Taxable Talk

Two reports this weekend about athletes having tax troubles. First, former baseball player Lenny Dykstra refused to pay his accountant's bill. Well, he was billed $111,097. I guess I don't charge enough. Anyway, Dykstra told the New York Daily News, "Did they actually think I would pay that much for a tax return? That's insane." The accounting firm claims that such charges are "fair and reasonable" given their retainer agreement and that the charges have now grown to nearly $140,000 (including interest). (Hat tip: TaxProf Blog)

Meanwhile, seven current or former NFL players have been ensnared in a phony gold mining scheme sold as a tax shelter. Joe Kristan reported on this and a phony chicken farm scandal. I think it's easy to see how a phony mining scheme can be done. But how do you invent a phony farm? Even better, the chickens on this farm laid liquid eggs. Sounds like a book about cows that give chocolate milk.

We the People, the tax protester organization headed by Robert Schulz, has been on the wrong ends of various court rulings. We the People believed that you could voluntarily stop withholding. The IRS and the Department of Justice didn't like the idea of a $39.95 kit that allowed one to not pay taxes. So last year the IRS got a permanent injunction to stop the distribution of the packets. The IRS also asked PayPal for a list of who bought the packets (We the People accepted PayPal for payments) and last year won an appeal in the 8th Circuit: "[W]e conclude that Schulz’s constitutional arguments challenging the IRS’s authority to enforce the tax laws are without merit."

The IRS also asked We the People for a list of who bought their packets. We the People refused, an the injunction was stayed pending an appeal to the 2nd Circuit. Today that Court said basically the same thing as the 8th Circuit: "We have considered all of defendants’ arguments and find them to be without merit. We affirm the judgment for substantially the reasons set forth in the district court’s decision. See United States v. Schulz, __ F. Supp. 2d __, 2007 U.S. Dist. LEXIS 58271 (N.D.N.Y. Aug. 9, 2007)."

As for the stay, that's gone.

"The district court found that defendants’ illegal activities were harming individuals, who were exposing themselves to criminal liability by following the defendants’ ill-conceived instructions. Requiring defendants to provide the identity and contact information of the recipients of the tax materials enables the government to monitor the defendants’ obligation under the injunction to provide a copy of the district court’s order to recipients of the tax materials. Moreover, the district court found that the defendants’ illegal actions were harming the government, which was not receiving required tax payments and was forced to expend resources to collect the unpaid taxes. Requiring defendants to provide the identity and contact information of the recipients of the tax materials enables the government to monitor whether the recipients of defendants’ materials are violating the tax laws. Thus, we find no abuse of discretion with respect to the district court’s imposition of the reporting requirements in Paragraph C of the injunction." [citations omitted]

So if you were one of those gullible enough to purchase a $39.95 package that would terminate your taxes you may soon receive a "Dear Valued Taxpayer" letter. In the end, we all have to pay our taxes.

Hat Tip: How Appealing