Start Skydiving???

[tetra316 0]

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Or Hart could have issued a check to the employee for $1500 instead of their net amount of $1000. In essence not withholding. That is the part that is not clear. I don't know what the tax code says in regards to that but I do know I've seem some even more obviously incorrect accounting practices with surprising results.

That would be a case of improperly classifying employees as independent contractors. According to the newspaper articles, that is not what was happening.

ETA: Your profile says you are a CPA. How in the world you you need this to be explained to you?

Yes I am a CPA. I'm also right and you are wrong. Read the court document I posted.

[riggerpaul 1]

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Ok, I take that back! Here is a summarized court doc. It states he failed to "WITHHOLD money form employees' checks." So his employees were getting paid more than they should have. Hart also used corporate funds to fund skydiving, which is a separate issue not related to the taxes. He didn't withold taxes so none were used to pay for skydiving.

The interesting part is the last quote "As a result of these actions, SMS employees were not credited with the taxes that were supposed to have been applied". That seems to imply witholding but not crediting. But the document clearly says he failed to WITHHOLD. Interesting.

Okay, though it comes from a court, it is still just a press release. This was not necessarily written by a judge, or even by a lawyer.

If you are still not satisfied about what actually happened, the press release has contact info.

Me? I think I understand what happened, and feel no need to bother the guy.

[JohnnyD 0]

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Or Hart could have issued a check to the employee for $1500 instead of their net amount of $1000. In essence not withholding. That is the part that is not clear. I don't know what the tax code says in regards to that but I do know I've seem some even more obviously incorrect accounting practices with surprising results.

That would be a case of improperly classifying employees as independent contractors. According to the newspaper articles, that is not what was happening.

ETA: Your profile says you are a CPA. How in the world you you need this to be explained to you?

Yes I am a CPA. I'm also right and you are wrong. Read the court document I posted.

Ask yourself these questions:
1. What is the company's date of inception?
2. What is the period under examination?
3. In the period under examination, was positive cash flow attained by criminal means?
4. If it was, how and what was it used for?
5. What was the end result for the employees?
6. What was the end result for the employer?

[tetra316 0]

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Or Hart could have issued a check to the employee for $1500 instead of their net amount of $1000. In essence not withholding. That is the part that is not clear. I don't know what the tax code says in regards to that but I do know I've seem some even more obviously incorrect accounting practices with surprising results.

That would be a case of improperly classifying employees as independent contractors. According to the newspaper articles, that is not what was happening.

ETA: Your profile says you are a CPA. How in the world you you need this to be explained to you?

Yes I am a CPA. I'm also right and you are wrong. Read the court document I posted.

Ask yourself these questions:
1. What is the company's date of inception?
2. What is the period under examination?
3. In the period under examination, was positive cash flow attained by criminal means?
4. If it was, how and what was it used for?
5. What was the end result for the employees?
6. What was the end result for the employer?

I don't care. I just like engaging in discussions when I feel I have a vaild point. Yes what he did was wrong and now he's paying the price. End of story. Hopefully he doesn't do it again.

[JohnnyD 0]

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I don't care. I just like engaging in discussions when I feel I have a vaild point. Yes what he did was wrong and now he's paying the price. End of story. Hopefully he doesn't do it again.

I think the discussion is at least reasonably important to the community as a whole because we do deal with the rules of independent contractors all the time (although not in this case) and specifically to the employees/contractors/jumpers at Start who may be directly affected by it.

By the way: I'm right.

[Scrumpot 1]

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A business with employees does not collect payroll taxes, it withholds them.

There is never any collection. A collection implies a debt, and the employees have no debt to the employer.

So the news reports are inaccurate to start with.

Paul - although from the lay perspective, your TERMINOLOGY is correct - in the eyes of the Federal Statute (and most specifically the one this defendent was charged, tried and now convicted under), you are incorrect!

Employers ARE considered an "Agent (or instrument in other sections) of Collection" (collection being the operative word here) on behalf of the government, of certain taxes, in certain situations. Payroll being one of them. Therefore when employers are found to fail to pay whichever set of taxes under the law they are emburdened with (as in this case) - they are charged with "Failure to Collect & Pay Taxes", as that is the statute(s) the charge(s) fall under.

