An update on Mr. Snipes

Mr. Snipes got very lucky I think - the jury's decision is back and he was found not guilty of fraud, but his two co-defendants face up to 10 years in prison; Blade just owes back taxes.

Here's the newspaper article.

Still, he is going to have to pay quite a bit. If you round up the $58 million to $60 and assume he earned it equally over 2002 to 2004 he would owe $7 million in tax for each year. Throwing in failure to file and failure to pay penalties adds another 100% to each year. Kind of harsh, I know, but the minimum penalty when returns are more than 6 months late is $100 or 100% of the tax due when both of these penalties apply.

There is also a fraud penalty that can be assessed that adds another 75%, but Blade managed to get out of this one.

So, what we have so far is $7 million in tax and $7 million in penalties for each year so far. Now we add in interest - I'm going to make it easy and say that he only owes 5%, simple interest and that it's going to take him until April to pay (I said I was going to make it easy, didn't I?). At 5% per year that adds $350,000 in interest for each year the tax hasn't been paid.

Blades 2002 return was due in April 2003 which means that he would owe interest for 5 years or $1.8 million. For the 2003 tax return he owes one year less or $1.4 million and for 2004 he only owes $1.1 million in interest.

What all this means is that my estimate of what he will need to pay is:

2002 $15.8
2003 $15.4
2004 $15.1

Total due $46.3 million!

Hmm, better start on Blade IV real quick! And file your tax return this time.

IRS Scams

No, not scams to try to cheat on your taxes, but scams leveraging people's fears of the IRS .

Since my business is taxes I subscribe to a number of news services like I mentioned yesterday. One of those services happens to be from the Internal Revenue Service. In one of the emails I received there was a list of scams that everyone should be aware of; the list is below. The important point is that if you receive a phone call or email from the IRS you need to verify that it is actually the IRS!

What I found really fascinating is that a scam has already cropped up concerning the rebate payments that were included in the economic stimulus package that hasn't even passed yet! Only a couple weeks have passed since it was announced and already some enterprising souls are out there trying to use it to take advantage of people. Makes me sick!

Well, here's the list in the email:

• Rebate phone call - someone calls and tells the person that they can receive a sizable rebate for filing their taxes early.
  
• Refund email - the email states that the person is eligible for a tax refund. All they need to do is click on the enclosed link and enter their personal informaion.
  
• Audit email - the email notifies the person that their tax return is being audited, but what's different about this one is that the name of the person the email is sent to is in the saluation at the beginning of the email.
  
• Changes to tax law email - this one is sent to businesses, accountants and other financial types. Clicking on the link in the email probably downloads some type of spyware, malware, etc. to the persons computer.
  
• Paper check call - the caller claims to be from the IRS and is calling to verify the persons bank account information because the check that was sent hasn't been cashed yet.
  
  

If you want to read all the details the report is IR-2008-011. And if you happen to receive one of these calls or emails or a different scam you can forward or report it to the IRS here: phishing@irs.gov. Given how quickly new scams come out this list might already be out of date!