Dolce & Gabbana lose appeal

Italian designers Dolce & Gabbana lost the appeal of their conviction for tax evasion. Their jail sentences were suspended. Apparently they still have to pay 670,000 euros apiece in taxes and penalties.

That’s not much considering they evaded tax on 1.37 billion euros.

Italian corporate taxes are among the highest in Europe. In that kind of environment, it pays companies to look for innovative tax savings devices. These two yo-yos probably thought they were getting on the Apple gravy train, or the Google gravy train or the Caterpillar gravy train, but they missed the target. What Apple, Google & Caterpillar did was completely legal. (Find the Apple Tax Strategy on our web site.) What these two did was apparently not legal. At least that’s the consensus of two Italian courts. That may be due to Italian tax law, but in any event, regardless of the actual facts, it’s entirely due to preparer incompetence. No competent tax preparer would knowingly violate tax law. And in this case, after two trials, it’s pretty obvious that tax law was violated. Sorry Herbie.

One of the articles linked to below says they were “avoiding payments” in Italy. Apparently  they didn’t cross all the T’s and dot all the I’s. In addition, this apparently was widespread among all Italian designers. Both Giorgio Armani and Prada have both come forward forward since the original case and paid hundreds of million of euros in more tax to stave off prosecution. Apparently the entire Italian design industry is using the same do-do bird tax preparation firm.

Some words of advice for adventurous taxpayers or tax preparers. Never take a novel approach to established tax law. This is not unheard of, even the Big 4 have been guilty of this, but it’s completely stupid. You know you’ll get hammered as soon as it comes to their attention.  There are enough legal tax savings devices and tax preferences buried in the tax code that only lazy and incompetent tax preparers would  ever try a novel approach.

We have a national reputation for tax strategy and we never go anywhere near the grey area, basing everything we do on established tax law. That still leaves tons of room to maneuver. It doesn’t mean we won’t have to explain the law to the IRS, or that we won’t get in a knock down drag out fight with them. But we will always have a solid defense. None of our clients will ever go to jail because of something we did, nor will we ever be censored.

We’re in this for the long haul. Not for a quick splash.

http://www.huffingtonpost.com/2014/04/30/dolce-gabbana-jail_n_5240127.html

http://www.huffingtonpost.com/2013/07/25/dolce-and-gabbana-closing_n_3653670.html

By the way, I’m also an anarchist.

From Vox Day, via Zero Hedge

“One need not be a socialist, or oppose capitalism, to oppose the income inequality that is the result of theft. With the assistance of the Federal Reserve and Congress, the banks have financially raped the American economy and the American people through fraud and political corruption. A reckoning is overdue. Everything that has been done in the last five years has been done in order to postpone it. And yet, a reckoning is coming nevertheless, because that which cannot continue will not continue. The rich simply cannot consume enough to substitute for more equitable consumption; how many cars can a man drive? In how many homes can a man dwell?”

<a href =”http://voxday.blogspot.com/2014/02/the-dark-side-of-income-inequality.html#comment-form/”&gt; Vox Popoli

People are bitching about the income inequality between the richest 88 people in the world and the rest of us. But there are more important things out there we should be paying attention to. The worst thing about this kind of income inequality is the potential for creating a landed aristocracy. But the answer is an estate tax that prevents passing on enormous estates to heirs unhindered, or worse yet, parking them in dynasty trusts,. A few generations of heavy taxation and incompetent heirs would eliminate that wealth. You probably hate estate tax, but that is all that stands between us and a landed aristocracy. Is it really healthy to have families like the Kennedy’s and the Bush’s rise to the top of the food chain? Would it even be possible for another Lincoln to rise to the Presidency?

Kill those dynasty trusts.

Very rich people make a lot of money, but they don’t just take it away from us. We have to participate willingly for capitalism to work, and we do. After all, it’s the best system out there for delivering the goods we want for a price we can afford. The only alternative, and it’s not a very good one, is centralized planning.

The income inequality we can’t deal with so readily comes from other sources. The most egregious comes from the abuse of government and power … just because they can. In many countries, this one included, that is the big problem. People get rich just because they’re powerful enough to take it away from us. Our government first bled us dry in the name of social engineering, just because they could, just because we trusted them. Then when we were already bled dry, they drove us deeply into debt to raise the money to feed their magnificent machine, enriching themselves and their favored classes as they went. just because they could.

The only way to deal with that is political revolution. Perhaps there will never be enough opposition to put a stop to this kind of income inequality. Perhaps we can never recover. Perhaps the values we used to hold dear are gone forever. But perhaps someday people will begin rolling out the guillotines.

Just thinking.

Dream Job or Nightmare?

From the Wall Street Journal …

” In a U.S. economy struggling to create jobs, at least one field is booming: compliance. Hefty fines and other penalties have jolted companies, especially banks, into a compliance hiring spree, as governments at home and abroad tighten business laws and regulations and ramp up their enforcement activity. “

This is because government is turning to penalties as a likely source of increased revenues. And they’re coming at us from all directions – IRS, other federal agencies, states and various state agencies. Where it used to make some sense to pay the penalties when caught instead of incurring the cost to comply, that is rapidly changing.

Finding their previous approaches to raise taxes inadequate to fund their needs, governments across the nation are finding penalties a richer source of new funding. The IRS, which was attempting it increase funding by policing the tax preparation profession and going after schedule C filers and S corps have lately been turning their attention to penalties for mundane activities as a more lucrative funding source.

Watch out or you may get hammered with a completely unexpected and very hefty fine out of the clear blue sky … $55,000 on a W-2 issues, hundreds of thousands of dollars on a foreign asset filing irregularity, and penalties of $10.000 is not uncommon for non or late filing.

However, we have found that there is generally a legal way around these regulatory issues that business are being penalized to death over. We have been finding satisfactory solutions for clients on any number of non-tax regulations and potential penalties. It is a good idea to be proactive. Take action before they rope you in. Otherwise many of your options will fade away.