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Thread: Taxes

  1. #1
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    Default Taxes

    I had a friend who never paid taxes and she told me that the IRS only keeps it on record for 7 or 10 years. Is this for real?

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    Member lexus_82414's Avatar
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    Default Re: Taxes

    actually irs says keep your records for approx 7 yr but you have 3 years to file back taxes for instances tax years 2000 2001 2002 however 2000 closes april 15 2004. If they were to audit you they can go back 7years.
    why hasnt your friend filed? I have helped dancers file who have never filed and as long as they never got a letter from irs stating that they have reported income from an employer (w2, 1099 ect) or they have never worked at a place to recieve one (considered selfemployed as most dancers) I hope that helps......

    lexus

  3. #3
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    Default Re: Taxes

    I don't know why, we just got talking about it when I told her how much I had to pay. But how is it possible that you can have 3 years to file old taxes with no penalties and the IRS only keeps those records for 7 years and then you're sort of free? That's unfare for people who pay their taxes religiously.

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    God/dess Emily's Avatar
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    Default Re: Taxes

    It's not really unfair since they charge you interest on it...so there is a penalty.

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    Default Re: Taxes

    Think of it as the same statute of limitations which applies to some criminal charges. Basically you can rob someone and if you are not charged with the crime within 7 years you can't be charged at all. Same is true of these priests who molested altar boys 20 years ago, they can't be charged today because the statute of limitations has expired.

    However, where your non-filing friend is concerned, consider the possible case if for example the club she works at decides to turn in a 1099 in her name next January and she still chooses not to file a tax return by next April 15th. The IRS computers kick into gear and find no return for this year. They shift into high gear and find no returns for previous years either. An agent checks with the club accountant, and is told "yeah, she's worked for us for quite some time". The agent then requests a full audit be performed. With no definitive basis for judging past years incomes, the IRS uses some standardized figure based on the average reported income of all dancers who do file tax returns. They then factor this backwards for a few years (based on input from the club's accountant, or other sources), adds on penalties for failure to pay estimated taxes, and interest. Your friend potentially gets a tax bill for $150,000. The burden of proof is then on your friend to prove that she actually earned less than the amount the IRS estimated, to prove that she was actually unemployed, attending college etc. such that the amount of back taxes she actually owes is less than the $150,000 the IRS estimated.

    In the meantime, the IRS can seize your friend's assets like her house, any bank account balances, in some states even her car, plus garnishee future earnings, until the matter is resolved. If the IRS wants to play hardball, they can also potentially charge your friend with the crime of tax evasion/tax fraud, which involves an entirely different set of penalties besides repaying taxes on non-reported income.

    If your friend for some reason chose to file/amend tax returns for the past three years, as already posted, there is no way that the IRS can seek tax evasion/tax fraud charges for these years (the way the IRS could if your friend did not file and the IRS "caught" her redhanded not reporting her income). However the IRS will expect payment of back taxes on the belatedly reported income, plus interest, plus penalties for non-payment of estimated taxes.

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    Default Re: Taxes

    Keep in mind that willful non-filing is a crime. Should the IRS decide to make an example of your friend, there could be jail involved as well.

    Z

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    Banned Melonie's Avatar
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    Default Re: Taxes

    Here's a news story about a pilot who has won a "temporary victory" after being charged with non-filing. Check out the amount of the fine and jail term the IRS was seeking !

    Additionally, everyone is in agreement that the IRS will now go after a civil judgement for back taxes, penalties and interest they claim the pilot owes on her $920,000 in unreported income over the last 7 years ! Also, their is no guarantee that the IRS won't bring new/different criminal charges against this person, because this jury verdict really upsets the IRS. Unfortunately for the rest of us, this district court case does not set a precedent which is immediately useful by anyone else.

    And this successful high profile defense would not have been possible, of course, if the pilot hadn't been able to cough up $100,000 or so in legal fees, and if this person had not also written those letters to the IRS in 1995 requesting them to "show me the law which says I'm liable for paying taxes".


    Jury acquits pilot, who questioned IRS, of tax-evasion counts

    By Shirley Downing
    [email protected]
    August 9, 2003

    A federal jury Friday found FedEx pilot Vernice Kuglin not guilty of evading income taxes on $920,000.

    The question of tax payment was unresolved at the end of the five-day trial.

