Spidell's Tax Season Tribune: Farewell until 2017!
Well, this is it: the final issue of Spidell's 2016 Tax Season Tribune. Hopefully, we have provided you with some levity over the last few months. As one subscriber put it: "I love Tax Season Tribune. It's up with TMZ as my favorite tax season diversions."
As a special thank you to loyal readers of the Tribune, we would like to offer you a coupon for $10 off your next Spidell purchase! Choose from seminars, self-studies, publications, or research tools ... it can be yours at a $10 savings! Visit www.caltax.com and use coupon code TRIBUNE16.
You're in the home stretch. We'll see you on the other side with more analysis, seminars, and breaking tax news.
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Offer valid on your next order placed now through April 29, 2016. Visit www.caltax.com today!
Adult entertainer dances her way to jail
During a failure-to-file investigation, an IRS agent determined there were more than $1 million in bank deposits that were not reported on a South Dakota exotic dancer's tax return. The agent found evidence of more than $1.1 million in checks from one gentleman, and $50,000 from another, plus over $210,000 in cash deposits. When the taxpayer and her husband filed their returns, none of those deposits were reported.
Exotic dancer Veronica Fairchild and her husband Tim (who passed away in 2013) filed 2005-2008 tax returns in July 2010, reporting only the wages and tips from the exotic dance clubs where she worked but none of the other income she received for private lap dances at the clubs or elsewhere.
Their CPA originally prepared the 2005 return using the income from the taxpayers' bank statements, and the balance due was $56,217. When the Fairchilds saw the $56,217 tax liability, they immediately used the tax return to borrow money from the credit union — but not to pay their taxes; they purchased two Cadillacs and a boat.
Oops — it's a gift
Subsequently, Veronica Fairchild advised the CPA that the other income was a gift. She had him redo the 2005 return and prepare the 2006-2008 returns omitting the "gift" income. However, Fairchild continued to use the original, unfiled 2005 return and a working draft 2006 return to obtain loans for real estate and a Corvette.
Later, at trial, she stated that she was going to report some of the income so that the tax burden for the man who paid her $1.1 million would not be so great. She also stated that the lap dances never included sex. Unfortunately, the two previously mentioned men testified that the payments were not gifts but in return for services.
The jury found that she was liable for $239,118.94 in tax, based on unreported income of $853,996 and sentenced her to 33 months in jail.1
1 U.S. v. Fairchild (March 17, 2016) U.S. Court of Appeals, Eighth Circuit, Case No. 14-3517
Pay your tax and grab a Slurpee
Taxpayers who need to pay their tax in cash may now do so at over 7,000 participating 7-Eleven stores around the U.S.1 Is the IRS acknowledging the need for cash payments by certain businesses that can't have bank accounts? (Puff, puff, pay?)
The IRS hasn't explicitly stated so, and the cash payment option was spun as just a friendly way to help taxpayers; Koskinen stated, "…this provides a new way for people who can only pay their taxes in cash without having to travel to an IRS Taxpayer Assistance Center."
Anyone who wants to take advantage of this payment option should visit www.irs.gov/Payments, select the cash option in the "Other Ways You Can Pay" section and follow the instructions. There is a $1,000 payment limit per day and a $3.99 fee per payment.
"America's Funniest Taxpayer Excuses" — extension edition
In response to an item in last week's Tribune, a tax professional from Redwood City shared a story with us from this tax season:
We're filing an extension for a client because his papers blew away. Literally.
I have a client who lives in Arizona, and it gets hot there. He left his papers in a very nice, neat stack on the dining room table. He went out to have dinner with his wife, and while they were gone the fan turned itself on and blew the papers off the table. The housekeeper showed up that night, and she thought the papers scattered throughout the house were garbage so she threw them away. The client came home from dinner and went to bed. The next morning, he was going to pack up the info to send to me. He can't find it. He checks with the housekeeper, who said she thought the house was a mess and she cleaned it up. And the garbage truck came at 6 a.m.
Keep your ear to the ground!
Starting next week, we'll send you the first episode of our new weekly podcast, "Spidell's California Minute." Spidell's California Minute is a new way for us to deliver compelling Spidell content to your smartphone or computer via short audio clips. Find out ways to save yourself and your clients both time and money. Look for it in your inbox next Sunday morning. Happy listening!
A few fun facts about this week's writers:
Lynn Freer, EA, loves to travel and loves Starbucks. Here she is at Starbucks on the Champs-Élysées.
Renée Rodda, J.D., when not writing, researching, and helping Spidell customers, enjoys riding her horses, Eli and Ava.
Tim Hilger, CPA, is busily preparing taxes today. Tim is a golf nut who has played courses in all 50 states and often reminisces about his younger days shredding on his bass guitar.
Diane Fuller is a gourmet cook with a refined taste in all things sweet. From traditional Japanese desserts to the best bacon donut that's ever appeared in our break room, Diane knows how to satisfy her sweet tooth. She also writes children's poetry!
Kathryn Zdan, EA, is not only director of the editorial department, she also "rocks the house" as a regular in curling bonspiels around the country.
Austin Lewis loves classic rock, despite being born a few decades late, and he goes to more concerts than anyone else in the office. He's also a big baseball fan, and his worlds collided in 2014 when he saw Paul McCartney at Dodger Stadium.
Sandy Weiner, J.D., lives in sunny San Diego and takes full advantage of the perfect weather by pedalling on her bike and paddling on her kayak. Stay out of this iron woman's way!