$320,000 tax bill based on MySpace boast by college kids
Admit it. As a crazy college kid you attended your share of parties like the one in the video below.
But I bet your youthful revelry didn't prompt a $320,000 state tax bill. Of course, if you're close to my age (and no, I'm not saying exactly what that is), the Internet and social media sites weren't around to help the tax collector round up evidence.
But in 2008, the combination of new technology and youthful hubris has led to an apparent tax windfall for the Sooner State.
Five current and former University of Central Oklahoma students bragged on MySpace that their party business had served thousands. Actually, a lot more than thousands.
And that boast was enough for the Oklahoma Tax Commission to issue the erstwhile businessmen a six-figure state tax bill.
According to The Oklahoman, 2007 tax documents indicate that Kegheadz, the party business founded by the young men, hosted more than 100 events over nearly five years.
The state's primary assessment is for mixed beverages, along with sales and tourism taxes. Then there's the matter of penalties and interest, since the taxes weren't paid on time.
MySpace exaggeration: But Kegheadz co-founder Julius Baroi estimated the business hosted just over 20 parties in 1½ years, netting less than $2,000.
Another co-founder, Jordan Glover, said tax officials were misled by the company's MySpace claim of "Over 1 billion served." That, said Glover, was "hype," posted merely to attract more party goers.
The young men told the Oklahoma City newspaper that they never really thought about Kegheadz as a business, so they never filed any paperwork with tax officials.
“We're not denying that we threw parties and probably owe the Tax Commission something,” Baroi said. But not $320,000.
You can see how the Tax Commission came up with its assessment in this letter to the former business owners. Baroi's rebuttal letter gives his take on the parties and their taxable earnings.
The case is scheduled for an end-of-October hearing and the tax defendants are looking for some pro bono legal counsel.
"I think common sense will prevail," Glover told The Oklahoman. "But if there's any attorney out there who remembers what it was like in college and wants to give us some free help, we could sure use it."
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