elsewhere) or they may move from the US to a location with even cheaper taxes.
In a Forbes.com article entitled “Ten Facts about Tax Expatriation”, Robert W. Wood lists important information that you should know if you are thinking about moving to or from the US in order to modify your tax exposure. I’ll summarize the ten items here but you should read them in greater detail in Wood’s article.
And his ten tax expatriation facts are:
The government taxes all income worldwide. So the money you made elsewhere? The IRS wants some of it.
If you’re going to leave for tax reasons, you need to really leave. You can’t fake it. If you’re here more than 30 days in a year, you are considered a citizen or resident of the US.
There was a loophole that allowed you to get out of some taxes if you left for a reason other than tax avoidance. It comes as no shock to anyone that this loophole was closed.
In 1996, Congress just assumed that anyone with a net worth greater than $500,000 was leaving the US to avoid taxes. Nice!
In 2004, the US decided to stop guessing and just impose a tax on all US-based income for ten years after someone moved away.
There are special rules for long term residents (as if the tax law isn’t already complicated enough).
There’s an exit tax (or, as I like to call it, a “slap in the face” tax) for anyone leaving after June 17, 2008: Essentially everything you own in the world is considered to have been sold at market value and you have to pay a capital gains tax on it…
… unless the income is less than $600,000. So this is a “slap wealthy people in the face” tax. And it shouldn’t surprise you that Woods spends another 2 paragraphs going into detail about the complex calculations surrounding this.
You can defer this tax but it’s complicated.
Woods says it perfectly: “You’ll need professional help.”
Entry and exit is an interesting situation: Various agencies (like Homeland Security and the US Citizenship and Immigration Service) do a thorough job of making sure that it’s not easy to get into the US… and the IRS makes sure it’s not easy to get out of the US.
“Welcome to the USA… now that you’re here, you’ll pay taxes and you won’t be able to leave.”
(Photo credit: ellyjonez)
Tags: expatriate tax law, offshore income tax, Tax Expatriation, taxes for living overseas, us citizen tax liability Posted in IRS, Tax Evasion, Tax Law | 3 Comments »
Friday, June 25th, 2010

After watching the famous movie Jaws, you might not go near a beach for a while after viewing it. And although you and I might find a great white shark to be a scary villain in Steven Spielberg’s movie, Actor Robert Shaw was scared of another (and far more menacing) foe: The IRS tax collector!
Robert Shaw lived from 1927 to 1978 and starred in such hit films as The Sting, From Russia With Love, The Taking of Pelham One-Two-Three, and (of course), our favorite fish movie, Jaws.
Shaw played Quint, a gruff sea captain who takes Chief Martin Brody (played by Roy Scheider) and Matt Hooper (played by Richard Dreyfuss) out to the ocean to catch and kill the shark (not the government sharks that want to garnish your wages and tax your earnings).
(more…)
Tags: government sharks, jaws tax, richard dreyfuss, robert shaw, roy scheider, sterling hayden, steven spielberg, Tax Collection, tax collector Posted in IRS, Tax Collection, Tax Evasion, Tax Problems | No Comments »
Tuesday, June 22nd, 2010
In poker, the term “grinder” refers to a player who spends their days playing poker. Grinders treat poker like a business, sitting down for 8 hours to play, grinding it out like everyone else might grind out their work at a day job.
Michael Mizrachi’s nickname is “The Grinder” and he does exactly that, “working” at poker in a way that others might work at picking up garbage or running a cash register. And, like the rest of us, he has taxes to pay.
Unfortunately for Mr. Mizrachi, the IRS has recently put a lien on his home for $340,000 in unpaid taxes.
Over the course of his poker-playing career, the young Mizrachi has earned a whopping $6.9 million but, though poor money management and accounting practices, he owes $339,711, and he is facing foreclosure.
For many taxpayers, especially younger ones who begin to make a lot of money quickly in business, sports, Hollywood, or poker, taxes come as a nasty shock. People expect to pay taxes but making a lot of money can bump you up into a higher tax bracket very quickly, resulting in taxes owed that are far greater than you expected. It’s even more difficult to estimate the amount of tax you will owe when you don’t make a regular wage but rather earn your money in fits and starts (as a poker player might win a few times a year or a movie star might earn a few checks a year). Lots of my self-employed clients have this problem.
In Mizrachi’s case, it’s not simply a matter of putting in overtime or asking the boss for a raise. If he plans to continue “running his poker business”, he needs to play… And he needs to win… And he must develop the discipline to pay his taxes – on time.
This is a cautionary tale for those who want to play professional poker, professional sports, get into acting, or be a normal self-employed person: With every single paycheck, estimate the amount of taxes you owe and set that money aside (or pay quarterly) to avoid tax problems down the road.
(Read the full article here)
(Photo credit: plutor)
Tags: Income Tax, IRS, michael mizrachi, poker, poker player, Tax Problems, unpaid taxes Posted in IRS, Income Tax, Tax Problems | 1 Comment »
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