Direct from the Cato Register, specifically on the topic:

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Ostensible versus Actual Purposes of Withholding. In 1941 Albert G. Hart, professor of economics at Iowa State College, proposed a general plan for collection of income taxes at the source (U.S. House Hearings 1941: 330-48). The next year Treasury Secretary Morgenthau (U.S. House Hearings 1942, vol. 1: 5) recommended income tax "withholding", presenting it as a "more convenient method for the payment of income taxes.'' Government concern for the well-being of the taxpayer was the dominant theme. Throughout this period the Treasury Department consistently portrayed the withholding proposal as providing taxpayers "a way of meeting their tax obligations with a maximum of convenience and a minimum of hardship'' (U.S. House Hearings 1943: 9).

As the tax codes became promulgated, ostensibly "withholding" and "collection" became (for purposes of the eventual statute) synonymous.

The newspaper annotation is correct.

Again all - Just "FWIW".

coitus non circum - Moab Stone

[dbcooperfan 0]

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The newspaper annotation is correct.

It may be correct but is misleading to most people.

I have been sitting back letting everyone get this law suit issue out of the way so I can bring something else up.

We all can agree that we are all turbine whores, and will go where the bigger, faster ship is...agreed? Agreed.

My questions are this... How can anyone in good conscience go to this guys DZ again after what has happened? How can a person honestly go to jump his aircraft knowing that he blatantly broke the law to build this DZ? How is one ethically able to support a DZ when you know for a fact that the money in this lawsuit (that he pled guilty to) was put toward building Start Skydiving?

As shiny new as it is, everything about this DZ is tarnished and he has given a black eye to the sport we love with his actions. I guess the old saying “Want to make a million dollars owning a DZ, start with two million.” Should be changed with “Want to make a million dollars owning a DZ, start with $679,000 of someone else’s money”.

I am very disappointed with the actions, lies and deceitfulness of John Hart. Instead of working hard to get a great DZ up and running he took the easy way. Who knows what else will come of this whole mess, only time will tell. The DZ should be (and probably will be) hit hard to pay back the money from the lawsuit, and rightfully so.

I for one will never darken the hanger door of Start Skydiving ever again.

"TREE!" - D.B. Cooper 1971

[Remster 24]

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My questions are this... How can anyone in good conscience go to this guys DZ again after what has happened? How can a person honestly go to jump his aircraft knowing that he blatantly broke the law to build this DZ? How is one ethically able to support a DZ when you know for a fact that the money in this lawsuit (that he pled guilty to) was put toward building Start Skydiving

I don't know the guy.

He broke the law, he got caught, and he's paying for it, both financially and with time.

That being said, ethics is not a black and white game.

Are you seriously asking a bunch of skydiver if they would support a business knowing the owner defrauded the government of taxes, to build a dropzone??????

With all the rumors about other DZO's implicated in murder trails, and opening DZ's with drug money; with all the stories (some real!) of fellow jumpers being arrested for running pot farms; others breaking and entering BASE sites, and many others, this one is not that open and shut, ethically speaking.

Remster

[riggerpaul 1]

Maybe there are other ways to look at it.

If the dz is not closed, then there are honest people trying to make a living there.

Refusing to jump there maybe doesn't hurt John Hart, but it could be hurting those honest people who are still there.

They were duped as much as anyone, so why punish them?

This isn't quite like saying you won't invest with Bernie Madoff anymore. It isn't nearly that clear.

Some of it may depend on the long term disposition of the dropzone.

If Hart is forced to sell his share to pay his legal costs, he might not be around to tarnish the place anymore. Would that alter your view?

[Scrumpot 1]

+1

I wish absolutley no hardship or ill-will in any way at all on any of the folks who patronize, or work Start.

dbcooperfan, whoever you are - maybe you weren't directing that specifically to ME (I hope not) - as I am the wrong person to ask. I have absolutely NO dog in this "fight" whatsoever. I suppose you only chose my post, as it was the latest before yours, to "reply to".

I am, have, and WON'T take(n) any position - on EITHER side of this. I was only clarifying based upon my knowledge of the particular statute(s)/code(s) - some of the technical misperceptions that seem to be going on with some of the posts is all.

