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September-11

I’ll take the ticket without extra taxes, please…

September 5, 2007 · 0 comments

Oh, if it were only that easy. Airlines fee and tax you to death these days.

Have a look:

For domestic flights, there is an “excise” tax of 7.5% of the fare. You’ll see this amount on your bill because the Department of Transportation (DOT) requires airlines to include that tax in advertised fares. What they don’t have to advertise are other government fees and taxes such as the $3.30 per flight segment (maximum of four segments charged on any round-trip ticket) plus a $2.50 security fee per departure, sometimes referred to as the September 11 fee – no doubt to make you feel less annoyed about having to pay it. Additionally, individual airports may impose airport passenger facility charges of up to $4.50 per departure (also a maximum of four fees per round-trip ticket). So, doing some quick math – a $500 ticket could cost you almost $575.

Heading to Alaska or Hawaii? Sure, we claim that they’re US states. But hopping a plane to or from either destination will result in an extra travel facilities tax of up to $13.40 per round-trip. Quite frankly, I’m not sure what that’s about – except perhaps as a revenue raiser.

And Canada? There’s now a federal immigration fee of $7.00 per round-trip, additional airport fees of $6.50 per round-trip and our friendly neighbors to the north tack on a Canada Air Traveler Security charge of $8.00 per round-trip.

It gets worse for international travel. The government charges a departure fee of $14.50 and an arrival fee of $14.50 on international flight tickets. Additionally, you’re charged $7 for immigration, $5 for customs services and $5 to fund “animal and plant inspections” (one of my favorites). Most airlines note that fees may go “up to $200″ for international travel.

Oh – and did I mention the airline fuel surcharges?

Sheesh.

And it’s about to get worse. That airport facility tax? The one that’s $4.50 right now? The Chicago Department of Aviation and other airport authorities have asked Congress for permission to boost the tax to $7.50 (a 67% increase) to help pay for airport capital-improvement projects. That’s because O’Hare, the world’s second-busiest airport (and my personal nightmare), is in the midst of an expansion – already behind schedule and over budget, much like the airlines that use it – that the airlines don’t want to pay for. Yep, the airlines who use the airport don’t want to pay to make it better. They think we should pay. And we probably will: consumers have little say when it comes to airline fees and taxes. So, keep your eyes out in the upcoming months. You’re about to the fly the fee and tax-friendly skies…

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When You Allegedly Cheat on Taxes, the Terrorists Win

May 30, 2007 · 0 comments

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September 11, 2001 has been linked to a number of criminal activities and now we can add tax fraud to the list.

The Internal Revenue Service has announced that Robert Coplan, a former IRS lawyer, and Martin Nissenbaum, Richard Shapiro, and Brian Vaughn, partners in the accounting firm of Ernst & Young, have been charged with conspiracy to defraud the IRS, tax evasion, making false statements, impeding the IRS and related offenses. Prosecutors allege that the four defrauded the IRS over a period of six years with the use of tax shelters which they created and marketed as a method to hide money.

The indictments allege that the four defendants created documents containing false and fraudulent descriptions of the clients’ motivations for entering into the transactions, which were reportedly created by the defendants to avoid paying taxes. Coplan is alleged to have argued that the crux of the plan, marketed to legal and investment professionals for their wealthy clients, was to “make our strategies appear to be investment techniques that have advantageous tax consequences.” He further urged clients to attribute their decision to discontinue trading partnerships after receiving favorable tax treatment to the September 11, 2001, terrorist attacks and to “possible economic repercussions resulting from such attacks” as a reason for their activities.

Not surprisingly, all of the defendants have pleaded not guilty.

And if you’re getting deja vu all over again, it might be a result of the investigation into suspected wrongdoing at Jenkens Gilchrist. Ernst & Young has been named in several suits involving tax shelter advice brought against Jenkens. Robert Coplan is one of the folks who ratted Paul Daugerdas out, claiming that Daugerdas masterminded the sales of the tax shelters for which Jenkens performed the legal work.

If your head is spinning from all of the tax shelter rumblings, it should be. Prosecutors allege that activities such as those that Coplan and his partners have been accused of have been ongoing since the mid-1990s. In one year alone, the IRS believes that these shelters have cost the federal government between $14 and $18 billion (with a b) in lost revenue.

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