Taxable Talk

I promised that I wouldn't write about soccer anymore. Well, I'm going to try not to, but I can't help myself. Dutch soccer coach Guus Hiddink will be prosecuted for tax fraud according to this story. And many Americans will sympathize with his problem: residency.

According to the newspaper Het Financieele Dagblad the dispute centers on whether Hiddink lived in Belgium when he claimed residency there, or whether he was still in the Netherlands. The prosecutor, Valentine Hoen, said that Hiddink's accountant also faces charges. For the record, the Dutch team made the round of 16 in the World Cup.

Meanwhile, actor Crocodile Dundee is also looking at tax evasion charges in Australia. The Sydney Morning Herald reported that Dundee and his business partner have been accused of hiding millions in offshore trusts. Both Dundee and his partner are accused of participating in shelters run by Swiss accountant Philip Egglishaw according to this story.

Tax fraud isn't just an American crime, after all.

George "Nick" Jesson was sentenced to three years in prison yesterday for filing false state tax returns between 1997 and 1999. The former tax protester and gubernatorial candidate had earlier pleaded guilty.

Prosecutor Bill Overtoom, quoted in the Orange County Register, said, "He just put plain zeros everywhere [on his returns]." Jesson evaded about $238,000 in taxes.

Jesson is no stranger to prison; he's currently serving a 27-month sentence for not paying federal taxes of $215,000. The new sentence will be served concurrently with the federal sentence.

Jesson's wife Trina has also been charged with tax evasion. Her next court date is August 11.

As we've said before, putting all zeros on your return has zero chance of success (when you really owe tax).

News Story: Orange County Register

Earlier this year I speculated that Richard Hatch, Survivor winner and now convicted tax cheat, might spend some of his 51 months in prison in beautiful Victorville (where it was 115 F yesterday). Well, Hatch has just been moved from Plymouth, MA to Oklahoma City's Federal Transfer Facility. Inmates rarely remain there, so perhaps Mr. Hatch will get to visit the wonderful California high desert after all.

Hat Tip: TaxGuru & Roth Tax Updates

Sometimes you just can't make this stuff up. If you're a proprietor in New York state of "Gentleman's Clubs," make sure you add sales tax on those lap dances, if they're in a private room at your establishment. That's definitely taxable because "...it's an admission fee to that particular room," according to Michael Bucci, a spokesman for the New York State Department of Taxation and Finance. And, as this news story notes, Bucci noted that lap dance in the public part of the club are not taxable.

Still, Richard Snowden and his "Tally-Ho Club" of Cheektowaga, NY (suburban Buffalo) are in trouble with the Department of Taxation. New York alleges that he owes $216,000 in sales taxes on private lap dances. Additionally, he has a residency dispute with New York. Snowden believes his primary residence was in Nevada in 2002 and 2003 (he owns a Las Vegas strip club, too); however, New York tax authorities disagree and want another $250,000 in income tax.

Still, the idea of a tax on lap dances is certainly intriguing...and different. Which is one reason I believe that the chances for uniform sales tax rules and regulations throughout the United States is essentially zero.

It appears that owning a strip club is an occupation more likely to lead to tax evasion; today's story is definitely not the first time we've seen this charge. In any case, Timothy Ray Cline of Justice, WV (the name of the town is somehow fitting) is charged with failing to pay $84,000 in taxes from his "Adult Entertainment Clubs" in West Virginia. Cline is also alleged to have inappropriately gotten $35,000 in disability benefits.

News Story Here

Almost everyone prefers to fly nonstop rather than changing planes. However, sometimes we just can't avoid it. Seasoned travelers have learned to avoid certain airports when changing planes because of delays. For one traveler, that delay may end up as 20 years.

