Oops. I forgot to publish a newsletter for March. So here it is, over a month late.
I decided to write about several recent tax news items.
In the nice try department: An enterprising taxpayer tried to dodge New York sales tax by claiming his strip club’s pole dancers were “artists,” thus exempt under a “dramatic arts exception” to sales taxes.
Taxpayer’s expert witness testified that pole dancing was a choreographed dance performance within the meaning of art. The court, however, did not buy it, concluding that pole dancing was learned from other dancers, or on YouTube, and did not fall within the art of dance.
Adding insult to the dancers, the court analogized pole dancing to “peep show” performances, rather than ballet or opera, holding that payment of cover charges and fees for private dances were no different than the entertainment sought at peep shows, which, according to a another court ruling, were subject to New York’s sales tax.
IRS v Palin
Okay, tea baggers, who wins a popularity contest commissioned by Fox News during tax time – the Tea Party, Sarah Palin or IRS? Surprise! IRS smoked them both, receiving a favorable rating of 49% compared to the Tea Party’s 36%, with Mrs. Palin trailing the pack at less than 25%. In fact, IRS was tied in popularity with President Obama.
However, not all the news is bad for the tax baggers: Their nemesis Speaker Nancy Pelosi received 29%, Senate Majority Leader Harry Reid was less popular than Palin with 16%, however, House Minority Leader John A. Boehner, a Tea Party supporter, checked in at just 12%.
After its victory, rumor has it that IRS hired a personal trainer to tone up for the swimsuit contest. Competitors are diving for cover.
Court Rejects Geithner Defense
Taxpayers using Turbo-tax cannot blame the program to avoid negligence penalties, according to a recent court decision. The court rejected the so-called “Geithner defense”, named after Treasury Secretary Timothy Geithner, who, during his Senate confirmation, blamed Turbo-tax for errors on his tax return.
The court noted that the taxpayers did not consult professionals, visit the IRS website or read the relevant instructions to make sure they were filing their tax returns correctly. The court then stated that it did not accept taxpayers’ misuse of TurboTax, even if unintentional or accidental, as a defense.