Posted on 09/21/2008 10:51:22 AM PDT by OKIEDOC
A youthful attempt to party their way to popularity and some exaggerated MySpace boasting have turned into a $320,000 tax nightmare for five current and former University of Central Oklahoma students.
“This is crazy,” said Julius Baroi, co-founder of Kegheadz, a loosely organized Edmond-based party business. “The Tax Commission claims we owe more than $300,000. We don't have enough money between us to pay $6,000 to hire an attorney. They won't listen to us.”
Paula Ross, spokesperson for the Oklahoma Tax Commission, said she couldn't comment on an individual taxpayer's case.
Although the Tax Commission wants to tax Kegheadz like a million-dollar business, Kegheadz was really just a group of college guys who got together to throw parties, said Baroi, 29, and co-founder Jordan Glover, 23.
Overall, Baroi estimates Kegheadz only netted about $1,700.
Tax officials got the wrong idea because of embellishments on the Kegheadz MySpace Web site that boasted things like “Over a billion served,” “Biggest party in the state,” and “Biggest party in the country,” Glover said.
But that was just “exaggerated hype” designed to create a buzz and attract people to the parties, Glover said.
The group threw 22 parties in Edmond and Oklahoma City in 2006 and the first half of 2007, Baroi said.
The goal was to meet college women and hopefully make enough money to pay their personal bar tabs, Glover said.
“It wasn't a career choice,” he said. “The goal was to have fun in college. Being a cool guy was the main objective.... You'd think they could tell we weren't masterminds. We were just college students having fun and acting stupid.”
Baroi said his group operated Kegheadz by going to Edmond and Oklahoma City restaurants and businesses and persuading them to host college parties. Off- duty law enforcement officers were hired to provide security and prevent problems, he said.
Men were charged a $5 cover charge. Women were let in free.
“If a guy brought three or four girls, we'd let him in free, too,” Glover said.
Kegheadz paid building owners $100 to $800 from the cover charge and a disc jockey was paid $50 to $200. The building owner got to keep money received from bar sales. If there was money left over from the cover charge at the end of the night, it was split among the Kegheadz friends who had promoted the event, Baroi said.
He said from 60 to 275 people showed up for the 22 parties Kegheadz promoted. Baroi said he made a few hundred dollars on some events and lost money on others He said 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 $320,000?
“That's ridiculous,” Glover said.
How did the Tax Commission arrive at such a high figure?
Baroi and Glover said when they met with tax officials, they were shown a huge stack of evidence that appeared to be page after page printed off the Kegheadz' MySpace Web site.
In the absence of business records, Tax Commission auditors apparently built their tax case around the statements made on the MySpace site, one of several Internet social networking sites the students used to promote their parties, Baroi said.
The former students said they were just having fun. Embellishing on social networking sites by college students is pretty much the norm, they said.
“People thought we were a lot bigger status than we were and we enjoyed people thinking that,” Glover said.
They just don't enjoy tax officials thinking that.
Documents given to the students by tax officials indicate auditors concluded Kegheadz hosted 108 events over a 4.5-year period and that their average paid attendance was 675.
Auditors estimated they had $919,506 in mixed beverage sales, from which they would owe $162,832 in mixed beverage tax, penalties and interest.
Baroi said none of that makes any sense.
Kegheadz never received any money from mixed beverage sales, he said. That revenue went to venue operators.
The group only held 22 parties and never had close to 675 people attend any of them, Baroi said. That's counting women, who got in free, he said.
Overall, Baroi estimates Kegheadz only netted about $1,700. “If a guy brought three or four girls, we'd let him in free, too,” Glover said.
Baroi and Glover said when they met with tax officials, they were shown a huge stack of evidence that appeared to be page after page printed off the Kegheadz' MySpace Web site.
The Tax Commission also is trying to assess them $155,294 for sales tax, penalties and interest and $1,856 for tourism tax, penalties and interest.
Welcome to what government will be like should Obama win the coming election.
