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Re: U.S. v. Martin Kapp – 10 Mariner Tax Questions Answered | gCaptain.com

Colleen Emery — Mon, 10 Dec 2007 04:43:19 -0000

Recent questions and answers by a real maritime tax professional!

I have received three years of amended returns from Martin Kapp, do I need to file these?
Yes, you do. I know his cover letter gives you three options. Recognize option B is NOT an option. If you go to our website; www.transport1040.com you will see a copy of the summary judgment; it clearly states on page 9 that Martin Kapp is not allowed in tax court. As mentioned in his letter addressed “Dear Clients and Friends” disadvantages with choosing this option states “Electing this option and IF the Tax Court later rules against my clients will also cause some additional accumulating interest and penalties.”
Option C that states do nothing, is also NOT an option. Again referencing his letter addressed “Dear Clients and Friends” Mr. Kapp state “The claiming of incurred meal expenses, just like any other deductions on your returns, may subject yourself to an audit”. Recognize the August 20, 2007 Judgment and Permanent injunction ordered Martin Kapp to provide the Department of Justice (DOJ) a list of names, social security numbers, and addresses of all clients from 2000 forward. Do you want to put yourself in an audit situation where they will disallow all of your deductions? It is then up to you, the taxpayer, to prove time, place and business purpose of ALL of your deductions. Not to mention that the IRS can then scrutinize your whole return, not just your mariner deductions.

I read the ruling against Martin Kapp, and no where in the ruling does it state that he has to amend our previous years returns, why did he?
You will also notice that Mr. Kapp faced very little personal repercussion as a result of preparing frivolous returns. Let’s look at some previous cases involving preparers of invalid mariner deductions. Again, please reference our website and you will see the ruling against four Louisiana preparers. In that case the DOJ issued permanent injunctions against the preparers. Per the final ruling “The preparers agreed to be enjoined from preparing false or fraudulent income tax returns” and were permanently closed them down. I know Mr. Kapp referred to himself as a “friend of the maritime industry,” however the IRS stands to collect millions of dollars in tax deficiencies as a result of the amended returns prepared by his office, and Mr. Kapp was allowed to stay in business.

Mr. Kapp told me he won both the Johnson and Westling case, I thought the meal deductions were valid?
Again, please reference the summary judgment available on our website. Pages 2, 5, 8, 9, 10, 11, 16, 18, 20, and 24 clearly show that Mr. Kapp did not win either case. Those cases validated only the INCIDENTIAL deductions that we have only taken on behalf of our clients and spells out very clearly that meal deductions that were provided to the mariner at not cost was NOT valid.

I read a letter from Mr. Kapp stating that the IRS had never contacted him and additionally when he did speak with them he showed them that the meal deductions were valid?
Per the above mentioned Summary Judgment Page 15 states “Kapp also falsely states in this letter that “These government attorneys did not realize the IRS published position for the last 17 years (1990 thru 2006) is to allow mariners to claim meals. Surprised. So were these government attorneys when they finally let me direct them to look at the government website.” When asked to identify these alleged “surprised” government attorneys, Kapp could not provide any names, agreed that this “could be a false statement,” and asked for a “quick break” to speak with his attorney.

Again, the above comes directly from the DOJ’s summary Judgment; I would use caution when trying to ascertain valid statements.

I’ve read statements from other maritime tax preparers blogs at gCaptain saying that I do not have to amend my taxes, is this valid?

Ironically, the initial statement said “You fulfilled your obligation in filing a timely income tax return. However, interest and penalties are assessed from the time the additional tax was due” . The second posting states “Do I HAVE to file these amended returns? NO
My initial question would be if interest and penalties are assessed from the time the additional tax was due, would the preparer be willing to assume those costs for you should you elect not to file your amended return? But, more importantly, let’s go back and reference the first question. Do you really want to go back and provide substantiation for all your other VALID deductions? Going through an audit is time consuming, I would prefer you utilize your vacation time doing things you enjoy. Not to mention I always appreciated one of my grandfather’s favorite lines, there is only two things in life you are required to do, die and pay taxes. No wonder he pushed us into either being mortuaries or tax preparers!

Is it still worth me tracking my expenses? There are still many legitimate deductions! Union dues, uniforms, safety equipment, job search expense, many companies are now including your travel reimbursement to meet the ship in your W-2 wages, plus other out-of-pocket expenditures, again reference our website at www.transport1040.com. Do not forgo these legitimate deductions just because a few preparers included so called invalid “mariner tax deductions” covering meals that were provided to you at no costs. Also, recognize, in order for your per diem deductions to be included in your return it does require you to file a paper return; your return can NOT be e-filed on your behalf.

