Today’s post is a guest article from Matt Robinson. He is a tax accountant who has been helping taxpayers with major IRS tax debt problems for over 11 years now. His firm specializes in tax debt settlement and resolution. Seeing that taxes are generally a boring subject, I asked Matt if he thought he could bring a little smile to my readers this morning. Here’s what he came up with…
Putting A Smile to the Dreaded Tax Season: 10 Humorous Tax Stories
Nobody looks forward to April 15th, other than the majority of tax professionals who earn a living because of complicated tax codes. With that said, there are quite a few funny stories that I have read or encountered that should put a smile on your face.
1. Aaron Zeff
Here is a great recent news story: Aaron Zeff is the owner of Harv’s Metro Car Wash in Sacramento, California. Last month, two IRS agents showed up at his place of business requesting payment for back taxes. Aaron’s onsite manager was surprised. He was surprised not only because two IRS agents showed up at the Car Wash, but because they said the business owed 4 cents from the year 2006. The total tax bill with penalties and interest totaled $202.35. Yes, penalties can destroy your life if you fail to pay your taxes, especially if you do not file. In reality, did the IRS really need to send two IRS agents to collect $202.35?
2. Diana Peffer
Here is another recent news story: Diana Peffer, of Omaha, Nebraska received a letter from the IRS this year. When she went to open the letter, it said she owed a total of 4 cents in back taxes from the year 2007. It probably was an automated letter created by the IRS computer system because no one in their right mind would spend $5 dollars to get three cents back. Do you think she should send the IRS a 4-cent check so that they could send her a 1-cent refund? You make the call.
3. Genevieve Motola
This news story is from this year as well. Genevieve Motola of New York gets a $5,700 tax bill from New York State. She’s 82 years old and it is unclear why she would receive such a large bill. It turns out the bill was from 20 years ago when she closed her store G&P Ceramics, Inc. Wow, hopefully, this is not a sign that New York is about to go bankrupt, is it?
4. Cynthia Hess
Although not as recent, this story needs mentioning. Cynthia Hess, AKA, “Chesty Love” of Indiana, was an exotic dancer who tried to deduct her $2,088 breast implants. The IRS rejected her claim and she sued the IRS in U.S. Tax Court. She won the case actually. She was able to prove, that the breast implants that left her with a size 56FF, allowed her to make more money than she otherwise would have. No comment.
5. My Friend, Tara
One of my friends, who is a CPA, always has a couple good stories for me. Tara, from New York, NY is an exotic dancer. She goes to see my friend to file her 2009 taxes, but could not find her W-2. In this case, you would use Form 4852 to estimate your earnings and withholdings. She says she is not sure what she made but it is “definitely” between $7,000 and $10,000 for all of 2009. Yeah, and I am “definitely” going to be the next billionaire.
6. Sara P
Sara P, of Orlando, FL (a single, recently divorced, mother with two children) attempted to file her taxes for the first time. Her ex-husband had always filed her taxes before so this was something new for her. She went to see my friend for help and as my friend tried to eFile her Federal tax return, he got it kicked back because there was a problem with the birthday for one of her sons. She insists that he does not know what he is doing and the birthday is correct. Anyway, she called my friend back a few days later and tells him she had remembered the wrong birthday for years. Really?
7. William Magdalin
This is one crazy story. In 2008, William Magdalin of New York City, made regular deposits at his local sperm bank. After he made quite a bit of money, he tried to offset his earnings by taking a tax deduction for his “efforts.” He took it all the way to the US First Circuit Court of Appeals. Yes, he lost.
8. Swimming Pool
This is clever. A doctor tells a man with emphysema to exercise more. Therefore, he installs a swimming pool and tries to deduct the cost of the swimming pool. Surprisingly, the IRS agrees to the deduction because it was for medical purposes. The IRS allowed the man to take the deduction (which was really only the difference between his total cost and the value the pool added to the property).
9. Pet Food is Tax Deductible…Sometimes
A couple owned a junkyard and fed a bunch of stray cats. The couple argued that the cats were used to ward off snakes and rats that were living in the junkyard. The couple took the case to court and won! The IRS agreed that the cats kept the property safer for customers. Interesting.
10. William Halby
This is a great story to end with. William Halby, a lawyer from New York, last year lost a tax deduction case in U.S. Tax Court. He tried to deduct $100,000 in expenses for prostitutes and pornography he paid for from 2004 to 2005. He argued his deductions were medical expenses and were justified as part of “sex therapy” because he was depressed and alone. The court ruled in favor of his deduction. No, I am kidding. The U.S. Court denied the deductions because not only is prostitution illegal but because no doctor would recommend such a thing.
– HAHAHA. Gotta love them taxes right? Thanks, Matt for providing some, rather interesting, tax stories! Does anyone out there have any random tax deduction stories they have heard through the grapevine?
Without citing sources, this list is as good as fiction. Still, those are some funny stories, true or not.
If you search some of these names provided you will see they are real stories.
Obviously Ninja has never owed taxes at the end of the year, or they wouldn't be so funny!
Here is my story: One of my current clients, a federal government software contracting company, was targeted for an audit three years ago. The audit focused on two large accounts receiveable items. The IRS questioned the validity of the AR due to the fact it was aged nearly 200 days. They felt my client was recognizing income in a loss year, and intending to write off this balance in a taxable income year. When my client sat down with his accountant, attorney, and the IRS agents, they listened to the IRS's concerns. When it was their turn to speak, the accountant revealed that both AR items were invoiced to the Internal Revenue Service, and they attorney laid out their plan to sue for collection if the account wasn't satisifed in 30 days. As the accountant tells the story, it was the proudest moment of his audit life, and the fastest he has ever seen the IRS drop a case and get out!
Two weeks ago I wrote about how 2009 is the first time I will owe taxes to the IRS instead of get a refund, but you are right, taxes aren't that funny 🙂
Ninja,
Are you referencing having to pay a $60 tax liability? Was that serious? Our liability had three more significant digits and a comma. This year will be far worse since we converted our traditional ira’s to roth ira’s. Unfortunatly none of that money was non deductible because it was a result of 401k rollovers. Add another $20m to the tab for this year! At least income tax will be exhausted from that investment. Let’s talk after you experience the joy’s of the marriage tax penalty…
Get over it. My parents have been married for over 20 years and never had to pay taxes. Some people do, some don't. You chose to convert to Roth IRA's; you know there's a liability involved, so you deal with it. You could've opted not to, and that's not Ninja's fault. What's serious to you might not be to someone else, so don't belittle anyone else's situation. Just because it's not a hardship for Ninja to come up with the money doesn't give you the right to crap on him about it.
I don't get it? Do you feel more important because you had a higher tax obligation than myself?
Your initial comment said "Ninja has never owed taxes at the end of the year". I responded saying I have. If you intended to say "Ninja has never owed a CRAZY HIGH tax obligation at the end of the year" then I recommend you be more clear in your comments, but don't get all high and mighty here por favor 🙂
Taxes are not as funny as your picture on this post. Ok, I'm sick of hearing about taxes but I couldn't let you write a post and not get a comment 🙂 Is it April 15th yet???? Come on Thursday, come to papa