Tuesday, January 22, 2013

Tax Planning - Repairman Jack Style

Source: http://www.forbes.com/sites/peterjreilly/2013/01/22/tax-planning-repairman-jack-style/

There is only one guy who refuses to file tax returns that I have unswerving admiration for.  His name is Jack.  Just Jack.  He’ll give you a last name if you insist.  He has lots of them.  Jack’s designation as a “repairman” is metaphorical.  What he fixes are situations that are at variance with his moral code. Wikipedia catches the spirit of his business pretty well:

He is something of an underground mercenary, hired by everyday people to fix situations that cannot be dealt with through legal means (e.g. by blackmail). He is careful about who he agrees to do fix-its for, preferring innocent, desperate citizens being victimized with no one else to turn to.

 There is a little bit of the  Zorro or the Lone Ranger about Jack.  The only thing is that after Jack has “fixed” a situation, he does not want somebody to say “Who was that masked man ?”  He would prefer “What the _____ ?”.  Jack does take a fee for his fixes.  Clearly gross income – and based on his lifestyle he makes enough to have a filing requirement and a significant liability.  He doesn’t file and he doesn’t pay and I really admire him.

Before you report to the various bodies that can sanction me, I should probably mention that Repairman Jack is a fictional character, the creation of F. Paul Wilson.  He appears in a series of novels that disclose “The Secret History of The World”.  You could tackle the “secret history” in chronological order (which is different from the order the books were published).   I’m engaged in that project right now. (Warning: if you are a tax blogger, you might take a productivity hit.)  It will be a while before you meet Jack if you take that course.  I’d recommend that you start with The Tomb, but, dammit Jim, I’m a tax blogger not a book reviewer, I’m here to tell you how Jack manages to not pay any taxes without forfeiting his liberty.

Be In The Right Business

The people who need Jack’s fix-it help have reasons that they cannot deal with the authorities.  Not anything that someone with a chaotic good alignment would hold against them, immigration issues for example.  At any rate his customers understand why they need to pay cash and won’t be inclined to send him a 1099.  When Jack’s girl friend prevails on him to “fix” the theft of some toys from a pediatric AIDS clinic where she volunteers, he resists because of their record keeping requirements.  He ends up doing the job gratis, but that’s a different part of the story.

When Jack explains why he can’t do paid work for a charity, his girl friend is more or less stunned:
She shook her head. “How can that be? You’ve got to have a social security number. You’ve got to have a bank account, a credit card, a driver license. You can’t function without them.”

Get Off To A Good Start

Jack was born in 1969+/-.  This was a great help in his subsequent plan to live “off the grid”.  If he was born much later, his CPA father would very likely have gotten a social security number for him in order to claim him as a dependent.  Jack had an entrepeneurial streak and was busily mowing lawns for pay by the time he was fourteen.  His first employer who ran a kind of antique shop was not bothered by the lack of a social security number.  He even paid Jack a few cents more an hour because of the avoided paperwork.

Honesty Is The Best Policy

Young Jack earns the trust of his employer by passing an honesty test, the details of which escape me at the moment.  He passes a much more significant test when the owner’s nephew appears in the store in the guise of a customer.  He tries to interest Jack in stealing from the owner.  When Jack resists, he reveals himself, praises Jack and offers him his card.  When Jack decides to move to New York City, Abe becomes his best friend, confidant and weapons supplier.

Because You Have To Have Friends

Jack may live off the grid, but he lives in community.  You will only learn about Jack’s special capabilities by referral.  You can contact him through his website which includes enough discussions of appliance repair to cover the true nature of his business.  He will then set up a meeting with you at a bar called Julio’s that is decorated in a manner to drive off yuppies.  Before you get to see Jack you will be scrutinized by Julio.  Julio’s problems with an unreasonable partner were among one of the earliest fixes that Jack achieved when he was starting his “career” in New York.

And A Retirement Plan

Being an urban merecenary can be demanding physically.  It is probably not a good job for really old men but Jack cannot have an IRA or a 401(k).  Much of his savings are in the form of Krugerands or other bullion coins.  They are hidden in the walls of his appartment.  Unlike paper money they won’t burn in a fire.  They are taped to pipes so that even a metal detector equipped burglar will be less likely to find them.

Why Is Tax Evasion OK For Jack But Not For Me And You ?

People refuse or fail to file required income tax returns for a variety of reason.  There are disorganized procrastinators, some of whom cannot discipline themselves to live on their after tax income.  There are people, sometimes called “tax protesters”, who have adopted often wacky theories about why the tax laws don’t apply to them.  The theories will often be supported by a pastiche of out of context quotations from case law, statutes and regulations.  There are “war tax” resisters, some of whom file without paying.  I have a variety of reactions to these folks.  I have a lot of sympathy for the disorganized procrastinators.  Over the years I have tried to give a couple of them the tough love that I thought they needed, but dammit Jim, I’m a CPA not a therapist.  I kind of admire the “war tax” resisters.  The tax protesters.  Much as I like to have them comment on my blog I’m hard pressed as to determine whether they are idiots are sociopaths.  Probably the proportions vary.  Jack is different.

The reason that Jack is different is that he has a special role to play in “The Secret History Of The World”, a titanic struggle spanning millenia between forces that we can never fully understand.  People are often merely pawns in this great struggle.  The tentacles of the conspiracies involved in the struggle reach everywhere.  That is probably why Jack feels moved to live off the grid, even though he is only gradually learning the true significance that he has.

I’m still working my way through the Repairman Jack corpus.  There may be some other planning tips buried in there.  I’ll keep my eyes open and let you know.

Here is his link on Twitter! @peterreillycpa.

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