We have stressed in our newsletters, seminars, website, and correspondence over the past eight years that the aforementioned ‘mariner tax deductions’ were NOT valid. Sadly, that has largely fallen on deaf ears and is now coming back to haunt some of you. Recognize since we were first contacted by the U.S. Attorney’s Office on April 10, 2006 we posted the DOJ’s initial complaint against Martin A. Kapp on our website. Since then we have been in constant contact with attorneys involved with the case and other pending cases. Please don’t continue to be misled. We will be more then happy to assist you in setting up a payment plan with the IRS, and/or review your amended returns, at no cost. We appreciate your interest in Transport Workers Tax Service, as you can imagine we have been inundated with similar inquires. In order to provide our new clients with the same exceptional service levels we are requesting that you remit a non-binding count-me-in personal information page. This will allow us to adequately staff for the 2007 tax year. We will be accepting new registers up until January 15, 2008, after then it will be on a first come first serve basis and may result in us being unable to assist you. So we emphasize the importance of doing so in a timely fashion.

Please feel free to contact us at twts@transport1040.com or CountMeIn@transport1040.com should you have any questions that were not addressed in the above.

Re: Mariner Tax Deduction “Kapp-sized” By IRS

Colleen Emery — Fri, 11 Jan 2008 15:34:53 -0000

Feel free to contact us, we can assist you in setting up a payment plan with the IRS if you are a recipient of amended returns ~ at no cost. See our website at www.transport1040.com for more information.

Re: Future gCaptain says “My Daddy’s gettting audited” | Tear

Colleen Emery — Tue, 22 Jan 2008 21:40:37 -0000

Although I am not a big fan of certain tax chains, I do need to say the following posting by H&R Block is valid.
If your preparer is under scrutiny by the IRS and DOJ, wouldn't you be putting your self under scrutiny by using them???
See tax tip regarding mariner meals provided to them for free ~ pay close attention to the $5,000 fine imposed on you, the tax payer. Should you have any questions, you can always contact us at www.transport1040.com
My best to you ~ and realize for over 8 years we have been on your side!

Tax Tip82Tips from H&R BlockPrint | E-mail | Bookmark |
Overview
The requirement to pay taxes isn't optional and is clearly set forth in section 1 of the Internal Revenue Code.

If you fail to pay taxes, you'll face criminal penalties, including fines and imprisonment, as well as civil penalties.

The IRS rejects many common frivolous arguments that are used to avoid taxes.

The IRS reminds taxpayers to steer clear of frivolous tax arguments and schemes designed to avoid paying your taxes. The penalty for frivolous tax returns is $5,000. The penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.

The IRS rejects these common frivolous arguments:

Filing a tax return is voluntary.

Only federal employees and persons living in Washington, D.C., are subject to federal income tax.

Native Americans can avoid federal income tax because of a "Native American Treaty."

Taxpayers can validate invalid returns or other invalid tax positions or documents by writing or stamping the phrase "nunc pro tunc" on the face of the return.

Income and expenses can be attributed to a purported trust to avoid federal income tax liability.

Taxpayers are not required to file an income tax return because of the Paperwork Reduction Act of 1980.

Taxes are only owed on foreign income under tax code Section 861.

Taxpayers have basis in their labor equal to the fair market value of their wages, and therefore have no taxable gain.

Taxpayers who reside in the U.S. are not citizens or persons within the meaning of the tax code.

U.S. residents living abroad who can exclude U.S. taxable income under tax code Section 911 are in fact residents of a foreign country.

Taxpayers can buy or sell the right to claim a child for purposes of the Earned Income Credit.

Taxpayers can deduct all of their nonbusiness-related household expenses if they establish home businesses.

Employer withholding of employment taxes is voluntary.

The 9th Amendment exempts those with religious or other objections to military spending from paying taxes to the extent the taxes will be used for military spending.

Only fiduciaries (a person to whom property or power is entrusted for the benefit of another) are obligated to pay taxes, and the U.S. must prove the fiduciary status or relationship.

A taxpayer who is employed on board a ship that provides meals at no cost to the taxpayer as part of the employment may claim a so-called "Mariner's Tax Deduction," allowing the taxpayer to deduct from gross income the cost of the meals as an employee business expense.

A taxpayer may claim the section 6421 Fuels Tax Credit even though the taxpayer didn't purchase and use gasoline during the taxable period for which the credit is claimed.

None of these or any of the other arguments on the IRS's full list of frivolous arguments will excuse you from paying your taxes.

Re: Mariner Tax Deduction “Kapp-sized” By IRS

Colleen Emery — Sat, 23 Feb 2008 17:03:37 -0000

Steve,
Please recognize foreign localities can be as high as $36/day for incidental deductions. Please see our website at www.transport1040.com or contact me at 1-866-777-TWTS (8987) for further clarification.

Re: U.S. v. Martin Kapp – 10 Mariner Tax Questions Answered | gCaptain.com

Colleen Emery — Thu, 06 Mar 2008 14:38:13 -0000

Amy,
Feel free to contact me at twts@transport1040.com I may be able to tell you if your information was shared with either the IRS or the DOJ. I should be able to tell you if you are one of the many clients affected by this.
I am sorry that you may be in a position to pay back taxes, however we at Transport Workers Tax Service have NEVER put any of our clients at RISK.
We've always had the mariners back! Colleen