Classic case of excessive penaltys & interest Page 1 / 2

mrfxit, May 12, 10:16pm
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11446426
Yes he's a sneaky bugger
yes it's over several decades
yes he deserves to be cleaned out

My point is that while his base debt is $5.7M,due to penaltys & interest added regularly on top of each new amount owing, he now owes $485M.
He's being taxed on the tax & penalty added amount + interest & taxed on that again.

Classic case of the govt not knowing when to stop adding tax/ penalty's & interest

suicidemonkey, May 12, 10:34pm
I see it as people blaming the govt for what is obviously one guys own fault.


mrfxit, May 12, 11:00pm
Yep definitely his own fault but blowing $5.7M out to $485M is simply tax on penaltys + interest + GST to create the excess $479.3M.

Wonder how many times each revised amount including penaltys + interest + GST has again had the extra penalty's + interest + GST added.

$479.3M of tax on $5.7M debt

richard112, May 12, 11:17pm
If he wasn't an acct I might feel a bit sorry for him. Have been in strife with IRD myself. Own fault trying to prioritise time & put IRD at the bottom of the list thinking I could easily catch up on the outstanding plus interest. What I didn't know about was the penalties, which are calculated often (daily? weekly?) and compound. Very nearly put me out of business at the time. The penalties are horrendous. My fault, but I'm not an accountant and thought I was literally just buying time & at a reasonable rate. But this guy is an accountant. He must have known what he was doing, or trying to do. i.e. rip off the government.

gazzat22, May 13, 12:02am
From what I remember this guy ruined a lot of people lives Tough sh. t.

d.snell, May 13, 1:15am
And his solution, pay it back at $50,000 per year until death. Even the min amount of $5.7m would take 114 years and at 80, this guys got a max of 20 years to live. He's having a laugh!
IRD can now bankrupt him and then the official assignee will be able to seize all his assets, including trusts and other sources that he has hidden away.

mrfxit, May 13, 2:21am
Yep all fair enough.
Aside from the fact he's an accountant & deserves a thrashing in public.

My point is that It's still a pretty nasty & stupid example of how penaltys + interest + tax's can far far out weigh the crime.

king1, May 13, 2:51am
I thought they stopped doing excessive penalties years ago because too many people topped themselves - apparently not

d.snell, May 13, 3:20am
Yes, but IRD are quite good at reversing those penalties when some real form of repayment is put in place. In this case, I suspect the IRD said, "Stick two fingers up to us, and we will come down heavy on you"

mrfxit, May 13, 11:20pm
Yea your debt multiplied by 85 can make you do some pretty stupid things.

ross1970, May 14, 1:37am
Like the guy in the states a few years ago, battling IRS, topped himself by flying his light aircraft into the local IRS office building.

oclaf, May 14, 2:13am
They guy is clearly a dick. No arguments there.
But 5.7 million compounding to 485 million is completely unjustifiable. Even over a number of years there is no sane way to rationalize that sort of financial penalty.

mrfxit, May 14, 2:31am
Perfect

ross1970, May 14, 2:44am
yip, that sums it up.

d.snell, May 14, 2:50am
So what's the alternative? if this guy had been talking with IRD and working some payment out, he wouldn't have these penalties. He chose to tell the IRD to stick it and continued to stall through the courts. He was aware of the implications and decided to live the good life, spending and hiding as much money as he could. REMEMBER it's you and me this guy has cheated, not the IRD, they merely administer it on our behalf and I don't like thieves and cheats, one little bit, so absolutely NO sympathy whatsoever for this clown.

mrfxit, May 14, 2:57am
Ballooning out to $10mil, yea ok & THEN nail him hard, but to let it go to $485mil is simply ludicrous.
Thats asking for a fail.
Theres a certain point in debt where everybody simply say's . Yea NAH.
$10mil he could have dealt to or been dealt to via assets etc.
In his case $485mil is a simple Yea NAH.gf'd

oclaf, May 14, 3:21am
Yes the guy cheated the government and the tax payer. But to inflate 5.7 million up to 485 is ludicrous. They may as well just rounded it up to a solid 1 billion for all the difference it would make in paying it off. Adding exorbitant penalties and penalising interest rates are only going to exasperate the problem of debt collection. There is a certain level of debt inflation where people are just going to tell you to F-off and stop even trying to pay because there is simply no point.
Very quickly, a difficult but manageable outstanding tax bill will snowball into something utterly impossible. At a certain point you have to ask who is actually ripping off who.
The only other industry I've heard of that can perform that sort of accountancy alchemy on debt are illegal loan sharks.
I don't know what IRD's interest rate is, but if they can do that, then I am sure it is out of line with other interest rates in a way that could only be described as exhorbitant.
The alternative. Keep penalties manageable and don't use interest as a penalty. There will always be those who avoid tax. But crippling penalties that have no chance of ever being repaid are no solution at all.

king1, May 14, 4:39am
Weren't the powers that be trying to put the brakes on dodgy loan sharks who charge too much in interest/penalties recently.

emmerson1, May 15, 11:37am
5% a month compounds to 85x in 7 1/2 years. Not completely ridiculous.

oclaf, May 15, 12:29pm
5% per month.
That is 60% per annum.
That is right up there on the ridiculous-shit-o-meter.

mrfxit, May 15, 9:01pm
Exponentially increased with each & every penalty & interest added.

Penaltys & interested added ON TOP of the previous penaltys & interest & all added on top of the original amount.
$479.3Mil worth of penaltys & interest ON TOP.
$5.7Mil PLUS $479.3Mil in penaltys & interest

How many ways do I have to describe how stupid the situation has become.

Some of you understand, others simply don't get it.

There is a point in a persons debt to income levels, where they will simply say "NAH" (not even a "yea Nah") just NAH!

mrfxit, May 15, 9:05pm
Just to make my thoughts a bit clearer on this guy & his activitys.

May he rot in hell for eternity for his actions & have a specific bad mood dead Germany leader for a bed buddy.

I simply think the IRD intentions & maths system are all wrong.

king1, May 15, 11:12pm
It is much like the American propensity to handout 1000 year plus jail sentences. Stupidly ridiculous.
and serves only to make the masses feel better.

tmg, May 16, 6:28am
Aha . thort this was J G Russell that was in the news . ;-)

An acceptable arrangement agreed to see payments & if met once paid wud prob have seen penalties remitted ;-)

Unfortunately it looks a bit like "Red Flag waved at a Bull charging" scenario now . ;-)

VG question though - what will IRD actually recover out of this even with attempting bankrupting him and putting him out of action prob for good ? ;-)

tmg, May 16, 6:32am
Anyone seen instances of unpaid GST compounding in their travels ? ;-)

a darn sight more hefty increments than just income tax ;-)

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