IRS Guy Fits Right in at Football Game

I have the perfect kind of Friday story that zeros in on the bad behavior of one single IRS employee and, by implication, expects you to assume that he was somehow acting in his official capacity or that he is a fair representation of the IRS as a whole.  I realize that by discussing this story I am perpetuating these same stereotypes or outright falsehoods, but I do it tongue in cheek.  I know there are some good people at the IRS, and every walk of life is represented among its 89,000 employees.

On to the story.  29-year-old furloughed IRS employee, Stephen Sapp, was caught misbehaving at a Pittsburgh Steelers game this past Sunday.  I’ll stop right there for a second because I know some people don’t realize that you don’t have to be a boring, bean-counting stiff to work at the IRS (although I think it helps).  Newsflash: IRS employees like to have fun on the weekend just like everybody else.

Admittedly, it was a little hard for me to imagine an IRS-type at a Steelers game.  And if that was a surprise to you, then the rest of the details are going to blow your mind:

  1. at Steelers game
  2. drunk
  3. screaming and cursing
  4. throwing steel crowd dividers
  5. knocked a woman unconscious
  6. promptly arrested by authorities

You’re probably thinking, “they got the story wrong; there’s no way this was an IRS employee!”  But wait until you find out what he did after being arrested; it might change your mind.  Sapp told the police officers, “Listen, I know how this works. How much money will it take to make this go away and to let me go home today?”  THERE’S the IRS we all know and love!!  The irony of that statement is just too much!

Modesto Grand Prix not so Grand for Everyone

I was hoping to find something positive to blog about today.  It does get a little old constantly reading about the problems at the IRS, including the issues with Lois Lerner, their ongoing struggles with customer service, lack of sufficient funding, etc., etc.  It’s impossible to avoid stories about tax refund fraud, phishing schemes, and phony IRS calls meant to trick taxpayers into giving up their private information and their money.  So when I saw that Modesto had hosted its first ever “Modesto Grand Prix” over the weekend, I thought I had found the perfect “feel good” story as a topic for today’s blog entry.  What’s not to love about folks gathering for a good old fashioned street race?  Even better: folks pouring in from all over the Central Valley, filling up hotels and ringing up registers at local eating establishments.  If that had happened.

People came to the event, but not in the numbers that the city had expected.  Downtown business owners had spotty success; some recording higher-than-average sales, and others lamenting a big drop in sales.  Mark Smallwood, owner of a downtown restaurant called Harvest Moon, is most likely not going to be supporting a return of the Grand Prix to Modesto next year.  He said that his business suffered this weekend because the sidewalks were blocked to the extent that it prevented some pedestrians from passing by his store front.  He complained about fencing and banners blocking many from even seeing his restaurant.  This resulted in revenues of less than half what he would bring in during a normal weekend.  He even plans to file a lawsuit against the city.

So much for a positive, feel-good story.  In a few weeks we’ll know if the city lost money on the event.  The mayor, Garrand Marsh, is on record saying that he will not consider bringing the Grand Prix back next year if they did.  I do hope that the mayor and city officials give it another chance.  Modesto needs this type of thing to boost its economy a bit.  It really needs events like this throughout the summer to get things moving financially.  It sounds like with some adjustments the Grand Prix could have been a big success for the city and its downtown businesses.

More on the Individual Mandate

With the individual mandate element of ObamaCare going into effect in 2014, some people who are currently without health insurance may be wondering if they should begin looking into joining the ranks of the insured. We now know what the penalty will be for failure to secure insurance, so there will certainly be those who do a little cost/benefit analysis. As the deadline creeps up on us, perhaps some are also wondering why. Why is there a penalty at all?

I found a succinct and informative article on the PBS website that answers many of the common questions that pop up in relation to the individual mandate:

If you aren’t already aware, Americans will be required to obtain health insurance beginning in 2014 or else pay a tax penalty of up to $95 per adult and half that for each child, or 1 percent of the household income, whichever is greater. And if you still don’t have coverage by 2016, you’ll pay as much as $695 per adult and $347 per child pursuant to the individual mandate.

What I really like about the PBS article is the plain-language explanation of the “why.”  For the health care overhaul to work, there has to be a broad base of participants. If everybody participates, including the young and the healthy, then the rates will (ideally) remain low. If coverage were not mandatory, then there would be an inordinate number of sick, high-cost participants which would drive the price of insurance through the roof.