Again, and as I've closed each of such posts I've put into this thread here (without bias or "agenda" - I'll leave all that to others - and apparently - you-all) ...Just very basically, "FWIW".

I am not "involved", nor do I intend to be baited into being --- again, on EITHER side either.

FWIW....
Blue Skies,
-Grant

coitus non circum - Moab Stone

[dbcooperfan 0]

Scrumpot,

My post was a general one to all, it wasn't directed to you. Sorry if it came off that way.

My issue is with how the money was obtained to get the operation up and running and everything that the DZ has done with the money since.

I feel for the employees/patrons that bought into all of Hart's "stories" as well. They were led to believe that he was an upstanding honest guy only to find out the opposite, in a very crushing way. They should not be punished for believing him. I just wouldn’t be able to work/jump at a place that was built on the kind of lies he created in the name of the greatest sport created.

And before anyone throws out an “open your eyes” comment, let me say this isn’t my first rodeo, with this kind of situation. I have been jumping for a long time and have seen my share of shady DZ’s. That is why my radar went off when things started to go south at their last airport. When I jumped there I saw through the smoke screen he was creating and once he left Lebanon (which is a whole different lawsuit waiting to be resolved), I didn’t follow him. There are a bunch of DZ’s in that area that people can rotate to and from that is within a 3-4 hour radius on either side of the border.

People will jump where they want with their money. I am simply saying that personally, I draw the line at that kind of behavior and won’t support him or any DZ he is associated with.

"TREE!" - D.B. Cooper 1971

[divnswoop 0]

Gotta love people who are not willing to stand up behind their words...and hide behind a screen name.

[dbcooperfan 0]

I totaly agree. Especially when they don't put info like their full name...email....Home DZ....stuff like that.

Gotta love it.

At least some are willing to give their opinion and speak up, even if they do hide behind a screen name.

"TREE!" - D.B. Cooper 1971

[divnswoop 0]

Shawn Conley....live in Deland...no "home" DZ....and you are a pussy.

That is my opinion with my full name. Unlike you

[dbcooperfan 0]

D.B Cooper....I live in Washington somewhere...no "home" DZ...and you're right.

"TREE!" - D.B. Cooper 1971

[pms07 3]

I was pretty sure I was in a skydiving forum but this thread looks more like a fucking lawyer convention. When all you aspiring legal experts figure out the nuances of tax law and how it applies in this case, I'm sure you will let us know...

Meanwhile, let's get back to talking about skydiving...

[BillyVance 34]

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Ok, I take that back! Here is a summarized court doc. It states he failed to "WITHHOLD money form employees' checks." So his employees were getting paid more than they should have. Hart also used corporate funds to fund skydiving, which is a separate issue not related to the taxes. He didn't withold taxes so none were used to pay for skydiving.

The interesting part is the last quote "As a result of these actions, SMS employees were not credited with the taxes that were supposed to have been applied". That seems to imply witholding but not crediting. But the document clearly says he failed to WITHHOLD. Interesting.

I'm not sure why but I tried a few times to open your attachment and kept getting a blank page.

I do have this link however... http://www.justice.gov/usao/ohs/Press/06-22-10-cin.pdf

ETA: well damn... I clicked on my own link and got nothing... must be a bug or something on my end...

"Mediocre people don't like high achievers, and high achievers don't like mediocre people." - SIX TIME National Champion coach Nick Saban

[DiverMike 5]

I don't know the details about how the money that supposed to be submitted to the IRS was spent and neither do you. Like Scrumpot, I will try to explain using generally accepted accounting principles that are not specific to this case. Payroll taxes are accrued and paid quarterly. They are a business expense just like advertising, charity deductions, training, membership dues, and many more. There is no clear audit trail of the money used to pay other expenses if one expense is not paid.

The DOJ press release indicated, "From 2004 through 2006, Hart used SMS corporate funds for expenditures including, but not limited to, funding his skydiving team’s attendance at skydiving competitions, funding other skydiving organizations, and paying for his annual membership and expenses at a local country club."

It could just as well said, "From 2004 through 2006, Hart used SMS corporate funds for expenditures including, but not limited to, charitible contributions, employee health care, and providing assistance to terminally ill children."