    "I think it is safe to assume the IRS will attempt civil collection, but she is not guilty of tax evasion," said defense attorney Robert Bernhoft of Milwaukee.

    "I feel justified," a grinning Kuglin said after the verdict was returned at mid--afternoon. She stood outside the federal building, chatting with supporters and jurors.

    Federal prosecutor Joe Murphy was not available for comment.

    Kuglin, 58, was charged with six counts of tax evasion that could have meant up to 30 years in prison and $1.5 million in fines.

    The government accused Kuglin of filing false W4 forms for the period from 1996 to 2001.

    Kuglin, a pilot for FedEx since 1985, said she had paid taxes like anyone else for most of her life. But about 10 or 11 years ago, she began to question the federal tax system. She began to read court documents, legal opinions and the federal tax code.

    She said she found what she felt were contradictions. She wanted to know where in the federal tax code it said she was liable for taxes.

    Kuglin wrote the Internal Revenue Service twice in 1995 with questions but said she didn't get a response.

    Murphy, in closing arguments on Thursday, said Kuglin did have an opportunity to discuss her situation with the IRS, to learn what she owed and what documents she was required to file "and she didn't."

    Defense attorney Larry Becraft of Huntsville, Ala., said Kuglin decided mandatory payment of income taxes "did not apply to her."

    After the verdict Friday, Becraft said the federal tax code is a confusing conglomeration that "at best is a walking due process violation."

    He said the average American simply doesn't understand the tax code.

    Juror Barbara Snodgras of Memphis said the jury did not convict because "we all felt that the prosecution didn't prove its case."

    When asked if she planned to start paying federal income taxes again, Kuglin replied: "I will pay all the taxes for which I am liable."



    Also, I don't think that I'd want to be in this federal judge's shoes either ...

    ... after the jury had been excused the U.S. Attorney reportedly demanded that the Judge order the defendant to file her forms, pay her taxes and obey the law. The Judge reportedly replied "Sir, I don't work for the IRS."

    The case is: U.S. District Court, Western District of Tennessee (Memphis) # 03-CR-20111, USA v. Kuglin.

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    Featured Member Devastating Divyne's Avatar
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    Default Re: Taxes

    Don't you just love my hometown!!!!A bunch of wackjob weirdos also commonly referred to as the prosecutor's office running around downtown doing a whole lot of nothing, but at least they are amusing sometimes.
    "Come what may although I often say realities come from dreams, but approach all lies with open eyes because NOthing in this world is EVER ALL it seems."

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    Default Re: Taxes

    I have no record of who dance's on my stage, I only check when they come to work for me that they have valid ID and are of age to perform and that is it. My record's will show that I had say 8 dancer's and collectively they tipped the house $64 and did say 65 lapdance's. I don't know or care which one did how many or who made what. I report everything I take in but not who it came from. If I had to do that then I would have to do it for every customer that came in my door. I will add that most of my girl's do pay taxes so that still look's good for me and the club. Until my attorney's or CPA tell me different, I will continue to do business in this fashion.

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    Default Re: Taxes

    Bob, fortunately your club is located in a state where more specific laws regarding dance clubs are not in force - yet. In California for example, you would be required to sell each customer his private dance ticket through the club's cash register. You would then be required to record which dancer provided each private dance, and pay them accordingly at the end of the night/week. Eventually (after the total amount exceeded $600) you would be required to report the amount of these club payouts to each dancer to the IRS and state tax dep't as 1099 misc income, or be forced to pay taxes on 100% of the private dance money you collected through the club's cash register yourself (even though you turned right around and paid it out to the dancers) !

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    Default Re: Taxes

    You have 3 years to file back taxes,not true if you are self employed and owe money, you must file, but you can get an extension,but you must pay the money you owe,you dont have three years to pay.

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    Default Re: Taxes

    Michelle, ain't that the truth! Every quarterly estimated tax payment you don't make just tacks on extra penalties and interest to the income taxes you continue to owe !

    Actually, I think the legal point about 3 years worth of tax returns is that everyone has 3 years opportunity to file amended returns (like deciding to voluntarily report some extra income you "forgot about" in 2000). Once the three year deadline has passed, anything that the IRS still finds amiss on returns more than 3 years old can be considered a criminal act on the part of the filer.

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