However, opponents of the individual mandate believe that the penalty isn’t severe enough to ensure anything near 100% participation. Some people will certainly weigh their options and risk a penalty that will be lower than a health insurance premium, especially if the IRS is not going to do too much to enforce the individual mandate.

Axl Rose on Punctuality

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Guns N’ Roses was notorious for starting their shows late.  I always believed it was a standard side effect of the rock n’ roll lifestyle; the drugs, the revelry, the general irresponsibility.  But Axl Rose, GNR frontman, recently addressed the issue of punctuality in a rare television interview with Jimmy Kimmel.  Ironically, his explanation came a couple decades too late.

In his first live TV appearance in 20 years, Axl Rose talked about some of his puzzling behavior, such as his ridiculous corn rows, his disappearing back stage in the middle of shows, and his chronic tardiness that had a tendency of alienating fans.  Axl apparently lives by the mantra “punctuality is the thief of time” (a famous Oscar Wilde quote from the book The Picture of Dorian Gray).  In other words, if he showed up on time, then chances are he would just have to wait, thereby wasting his own time.  And why should a rock star have to wait for anybody?!

My sincere hope is you will not follow Axl Rose’s example when it comes to your taxes.  It’s only October, but it’s not too early to start thinking about next filing season.  Get your paperwork in order now so you’re not scrambling in April.  If you’re going to need an accountant or tax attorney, save yourself some trouble and begin making plans now; it could mean the difference between tax relief and tax disaster.

Gibson Case Settled

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Gibson Guitar Corp. settled its criminal case with the Justice Department today, at least that’s when the public announcement was released.  Gibson basically paid to make it all go away.  Federal prosecutors agreed to drop the criminal case on the following conditions:

  1. Gibson pays $300,000 penalty
  2. Gibson donates $50,000 to the National Fish and Wildlife Foundation
  3. Gibson forfeits claim to $262,000 worth of exotic woods seized by the feds

Gibson CEO Henry Juszkiewicz had been publicly denouncing the actions of federal authorities ever since they raided the Tennessee-based facilities last year, reminiscent of taxpayers and taxpayer rights groups who oppose overly-aggressive IRS tax debt collection actions.

Juskiewicz stated that it would have cost the company much more to defend themselves in the litigation than the roughly $600,000 that they paid (and forfeited) in the settlement.

An Academic View of Tax Fraud

A new book by Duke University professor, Dan Ariely, may shed some light on why so many people looking for tax relief tend to cheat on their income taxes.

The book is called The (Honest) Truth About Dishonesty: How We Lie To Everyone — Especially Ourselves. I should point out that, as far as I can tell from the 8 minute NPR piece that I heard yesterday, this book has nothing to do with taxes. But some of the conclusions drawn from one of his cheating experiments really seems applicable to tax cheats (including those looking for a way to overcome their tax debt and those simply looking for a windfall).

The experiment went something like this: people were given a number of simple math problems and were told that they would be awarded a dollar for each correct answer. At the conclusion of the quiz,and after the correct answers were given, the participants were instructed to go to the back of the room and shred their answer sheets. What they didn’t know is the shredder was rigged so that it only shredded the sides of the paper (so the experimenters could go back and check their honesty). Ariely found that many people were ok with fudging their scores to earn a couple extra bucks.

Then the experiment was altered slightly and the participants, instead of being paid directly for their correct answers, were given tokens which they cashed in for money nearby (1 token = $1). Ariely found that adding this extra step of separation increased the dishonesty of the participants.

The moment something is one step removed from money … people can cheat more and [still] feel good about themselves. It basically relieves people from the moral shackles.

~ Dan Ariely, Duke University

Then one additional variable was added to the experiment. One of the math quiz administrators was pretending to be distracted by a cell phone call in the middle of his instructions. As you might have guessed, Ariely found that this resulted in even more drastic cheating. Apparently, if people can come up with a good reason for cheating (i.e., like somebody was being rude by talking on their phone at an inappropriate time) then it’s that much easier to cheat.

Too many taxpayers fudge their numbers to get a bigger refund. Maybe people feel ok about doing this because the process seems so far removed from the government’s money. AND maybe they feel it is justified because they have been mistreated by The System at one time or another.

