Football, Concussions, & Taxes

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Maybe you have seen this popular statistic:

By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.

True or not, it is difficult to dispute the fact that many NFL players have a hard time after their football career is over.  One thing is certain — they are routinely getting into trouble with the IRS.  The most recent example is former Atlanta Falcon, Jamaal Anderson.  News sources say he has tax debt from 2007 and 2008 in the neighborhood of $1.1 million.  The IRS has filed a lien to protect the government’s interest in his property until he can pay back what he owes.

Football takes a huge toll on the body and these guys typically retire very young.  I don’t know if there are any formal studies on this type of thing, but I would guess many pro football players retire with tons of ambition, but insufficient business acumen and, who knows, maybe one too many concussions to be able to maintain the type of lifestyle they were used to while in their prime.

Any thoughts on this topic?

TIGTA Recommendations Need More Teeth

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It would seem that TIGTA’s “recommendations” to the IRS have fallen on deaf ears at times.  Perhaps TIGTA needs to be given greater authority so it can lay down some consequences for non-compliance.  Taxpayers face stinging consequences like the bank levy and wage garnishment for failing to abide by our tax laws, but all the IRS has to fear is yet another unfavorable audit report — no more than a slap on the hand.

The Whistleblower program, as we know it, was established in 2007; the same year a separate Whistleblower Office was created.  Two years later TIGTA identified some problems with the program and made its recommendations.  In an audit report made public today, TIGTA states that the IRS still hasn’t complied with the changes that were suggested in 2009.

These are some of the recommendations that the IRS ignored:

  • establish timeliness standards for processing of whistleblower claims
  • establish a quality review process
  • correction of inaccurate data revealed in the 2009 audit

By far my favorite snippet from the audit summary:

“In the prior report [2009], TIGTA found that information captured on three inventory systems was inaccurate. In this review [2012], auditors determined that employees manually transferred claim information from the three systems into a single inventory control system, Entellitrak.  However, IRS officials did not ensure steps were taken to reconcile and correct the inaccurate information that was reported in our Fiscal Year 2009 review.”

This is too good!  The way I read this it’s like the IRS swept the problem under the proverbial rug.  Instead of fixing the problem, they just moved it to a different spot.  This is a familiar approach to problem-solving that trickles down to the IRS call center employees.  They’re punching in and punching out with no real sense of accountability for the quality of their work.

IRS Shuts Down Granny’s Suicide Kit Sales

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Going back in history, the government has always used the Internal Revenue Service to shut down underground businesses that are illegal or immoral.  If the law does not support the government’s case, or if the facts and evidence are not in its favor on other charges, the government often has “tax evasion” in its back pocket.  Al Capone is the prime example.

This week’s Al Capone is a 92-year-old lady from Southern California named Sharlotte Hydorn.  She was convicted and sentenced to 5 years supervised probation for failing to file and pay taxes on the income she earned from suicide kits she sold from her home.  She was also ordered to work out a way to pay off her IRS tax debt.  As you probably guessed, there is no federal law addressing assisted suicide.

My question is “where was her family?”  I know her husband is deceased — it was his death that sparked Hydorn’s interest in benevolent killings.  But she needed somebody by her side to tell her things like:

  • Maybe you should be a little more careful about who you’re selling these kits to; like maybe find out their age and circumstances first.
  • Maybe you should be paying taxes on this income
  • Maybe when grandpa whispered “home, home” on his deathbed he wasn’t asking to die in the comfort of his home.  Maybe he was trying to communicate to you that he was now going “home” to his maker.

I realize that last point is pure speculation.  But hey, if it were true then Hydorn certainly never would have started selling suicide kits in the first place.

Taxgirl Shares Nugget of Blogging Wisdom

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Last week I blogged about “Taxgirl” Kelly Phillips Erb’s coverage of the Richard Hatch tax debt controversy.  It was my observation that she had changed something about the way she reported the story after speaking with Hatch directly about his situation.  Well Kelly was nice enough to provide me with a little clarification, part of which I have reproduced here:

“One of the reasons that I’ve blogged the story so many times is that I’ve been fascinated by the history. Like you, I practice tax law and I have been trying to get my head around why this case didn’t stop earlier. This wasn’t an ordinary story. In fact, that was the point of my original piece: the IRS doesn’t, as a rule, just toss folks in jail.