David Carruthers, a UK citizen, needed to travel from London to San Jose, Costa Rica. You can't fly nonstop, so he ended up changing planes at DFW. That was a mistake. Unknown to Mr. Carruthers, a federal grand jury had handed down an indictment against him on June 1st. When the US government learned he was heading to DFW, the Marshals were waiting. (Lists of all travelers from overseas heading to the US are sent to the US government just after the plane departs.)

Carruthers is an executive at Betonsports.com, an Internet sportsbook. While Betonsports may be legal under UK and Costa Rican law, it's decidedly illegal under a wealth of US statutes, including the Wire Act. Carruthers is accused of being part of an alleged conspiracy in violation of the Wire Act, the Travailing Act, Mail Fraud, Wire Fraud, and RICO. And tax evasion, of course.

Tax evasion, you ask? If the enterprise is overseas (and there's no dispute about that), how can it owe US taxes? Well, when the government first went after bookmakers a new tax was passed—a federal excise tax on wagering. The tax is based on wagers accepted fromUS citizens. The tax is 2% of each illegal wager. The indictment alleges around $4 billion of wagering; the tax on that is $80,000,000.

Given that this case involves a foreign national, RICO allegations, and comes just after the House passed anti-online gambling legislation, you can expect to hear a lot more about it in the coming weeks. Meanwhile, the founder of bodog.com (another online sports wagering site), Calivn Ayre, is supposed to be headed to Las Vegas for a marketing conference next week. Any bets on that?

News Story Here

Italy may have won the World Cup, but it's soccer scandal continues. Three teams have been demoted from Italy's top league, Serie A, to Serie B. Juventus, of Turin, Fiorentina, and Lazio, of Rome, were all thrown into Italy's "Junior League." This is especially galling for Juventus, who won the last two Serie A titles. And those titles were also by the Italian sports tribunal that decided the case. AC Milan, another first division powerhouse, was penalized fifteen points and cannot compete in European matches during the next season.

Juventus was also penalized 30 points in the scandal. Points apparently have something to do with the rankings in soccer; if you get a lot of points you get promoted to a higher division and can earn more money.

I will be honest: I really don't care much for soccer. But I do find the idea of sports courts quite intriguing. The verdicts, by the way, can be appealed to a "higher" sports tribunal. Can you imagine the US Supreme Court for Sports?

News Story here

It's rare when we get to talk about the sports world on this blog. However, there are a couple of stories that are worth some discussion.

Barry Bonds, home run hitter extraordinaire, and alleged steroid/performance enhancing drug user, appears to be facing an imminent indictment on tax evasion and perjury according to his attorney. Laura Enos told this to the Associated Press, in a story appearing on Sports Illustrated's website. Apparently the term of the grand jury investigating Bonds expires on July 20th. The story does not detail how or why Bonds will be indicted for tax evasion (the alleged perjury charges appear to stem from Bonds' testimony to a different grand jury). The story also notes that money laundering charges could also be involved.

Luckily, I'm a Cubs fun and don't have to deal with such allegations. Or wins for that matter.

While I scampered about on my recent trip, plenty of tax crooks were being led away. Here's the weekly update:

As reported last week, bad news is piling up for Kent Hovind. After his defeat in Tax Court, he found himself behind bars—he was arrested and charged with 58 charges, including tax evasion. His wife was indicted on 44 charges. Their indictment is set for Monday. (News story here.)

A Memphis man has been convicted of failing to file tax returns and tax evasion charges. Billy Severence didn't file his 1990 - 1993 taxes. For 1991 through 1993, he was convicted on felony tax evasion charges. Severence could face 19 years in prison, though a sentence of 3 to 5 years is more likely. (News Story here.)

James Hubb, who faced eight years in prison for his tax fraud conviction, was sentenced to 18 months and fined $10,000. He must also make restitution and pay back taxes. Hubb paid personal expenses from his business, and did not accurately report the transactions on his tax returns. We reported on Hubb's conviction here. You can read about Hubb's sentencing here.

Thankfully, the tax crime blog was fairly light this week. And that's a good thing.