Poker tax adivce

[tuff_fish]

Have a buddy who needs advice with late taxes. Any help would be great. He filed once as a pro poker player for the year of 2010 he went thru a poker cpa i believe. Once he filed he ending up owning 13k. He filed days before black Friday happened and got most of his money frozen on ftp/stolen from from ub and never paid any the money he owned. Hes gotten a few things in the mail from the irs saying how much interest is but hasn't gotten anything for a few years. He still grinds for a living but hasn't filed anything sense but also hasn't had an big scores that the government would know about. What's his best play hear? Can he get in legal trouble if he doesn't pay or will the interest just keep building up? Hes pretty concerned about it but doesnt have the money to pay it and doesnt have any idea what to do. Thanks

[Daly]

Your buddy is already in legal trouble. And the fact that he didn't file in 11-14 probably isn't helping either as eventually they will figure that out as well.

Not sure what to do here honestly. He basically signed an IOU to Uncle Sam when he submitted the tax return back in 2010. No way around that.

[Dan Druff]

Have a buddy who needs advice with late taxes. Any help would be great. He filed once as a pro poker player for the year of 2010 he went thru a poker cpa i believe. Once he filed he ending up owning 13k. He filed days before black Friday happened and got most of his money frozen on ftp/stolen from from ub and never paid any the money he owned. Hes gotten a few things in the mail from the irs saying how much interest is but hasn't gotten anything for a few years. He still grinds for a living but hasn't filed anything sense but also hasn't had an big scores that the government would know about. What's his best play hear? Can he get in legal trouble if he doesn't pay or will the interest just keep building up? Hes pretty concerned about it but doesnt have the money to pay it and doesnt have any idea what to do. Thanks

Interest will keep building.

He will not go to prison for this.

Of his 2010 "winnings" claimed to the IRS, were any of these claimed as winnings to the IRS but never cashed out?

He can try to appeal based upon that, though the window to file an amended return for 2010 has closed. Still, he can appeal the existing debt if that's true and perhaps win, at least with UB. FTP paid people via Stars eventually, so that isn't a valid argument anymore.

[GrenadaRoger]

Have a buddy who needs advice with late taxes. Any help would be great. He filed once as a pro poker player for the year of 2010 he went thru a poker cpa i believe. Once he filed he ending up owning 13k. He filed days before black Friday happened and got most of his money frozen on ftp/stolen from from ub and never paid any the money he owned. Hes gotten a few things in the mail from the irs saying how much interest is but hasn't gotten anything for a few years. He still grinds for a living but hasn't filed anything sense but also hasn't had an big scores that the government would know about. What's his best play hear? Can he get in legal trouble if he doesn't pay or will the interest just keep building up? Hes pretty concerned about it but doesnt have the money to pay it and doesnt have any idea what to do. Thanks

his best play is to get a transcript of his account (record of income and deductions) from the IRS and determine if he should file...if he has gross income (not adjusted gross income nor taxable income) in excess of 10,000 he probably has a filing requirement.

The money stolen by UB can be claimed as a casualty loss in the year it became certain the UB would not be paying...

the IRS can made a substitute for a return (make a tax return for a non-filer) and then proceed to collect on that return...they can file liens, levy's on bank accounts, garnish wages as well as generally fuck up your credit...if an auditor is assigned to his account, the auditor will summons all of his bank records for the year being audited and treat all deposits and credits as income--it will be up to him to prove otherwise...if significant audit adjustments are found, the auditor will the audit all other years still open (3 years have passed since the return was filed for that year). Banks keep records of your account for 7 years so the IRS can go back quite a ways.

Also, state tax authorities may also make substitutes for returns...California is notorious for doing that to non-filers based on their professions...then you need to file a return to get the correct amount of tax (California will tax all estimated income at the highest rate 10.3% plus allow no deductions, not even the standard, or personal exemptions)

when people like your friend come forward, the IRS will usually work out an installment plan that requires paying all current years taxes and then paying as much as possible of back-tax owed over a 5 year period...and after the 5 years if there is still back tax owed, then that unpaid is forgiven (offer in compromise)

over the last few years the IRS has had major staffing problems in part caused by Tea Party inspired government funding freezes and debt ceilings...as auditors and collectors have left they generally have not been replaced...so currently there is a shortage of field agents...as a result you have these correspondence audits done by IRS computers based on W2 & 1099s or other information...in effect, we have a back door tax cut for business owners and self employed who are the most likely to cheat on their taxes because there are not enough auditors available -- the IRS computers don't get the data to flag those persons for audit (wage earners can't cheat easily because of the payroll reporting)

so really, it is up to him...if he wants to establish credit, buy a house or open a business, lenders will want to see tax returns...if he is content to live on the fringe of society and never take a job that requires licensing by the state, then he can probably get by for a time


one other thing, you mention UB...is your friend doing online gambling with poker houses or bookmakers outside the US? if so, he may easily become subject the Foreign Bank Account Reporting requirements, as casinos are considered financial institutions per the IRS...if at any time during a calendar year someone has more than $10,000 in a financial institution not subject to US bank reporting regulations, then he must file an FBAR report to disclose that to the IRS...no tax is paid with that report, but it will alert the IRS for follow up...and that can happen if he wins a big tournament or goes on a heater...(for example Jewdonk's streak of tournament wins earlier this year may have created that reporting requirement)...see the below case for an example
http://blogs.angloinfo.com/us-tax/20...g-is-required/