The Ostrich Defense – Continued! By: Gabriel PotterMBA, AIFA® 2014.01.08

You can be a millionaire and never pay taxes.  You can be a millionaire and never pay taxes!  

You say:   "Steve, how can I be a millionaire and never pay taxes?"

First… get a million dollars.

Now! You say, "Steve, what do I say to the tax man when he comes to my door and says, 'You have never paid taxes?'"   Two simple words.

Two simple words in the English language: "I forgot."   How many times do we let ourselves get into terrible situations because we don't say "I forgot"?

Let's say you're on trial for armed robbery. You say to the judge, "I forgot armed robbery was illegal."
-- Steve Martin

 

Claiming ignorance of the law is not usually  sufficient to absolve oneself of responsibility, but that doesn’t stop people from trying.  We wrote about this tactic inside our Quarterly magazine – Confero Issue 4 – in the article titled “The Ostrich Defense”.  The latest attempt  is from Beanie Babies creator Ty Warner using it for recent tax evasion case.  In between the other arguments that his lawyers have made, including an emotional plea regarding Ty’s unhappy childhood, is the assertion that, despite his undeniable business acumen, Mr. Warner is not a tax-expert.  Despite a net worth of several billion dollars, he acted outside of the counsel of his accountants and consequently neglected to pay millions of dollars in taxes from an undisclosed overseas account.

I submit my apologies to Steve Martin; it looks like “I forgot” isn’t, by itself, enough stay out of jail free.

Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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