One of the cool things about blogging is that it’s not static. Providing regular content to an engaged audience allows you to update stories as they happen. And I’d like to think that’s what happened here. It wasn’t my intention to “backpedal” or paint Mr. Hatch as a victim with my follow-up piece. I don’t think I so much “changed my (sic) tune” as I found out more about the story and reported what I learned.”

She’s right.  I hadn’t thought of it that way.  It’s great that she was able to tell Hatch’s side of the story and add something that we probably wouldn’t get through standard news outlets.  I also support the notion that a good blog is often dynamic and engaging.  Thanks for the perspective Kelly!

The comments are not very prominently displayed on our blog, so click here if you want to read the Taxgirl’s comment in full.

Blowing the Whistle on the Whistleblower Office

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The IRS Whistleblower Office, as we know it, was set in motion by legislation written by Senator Chuck Grassley, R-Iowa back in 2006.  Slow motion that is.  And Chuck is not happy.

Senator Grassley recently penned a stern letter to the Commish and Treasury Secretary Tim Geithner asking them to kindly fix whatever is broken at Whistleblower headquarters.  It’s the same story: they are taking too long to process these cases, and whistleblowers are patient, but they begin to lose faith in the system as the months and years pass on their claims without compensation.   If they don’t straighten things out over there, the IRS is going to miss out on a big opportunity to collect the tax debt of some of the biggest tax cheats in the country.  Whistleblowers will just stop coming forward.

According to reports, Grassley’s letter may have been prompted by recent intel that the director of the whistleblower program had spent time as a panelist at the Offshore Alert Conference — an errand seemingly outside the scope of his duties.  He can’t be abandoning his post for gigs like this given the current backlog of cases!  Of course, it probably doesn’t help his case knowing that the conference was held at the Ritz Carlton in Miami Beach!

What’s with Floridians and their Penchant for Tax Crimes?

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I recently blogged about how Florida is becoming a hotbed of tax crimes.  The US Department of Justice issued a press release this week about a Floridian who appears to be engaging in illegal tax activities right from his prison cell.  I say “appears to be” because, procedurally, this is still just a grand jury indictment, not a conviction.

David Marrero has been charged with corruptly endeavoring to obstruct the Internal Revenue Service (IRS) and filing false claims.  He filed false tax returns in hopes of getting a refund from the government.  He even went so far as to prepare bogus income docs to support his fraudulent refund claims.  Marrero also used other peoples’ financial information as part of his scheme — a common technique in the underground business of false return filing.  If you have tax problems, hopefully this story makes them seem small in comparison.

The IRS has promised to scrutinize return preparer certifications that are issued to inmates, perhaps they should also be taking a careful look at any and all returns filed from prisons.  I’m sure they already are, and that is probably why David Marrero’s strategy failed.  So much for getting out early for good behavior…

The Hatch Tax Saga Continues: Hatch vs. Erb

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Forbes contributor, Kelly Phillips Erb, blogged about ex-Survivor contestant/winner, Richard Hatch’s tax problems last week and this week she’s completely changed her tune.  What made her backpedal?  A personal call from Mr. Hatch.

The Tax Girl’s April 24th blog post portrayed Hatch as a quasi-celeb tax-dodging goofball.  Maybe its the commercial that makes him look like a goofball.  But nonetheless, Hatch called her out in a comment to her article, claiming that she didn’t bother getting her facts straight.  Then they spoke via telephone and Hatch gave her the complete rundown on what has happened in his fight with the IRS and the judicial system from the time he finished his stint on Survivor up to the present.  AND NOW, in today’s blog post, all of a sudden Hatch is a “victim” and a true survivor.  See today’s post here.

Whatever, I get it.  The phone call made her realize that Hatch is an actual human being suffering under the burden of a massive tax debt, and following his tax story through reports of the mainstream media may not have resulted in an accurate understanding of the controversy.  Heck, if Kelly were to call me in response to this post, I’m sure I’d do some backpedaling myself:)

What Makes the Tax Code so Long?

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This is the kind of thing that makes the tax code so long:

Any natural grape wine may be sweetened after fermentation and before tax payment with pure dry sugar or liquid sugar if the total solids content of the finished wine does not exceed 12% of the weight of the wine and the alcoholic content of the finished wine after sweetening is not more than 14% by volume; except that the use under this subsection of liquid sugar shall be limited so that the resultant volume will not exceed the volume which could result from the maximum authorized use of pure dry sugar only.

~ excerpt from 26 USC § 5383