Don’t forget everyones friend…Dennis Kozlowski

“Tax Evasion Found at All Income Levels
By KATHY M. KRISTOF, TIMES STAFF WRITER|June 16, 2002
The recent arrest of former Tyco International Ltd. chairman L. Dennis Kozlowski on charges of evading $1 million in sales taxes is throwing light on a shadowy subject: Americans who try to gain an edge–legally or illegally–on the tax collector.

Some wealthy Californians sail to international waters to buy yachts tax-free. Many waiters, waitresses, beauticians and parking valets don’t report all their tip income, accountants say. Some small-business owners fail to ring up cash sales, playing poor for tax purposes, while some philanthropists overstate the value of charitable contributions to pad itemized deductions.”

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“Many people cheat on their taxes all the time,” said Steve Toscher, a partner at Beverly Hills law firm Hochman Salkin Rettig Toscher & Perez. “I don’t know that you can say that rich people cheat more than poor people, but there’s certainly more inducement and opportunity to cheat.”

Almost anyone can find a way to chisel if they want to, tax accountants say.

The tax-avoidance strategy Kozlowski is charged with using is among the most common–on a much smaller scale–because of the big differences in state tax rates.

Kozlowski is charged with evading $1 million in New York state and city sales taxes on artwork by having dealers ship empty boxes to his offices in New Hampshire, where there is no state sales tax.

But when it comes to sales tax avoidance, almost any consumer can participate. Many shop in no-tax and low-tax states and never think about filing a so-called use tax form, which is required for those who buy something in a lower-tax state–or by catalog or over the Web–and take it back home.

And sometimes business owners offer to forgo sales tax when the consumer pays in cash–a conspiratorial fraud that probably saves the merchant from reporting–and paying income tax on–the sale.

“New Yorkers go to New Jersey; Northern Californians go to Oregon,” said Clint Stretch, director of tax policy at accounting firm Deloitte & Touche. “Avoiding the payment of sales and use taxes borders on being a national sport.”

Towns along borders between low- or no-tax states and high-tax states often become busy retail centers, said Bill Ahern, spokesman for the Tax Foundation in Washington.

“On the Maryland-Delaware border, there are roughly 125 stores,” Ahern said. Delaware has no sales tax, while Maryland’s rate is 5%. “Delaware is simply filled with retail outlets catering to out-of-state buyers.”

http://en.wikipedia.org/wiki/Tax_fraud

http://biz.thestar.com.my/news/story.asp?file=/2007/4/22/business/20070422075753&sec=business#

“Underground economy -

Opponents of FairTax argue that imposing a national retail sales tax would drive transactions underground and create a vast underground economy. Under a retail sales tax system, the purchase of intermediate goods would not always be taxed, since those goods would produce a retail good that will be taxed. Individuals and businesses may be able to manipulate the tax system by claiming that purchases are for intermediate goods, when in fact they are final purchases that should be taxed. Proponents point out that a business is required to have a registered seller’s certificate on file, and must keep complete records of all transactions for 6 years. Businesses must also record all taxable goods bought for 7 years. They are required to report these sales every month (see Personal vs. business purchases).

While the superiority of consumption taxes is evident to many economists and tax experts, problems could arise with using a retail sales tax rather than a value added tax (VAT). A VAT imposes a tax at every intermediate step of production, so the goods reach the final consumer with much of the tax already in the price, along with some extra overhead. The retail seller has little incentive to conceal retail sales, since he has already paid much of the good’s tax. Retailers are unlikely to subsidize the consumer’s tax evasion by concealing sales. In contrast, a retailer has paid no tax on goods under a sales tax system. This provides an incentive for retailers to conceal sales and engage in “tax arbitrage” by sharing some of the illicit tax savings with the final consumer.

In the United States, a general sales tax is imposed in 45 states plus the District of Columbia (accounting for over 97 percent of both population and economic output). Most states also collect a variety of local sales taxes including county, city, and transit taxes. The United States has a large infrastructure for taxing sales that many countries do not have. Proponents respond to the underground economy argument by pointing out that, whereas tax evasion under the current income tax system requires only one person (the payer) to lie on their tax forms, tax evasion under the FairTax requires collusion of both the payer (the retail purchaser) and the payee (the retail seller). Furthermore, the number of individuals required to file taxes drops from approximately 135 million to 25 million. This 84% drop in the number of collection points will allow the tax administration to view tax fraud with greater scrutiny. Proponents of the FairTax see a substantial amount of additional tax revenue from those engaging in the black market, as a sales tax would require all who consume to be taxed (see Effects on tax code compliance).”Extracted from: http://schools-wikipedia.org/wp/f/FairTax.htm

http://articles.latimes.com/2002/jun/16/business/fi-taxes16
“Tax Evasion Found at All Income Levels
By KATHY M. KRISTOF, TIMES STAFF WRITER|June 16, 2002
The recent arrest of former Tyco International Ltd. chairman L. Dennis Kozlowski on charges of evading $1 million in sales taxes is throwing light on a shadowy subject: Americans who try to gain an edge–legally or illegally–on the tax collector.”

http://www.ador.STATE OF ALABAMA, ’ STATE OF ALABAMA
DEPARTMENT OF REVENUE, DEPARTMENT OF REVENUE
’ ADMINISTRATIVE LAW DIVISION
vs.
CAPITOL PAWN SHOP, et al. ’ DOCKET NO. S. 92-187
1120 Adams Avenue
Montgomery, AL 36104,state.al.us/aljrules/92-187.pdf

http://www.centralillinoisbusiness.com/index_test.cfm?colid=126
State sales and use tax evasion carry a heavy price

http://www.journalstar.com/news/local/article_d1f6929e-8cee-11de-b139-001cc4c002e0.html
Nebraska Diamond stands mute in sales tax evasion case

http://goliath.ecnext.com/coms2/gi_0199-1814404/Court-won-t-review-tax.html
Court won’t review tax fraud conviction.

http://caselaw.lp.findlaw.com/data2/circs/9th/9915827p.pdf
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: RENOVIZOR’S, Inc.,
Debtor.
No. 99-15827
CALIFORNIA STATE BOARD OF
EQUALIZATION, D.C. No.
Appellee, CV-98-20469-JF
v. OPINION
RENOVIZOR’S INC., aka The Hang-
Ups aka The Rose Collection,
Debtor-Appellant.
Appeal from the United

http://www.ftb.ca.gov/aboutFTB/press/archive/2006/06_11.shtml
Former Fugitive Pleads Guilty in State Tax Fraud Case

The “fundraiser” is too much!