Tax Debt Solutions Blog

Schwarzenegger vs Uncle Sam

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Arnold Schwarzenegger explained away his overdue taxes calling it ‘a minor paperwork tracking discrepancy’.  Not many ordinary taxpayers can appease the IRS with that claim regarding a $79,064 overdue tax bill.  The IRS did set a lien against that amount.  It was made up of $39,047 in 2004 and $40,016.80 in 2005.

The governor promised to be back in Uncle Sam’s good books and he did so when $79,064 was cleared by IRS agents who confirmed it was due to a ‘computer glitch’.  According to his representative the malfunction was discovered on Schwarzenegger’s payroll tax in both the years 2004 and 2005.  The IRS did demand an administrative fee of $20.50 from the governor of California.

The California Governor’s talking head shed a lot more light on the actual events that took place.  Problems arose from information returns and filings that notify Uncle Sam of payments to staff or merchants (e.g. Forms W-2 and 1099) that were presented by Schwarzenegger himself.  There is a fine for each and every time information is returned past the due date.  Exactly the same rule goes for every time information is wrong or incomplete information is filed.  Every time either of these happens then a $50 fine or penalty is incurred by that taxpayer.  The most a taxpayer may be penalized in a single year is $250,000.

The governor’s talking head is Aaron McLear.  He did make it known in a statement that some information will be resubmitted to the IRS by his boss.  They expressed anticipation that the issue would be finalized by the lien being removed sans any fine or penalty to the governor.

There is always the possibility of the IRS bringing California tax IOUs into the arena if Arron McLear is wrong and the governor does owe federal tax money.