He lost a lot of money on a 5000+ foot McMansion
He lost $30,000 out of $1.895 million. $30,000 is a lot to the little people but not to this guy. IANAL and I've only read the LGM post so far, but I'd guess there's some kind of fraud here, not just failing to do the tax paperwork over and over again. Money laundering? Payment for something Weinstein-related he'd rather not discuss publicly?
it's not quite clear how he owes so much.
Compound interest plus penalties?
1: It still doesn't make any sense, does it? If you're committing tax fraud, isn't not filing your taxes at all one of the best ways to draw the attention of the IRS? And the guy is a law professor!
How do you not file for eight years before the IRS takes strong action?
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I'm on the search committee for an upper-echelons admin at this school, and reading all the buzzwords in the applications is just dizzying. How can I possibly evaluate whether this person is more able to deliver measurables and strategize by ensuring alignment with an eye to the future and enhance quality while maximizing integrity than the next person?
We read two applications as a whole search committee, and other members were more able to comprehend differences between applicants than I seem to be.
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The other members are pulling shit out of their asses. "Measurables" isn't even a word.
4: Well, as a garden variety w-2 employee with no other income to speak of, if I didn't file my income taxes, I would be making a donation to the federal government. I'm not sure how much trouble I could get in for that.
If anyone says "I've got your measurable right here," you're being sexually harassed.
6: What is it that you delivered that can be measured? And do I need a ruler or a scale to measure it?
"Will you risk prison and future, public shame to protect a winning football team?"
I didn't pay taxes for a year or two. They were particularly confusing due to things like a recent move but also particularly low-stakes at that time. I just put it off so long that I was putting it off the following year as well. I think it was probably effectively a donation like in 8, or if not, very close to it. Now that I think of it, that was about nine years ago, just like this Harvard guy, so maybe I'll get a 7-digit bill in the mail soon too! But that was only one or two years, I've been paying my taxes since then, not for nine years in a row.
How do you not file for eight years before the IRS takes strong action?
My father failed to file in the 12 years preceding his death. The IRS was very patient, and eventually (as his executor) I got it all cleared up. I'm a little mystified that they never came after him, but apparently they did confiscate a bank account while he was alive.
Interestingly, he was able to move his money to a brokerage account -- with a checking account attached -- and the government couldn't find his money there.
One thing that probably worked in his favor is that he didn't owe money every year. Possibly his age factored in -- the IRS is probably accustomed to having old folks fall off the grid, with the executor ultimately figuring it all out.
With this background, I think I can shed some light on the Harvard professor's experience. My father was an active stock trader, and the IRS apparently had access to his his stock sales, but didn't have access to the cost basis for the stocks. So from the IRS point of view, if he bought a stock for $11 a share and sold it for $10, he had a capital gain of $10. Betcha the prof's house worked that way, and he may have had other transactions like this.
The LGM piece links to a document from the tax proceeding brought by the IRS, and the Harvard prof apparently just relentlessly fucked with the agency and refused to provide it with information. If you won't do your tax returns, the IRS in the end will do them for you with the information that they have.
So, the best plan is to stop paying taxes when you are old and spend everything just before you die. You don't even need to destroy the social fabric to do that, so I guess the wealthy elderly of today just enjoy it.
I may or may not have procrastinated and not filed for several years and actually have no idea what the state of my taxes are at this point. I have a bit of pathological anxiety around any and all financial paperwork; one reason I increasingly try to stay out of the public eye and will never run for office is specifically b/c I am incredibly incompetent when it comes to my own finances and many paperwork type things.
I'm guessing you don't become a Harvard professor having this sort of problem but it is a thing.
16.2: I don't see any other explanation for this.
16: If I remember correctly, I did my own with TurboTax or something similar for a couple years after the nonpayment, and then started filing jointly with my partner. Sometimes I'd like to go back to TurboTax or even the 1040, but (a) my partner keeps meticulous track of deductibles and it would be a pain, and (b) we really needed a professional for like four years in a row for one reason or another and now it's a habit.
I'm not a tax lawyer either, but am helping a friend with a failure to file state tax issue -- we're arguing that he didn't have to file and doesn't owe anything to that state -- and I am certain that this is way simpler than Campos is making it. Your basis in your house, like the expenses you incurred earning some professional income, are for you to prove up. If you don't want to do that, and just want to let the government tell you what you owe, they're going to use gross receipts. And they're not going to spend even a minute trying to figure out your expenses/basis.
I handled my mom's Canadian capital gains taxes on the vacation house in BC she sold right after my dad died. It was totally up to me to support every nickel of basis, and while the Canadians insist on a higher standard of proof, the principle is the same.
I'd think there must be a mental health issue where the guy is taking a judgment for that kind of money rather than filing a late return showing that he didn't have that much in taxable income.
I've seen decisions where lawyers get disbarred for failure to file. I'm always late with the estimated payments, and pay penalties for that, but not filing at all is way too scary.
Yes, I've never paid the estimated payments except one year. And that year was, fortunately, the year I got identity thefted. The IRS notices really easily if you've paid estimated payments but don't mention them on a return.
This sounds so insanely complicated I don't know if I'm oblivious to my own luck or if America is oblivious to its own fuckedupedness.
Not oblivious. Taxes are kept fucked-up so that corporations can make money from filing them and middle class people will resent them more.
Luckily, you live in a representative democracy.
Isn't demonstrating the basis just saying what it is on a form? You don't get a tax form when you buy to keep for x years until you sell. If they don't believe you and you're audited you'll have to go to the country registrar for docs to prove it but isn't the initial proof just your statement? I suppose capital improvements could require receipts if you add them to the claimed basis but again only if you're audited.
Even in countries that mail people their completed tax returns, it's bound to be more complicated for anyone owning significant amounts of property, no? And likely needs to be, given all the evasion that happens. As least until we get a Piketty global tax treaty.
Related: Lucky Ducky.
Actually, the duck isn't very lucky at all because the 8% sales tax is after he pays income tax and social security/medicare tax.
I'm always late with the estimated payments, and pay penalties for that,
Oh, shit, I'm late on estimated payments again!
I guess it will just have to wait until I get paid.
29: Did you forget about Standpipe's blog?