TMZ Founder's Death

I often post stories of celebrity tax failures.  I believe the IRS prosecutes high profile and celebrity tax cases to make them an example to the rest of the world and to deter would-be tax crooks.  And I consider it my little good deed, perhaps my civic duty, to pass the news along to others in the blogosphere.  Plus, who doesn’t love a little dirt?

One thing I’ve noticed as I have sought out celebrity tax debt articles is that 99% of these stories are first told by TMZ.  Its almost as if the TMZ people have some special IRS hotline — some privileged connection — with the nation’s tax collector.  I mention this today because I learned of the untimely death of TMZ’s founder, Jim Paratore.  He died of a heart attack yesterday at age 58.

TMZ celebrity tax debt stories are not a good source for in-depth analysis.  And sometimes they even get the technical details wrong (I have seen them confuse the concept of “lien” vs. “levy”).  But TMZ is fast.  I hope they can continue to be first on the scene of these types of cases, even without the founder around.

Bullet Point Friday

I definitely don’t want to be responsible for pulling anyone away from their taxes this weekend with a riveting and lengthy blog post.  So this one will be short and non-riveting.  The long-winded tax attorney is just gonna use bullet points today:

  • Obama released his 2011 tax return.  He paid $162,074 on income of $789,674 (20.5 percent rate).  When Romney was asked to disclose his return too, he responded by saying he’s filing for an extension.  See full story here.
  • If you’re interested in free Tax Day noshing at Panda Express, Chevy’s, P.F. Chang’s, etc., you may benefit from a perusal of this story.
  • The Giants shut out the Pirates 5-0 today in their first home game of the season.  Matt Cain threw a one-hit complete game.
  • Axl Rose declined Rock and Roll Hall of Fame induction like a little baby.  Part of his letter reads like his lawyer wrote it for him:
I strongly request that I not be inducted in absentia and please know that no one is authorized nor may anyone be permitted to accept any induction for me or speak on my behalf. Neither former members, label representatives nor the Rock And Roll Hall Of Fame should imply whether directly, indirectly or by omission that I am included in any purported induction of “Guns N’ Roses.”

IRS Enforcement of ObamaCare

As you may know, the IRS is supposed to be the agency to oversee enforcement of the new health care law, in the event that it does not get thrown out.  Perhaps the reasoning there was, they’ve been so good at denying tax relief over the years, they’re now ready for more responsibilities.

But the IRS really doesn’t want this additional duty.  They would have to hire 4,000 new employees, and they would have to train them (along with their current personnel) to do something they have never done before.  Furthermore, the IRS definitely doesn’t want to have to deal with all the thorny privacy issues that would crop up.

Apparently the IRS is moving forward with the hiring spree without waiting to see if ObamaCare makes it or not.  As some point out, it’s not only about ObamaCare; they are needed to enforce the current tax laws and collect taxes regardless of what happens.

See the recent Fox News debate.  Steve Forbes expresses probably some of the most bold opinions in this short debate.  He thinks that the numbers used to convince Congress to pour more money into the IRS have been spun — the idea that through IRS enforcement efforts, the government collects $4 in revenue for every $1 spent to collect is bogus.

Forbes and others agree that our focus should be on simplifying the tax code, not spending more on enforcement.

J.K. Rowling Moves Beyond Potter

I have a hard time watching Jim Carrey in a serious role — it just always seems like a subtle joke. Maybe I’ve never been able to see him as anyone other than Ace Ventura.  His mannerisms and acting style are so unique and, for lack of a better word, goofy, that I’m sure it is difficult for him to land roles in serious movies.

But some actors have succeeded in breaking out of their comfort zones.  So why not authors?  J.K. Rowling, author of the earth-shattering Harry Potter series, announced today that she would be breaking on through to the world of adult books via publisher Little Brown.  No, not that kind of book!  Just books that won’t be found in the “youth” section of the bookstore.  Although its hard to believe, her last Potter book was released back in 2007.

Rowling is saying that her new novel will be “very different” from the Harry Potter series.  I’m not sure what an author does to accomplish this transition.  In my non-author-like mind I’m picturing bigger words, more complex sentences, difficult plots and characters, darker themes.  Actually, if it’s going to be very different, maybe she’s writing about puppies and butterflies this time.