Beanie babies get justice

March 06, 2014 by Carol Thompson, EA
city

Taxpayers frequently ask, “Why do I pay so much in taxes, and other people are getting away without paying any?” Well, not always. In a recent case of tax evasion, Ty Warner, the creator of “Beanie Babies” was hit with $53.6 million in penalties for hiding money offshore. He stashed $93.6 million in a secret Swiss bank account, which generated about $3.1 million in foreign income earnings, and would have been taxed for $885,300. Normally, if someone inadvertently left investment income off of a return, they would be subject to an accuracy-related penalty of 20% of the additional income tax. With the new, aggressive Federal program (to make sure all Americans pay their fair share), the penalty for not reporting foreign investment income is 50% of the high balance of the account. Hiding money in another country goes on around the globe. The U.S. government is currently negotiating treaties with dozens of countries to report income to one another and stop the flow of untaxed money. So yes, sometimes there is justice in our system. Maybe Ty can go online and sell a few dolls to pay his debt.

Tags: income, IRS, tax scams

Recent Articles

Beneficial Owner
What is beneficial ownership information reporting? If you aren’t certain whether it applies to you, this blog may help clarify the reporting requirement.
Eraser on chalkboard erasing the word Debt
Whether you can settle your tax debt through an offer in compromise will depend on what the IRS deems is your collection potential, or ability to pay.
Financial Penalty written on wooden blocks
Penalty abatement is the process of requesting the IRS remove penalties (this is called abatement). You need to demonstrate that there is a "reasonable" cause.
Child Support
Child support is not deductible for tax purposes. Child support payments are also not required to be reported as income by any person receiving them.
This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.