Sounds like DemocRAT playbook.
These guys are just not patriotic enough.
Manwhile, robber barons like Raines have made off with tens of millions and nobody has anything to say about it.
Maybe they can get Charles Rangle to step in.
Reply
Outstanding
ROFLMAO
I know, maybe these guys should contact Joe Biden and see if he will represent them, isn't he a lawyer?
Josh Howard of the Dallas Mavericks said he didn't to have any allegiance to the f...ing flag cause he's black and blacks don't have to be patriotic.
This means that when 0bama becomes president all liberal Democrat blacks will be exempt from taxes because .... well... there not patriotic...LOL
I think that the federal government should step in and bail out Kegheadz. Kegheadz is obviously too important to be allowed to fail.
Yep, after we bail out AIG...then we’ll bail the Amazon guys, then Cisco, then Microsoft, etc....etc....etc.
Meanwhile, their little friends keep running to senators and representatives to write more tax code to avoid paying taxes. How these idiots come to the conclusion that we’ll save all of them....even the Dallas Cowboys...simply doesn’t make any sense to me.
If I were the Kansas City Royals....I’d sign up a dozen 4-star players this winter, to bring a world series winner to Kansas City....and when we go bankrupt...the Feds will step in to pay the bills for the Royals. Makes perfect sense.
I was reading where the poor rich folks in our congress was for the bail out because ... well...they are fixing to lose millions of dollars.
Never did one iota of business due to a down turn in the cattle market.
About two years later I did some consolidating of loans trying to capture lower interest rates.
My banker called wanting to know why there was an outstanding lien on my credit report for $13 thousands dollars for unpaid taxes to state of Oklahoma.
I called the state and was told that it was an estimated tax.
I was also told that the tax had to be paid.
It took my attorney nearly three years to get that tax settled and still ended up having to pay the state nearly $900 dollars in a settlement.
That is why this current bail out CARTE BLANCH scares the hell out of me.
You just got to know Henry Paulson is gonna protect his Wall Street buddies and people like Nancy Pelosie, Hairy Reid, John Kerry and others are gonna benefit.
I think the thought of these sorry bastardos losing money is the only reason they are now all of a sudden for all this non partisan bailout of their sorry butts.
Just my lowly opinion and thanks for letting me rant...whew feel better.
Sorry to hear about that. I’m glad you are “feeling better” now. But that sort of experience dissuades many people from starting small businesses.
If the taxing authorities decided to come after you for “estimated” taxes, you are pretty much assumed to be guilty unless you can prove otherwise but sometimes even that’s not enough.
I’ve been in the corporate accounting field for many years and some years ago was in a business partnership with a friend – doing some accounting work for small business but mostly computer consulting – accounting software installations, hardware and software support and the like. I was also a volunteer treasurer for a non-profit writers group.
Over the years I learned that while the IRS can be difficult to deal with, they are actually more reasonable and willing to work with you and negotiate with you in some cases than the state and local taxing authorities.
I’ve helped several employers and small business deal with taxation problems. State sales and payroll tax is often the most difficult.
These college kids, whether they knew it or not were engaged in a business and probably should have thought it through better, but then I’m presuming that they aren’t business or accounting majors.
Often people make the mistake of operating or incorporating a business and thinking that if they end up not doing any business or don’t make any profit they don’t have to file returns.
I had a couple of clients who at one time had a couple of employees and were making taxable sales and their business went dormant. But I still had to file quarterly and yearly payroll and unemployment tax returns and monthly or quarterly sales and use tax returns on their behalf – even if all the returns had all zeros on it.
But then that can be a Catch-22. Don’t file returns then you are screwed. File too many returns showing that you aren’t doing any business then you can still get screwed in an audit as you are expected to prove that you really haven’t done any business. But that’s trying to make you prove something that didn’t happen……trying to prove a negative is pretty much impossible. The only other option is to legally dissolve the business and un-incorporate but that can be just as lengthy, complicated and expensive as starting one.
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