Both statements are equally true.

Damn - I'm not following my own advice and am still feeding a troll.

For the same reason I jump off a perfectly good diving board.

[dbcooperfan 0]

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It could just as well said, "From 2004 through 2006, Hart used SMS corporate funds for expenditures including, but not limited to, charitible contributions, employee health care, and providing assistance to terminally ill children."

Both statements are equally true.

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Very good point. However that makes it even more sad to me. If what you say is true, he stole this money (or however everyone decided he got it On the flip side of this coin he still is hurting all the employees in this lawsuit. People seem to be overlooking those that he did the damage to over that period of time.

If the money did go to those causes to make their lives better then that is terriffic for them but shame on Hart for doing it that way becuase now they know he paid for it through ill gotten gains.

I'll go back under my bridge now.

"TREE!" - D.B. Cooper 1971

[davelepka 4]

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It could just as well said, "From 2004 through 2006, Hart used SMS corporate funds for expenditures including, but not limited to, charitible contributions, employee health care, and providing assistance to terminally ill children."

That's what I would have thought as well, but they did specifically include the skydiving activities and country club dues in the lawsuit. Maybe he did pay for those things directly through the corp., and those expenses (which would be considered 'non-standard' expenses) were what created the shortfall that left the payroll taxes unpaid.

On another note, you use 'providing assistance to terminally ill children' as one of your examples, and I'm not sure if you were aware of this or not, but Hart did do a lot of work with the Make a Wish Foundation, providing tandem jumps to terminally ill people, some of them being children (waivers were usually granted for the under-age tandems).

[davelepka 4]

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On the flip side of this coin he still is hurting all the employees in this lawsuit. People seem to be overlooking those that he did the damage to over that period of time.

I'm still not 100% sure you figure he hurt his employees with his actions. They can't be held accountable for his not paying the monies he withheld. It's not as if the IRS is coming after them personally to satisfy the tax debt, that lies squarely on Hart's shoulders.

So what is this 'damage' he inflicted?

[dbcooperfan 0]

Taken from the form that tetra316 posted:
"Beginning at least as early as January 2004, Hart willfully failed to withhold and pay over payroll tax payments from SMS employees’ paychecks, failed to file Form’s 941 with the IRS, and no payments of payroll taxes were made to the IRS. From 2004 through 2006 Hart failed to withhold and pay over to the IRS approximately $678,644.79 in Medicare and Social Security taxes from his employees’ paychecks."

I read it as those employees that he duped will not see those monies in the later years of their lives when they need it the most becuase he did not pay into SS or MC. Any money that the IRS is getting back will go to the Govt. not the employees he hosed.

I sure hope I'm wrong on my interpretation, but I don't believe I am on this point.

"TREE!" - D.B. Cooper 1971

[tetra316 0]

fyi-that is the same document I posted.

[DiverMike 5]

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I'm still not 100% sure you figure he hurt his employees with his actions. They can't be held accountable for his not paying the monies he withheld. It's not as if the IRS is coming after them personally to satisfy the tax debt, that lies squarely on Hart's shoulders.

So what is this 'damage' he inflicted?

There was 'damage' inflicted, although it was undone by the settlement, and it was not the employees who were damaged, but the US Government.

To quote the SSA, "Remember, it’s your earnings, not the amount of taxes you paid or the number of credits you’ve earned, that determine your benefit amount. When we figure that amount, we base it on your average earnings over your lifetime."

Since all the earnings were reported correctly, no employee was at risk of losing a single penny in retirement benefits. There would be a shortfall of collected money to provide the benefit. It is ok for the government to give itself a loan from the pool of SSA money with a worthless IOU, but if you are the owner of a corporation that does it you go to jail.


for more information see: https://secure.ssa.gov/apps6z/isss/main.html

For the same reason I jump off a perfectly good diving board.

[Andy_Copland 0]

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Can some ocean bottom feeding invertebrate, errrrr, I mean Andy or Jerry, care to explain?

Not really no. Would love to but gotta get back to earning money like the bottom feeder i am. Arse hole.

1338

People aint made of nothin' but water and shit.

Until morale improves, the beatings will continue.