Taxable Talk

...on the tax front.

Bjorn Ulvaeus, a member of the Swedish pop group ABBA, has been charged with tax evasion. He is accused of not paying 87 million kronor ($11.7 million) in taxes on royalties from ABBA's songs and musicals.

The Swedish government accuse Ulvaeus of setting up offshore entities to avoid paying taxes. Mr. Ulvaeus' attorney denies the charges.

Additionally, The Local reports that a second member of ABBA, Anni-Frid Reuss-Lyngstad, is accused of owing 12 million kronor in unpaid tax, interest, and penalties. She is accused of illegally moving her share of royalty income to a Panama based company.

ABBA's songs are featured in the musical "Mamma Mia," which is currently appearing on Broadway and in Las Vegas. Conveniently, two of ABBA's songs are Money, Money, Money and SOS.

UPI News Story Link

It's Friday, and Tax Day has come and gone. But the memory lingers, so let's look at some scofflaws as the week ends:

Louis Ratfield of Lake Worth, FL has been in trouble with the government before. The IRS secured a restraining order against him for promoting a "constitutional common-law trust" to avoid paying taxes. There is no such trust, of course. He allegedly continued to promote the trust. He was arrested on Tuesday on 56 counts of preparing false income tax returns. Each count could net him three years in prison. Ratfield has also been in trouble with the SEC, apparently absconding with investors' money.

James Hubb of Clayton, MO used $25,000 of his business' money for plumbing at his house (it may have been for a bathtub—some bathtub!). Besides the bathtub, quite a bit more money was taken from his business and used for personal expenses. That's not necessarily illegal, as long as it is disclosed and reported as income. It wasn't, and Hubb has pled guilty. He faces up to eight years in prison and a fine of up to $350,000.

In Massachusetts, Laurence Greenburg and Russell Skidds sold partially defatted beef tissue as partially defatted chop beef. That violated the Federal Meat Inspection Act. Compounding their problems, they didn't report all the income, causing them to file false tax returns. They were convicted on Tuesday.

Finally, H&R Block settled a 1998 RAL (Return Anticipation Loan) lawsuit for $35 million. H&R Block still faces a lawsuit filed by the California Attorney General. Given the nature of class action lawsuits, it's likely that the lawyers will get most of the money from that settlement.

News Stories:
Lake Worth, FL, Clayton, MO, Malden, MA and H&R Block

The IRS puts two liens against you. You fight the case, filing a lawsuit against the Commissioner of the IRS, claiming $4.5 million in damages for slander of title, inconvenience, aggravation, and generally annoying behavior. But you lose in District Court. You file an appeal to the Court of Appeals (here, the 10th Circuit). The IRS asks for the appeal to be summarily rejected, and that you pay a penalty for making a frivolous appeal.

If you're going to file a lawsuit against the IRS, you had better have legal grounds; being annoyed isn't enough according to the District Court that first ruled on this case. When the petitioner, Delbert Kyler, appealed, he told the Court that the IRS, "extorts money and property," "exploits the power of the United States for criminal thuggery," and that the U.S. Attorney was "obviously unschooled in the legal arts ... [and] expects this court to bend over backwards and kiss his ... allegedly royal ass."

You and I may be laughing. Unfortunately for Mr. Kyler, the Court just wasn't in a laughing mood, found his appeal frivolous, and ordered him to pay the "unschooled ... legal arts" practitioners of the United States Attorney's Office their legal fees of $8,000.

Case: Kyler v. Everson, 10th Circuit

Hat Tip: Tax Professor Blog

Many years ago, when I was running west coast operations for a telecommunications company, my office manger approached me with a problem. "There's a gentleman out here who's perfect for the in-house tech job, but he's handed me these sheets for his W-4." I looked at the sheets and realized that they were (what I now know as) typical tax protester stuff, claiming he wasn't a citizen of the United States but a citizen of California, and thus exempt from US taxes. My office manger continued, "He refuses to fill out the W-4."

That company had a policy that until all the employment paperwork had been completed, an employee couldn't start working. I went to the potential new hire and told him, after introducing myself, "You can either fill out a W-4 or we'll find someone else." He protested, and I cut him off, telling him that we were a business and didn't have time for tax shenanigans. He left and we found someone else.

Today the Tax Court looked at the case of a tax protestor. He submitted similar documentation in his job as a car salesman. He filled in his tax return for two years with all zeroes. The IRS didn't find this as humorous as you and I would. Neither did the Tax Court. After admonishing the protestor for the error of his ways (and warning that he faced a penalty if he advanced the same groundless arguments in the future), the Court found for the IRS.

You can find the Tax Protestor FAQ here.

Case: Paikowski v. Commissioner, T.C. Summary 2006-48