Accounting Accountability

Thanks to the commenters at Hot Air for this....

As you know, Al Franken has thrown his accountant (Allen Chanzis) under the bus for his tax problems, saying that Chanzis had advised him to not pay these other states taxes. Well come to find out, Chanzis is no ordinary CPA. Chanzis is a partner in the firm Wlodinguer, Erk & Chanzis- a firm that SPECIALIZES in Entertainment industry accounting! From Chanzis bio...

Allen Chanzis
Responsible for Business Management and has a unique expertise in all aspects of Tour Accounting and reporting. He also has extensive experience in our tax practice as well as royalty audit, computer and administration areas. Mr. Chanzis has the main responsibility for the Administration of our firms affairs.

Emphasis mine.

Now does this sound like someone who would make such a "rookie mistake" as to advise a client not to pay income taxes made while on tour? Remember...that is Franken's story...that his accountant gave him incorrect advice.

"We paid taxes on every cent of income we ever had," Franken told AP. "What happened is our accountant made a mistake, and all of these are repercussions of that same mistake. His mistake was not understanding the law, the obligation to pay these state taxes." Following his accountant's advice, he said, he and his wife, Franni, paid their entire income tax bill to the city and state where they were living at the time.

Emphasis again mine. I would speculate that this expertise is the reason why Chanzis told the Star Tribune that he was instructed to say "no comment" if asked about Franken's tax woes.

"I've been told to say, 'No comment,'" Chanzis said, without saying who had instructed him to do so. Refusing to discuss any mistakes, he added: "I've been told you have the information you need."

Emphasis once again mine. I've been told to say"no comment". Those words were very deliberately chosen....that is not an off the cuff answer. This man knows the whole truth but has been instructed not to say what it is!

As many have said...Franken needs to come clean and he needs to come clean FAST. The DFL nominating convention is a little over one month away (June 7). Thirty days is an eternity during an election. The sooner this issue is completely addressed, the sooner the candidate can start to distance himself from it. Today is the day Al - it's a slow news day and you know that the local press will bury it for you. Get it all out now!

UPDATE AND BUMP: The American Thinker has a great post up on this.

As a CPA I find the Franken tax situation an amusing lesson. I suspect the accountant probably advised Franken of the obligations and Franken told him not to prepare returns for the non resident states. I had that happen more than once with people who owned pass through entities that operated in several states...Income from the performance of services is considered earned where the services are performed. Technically speaking, whenever I spent a day at a client in a neighboring state, I had an obligation to file an income tax return in that state for that day's salary unless an agreement existed between that state and my state of domicile that I need only pay tax where I live.... A huge exception exists for athletes and entertainers. For one thing few people except the desk clerks at the motel notice when a team of IT consultants from California spends several weeks in Asheville, NC. People in three states knew when George Clooney and Renee Zellweger were in nearby Anderson, SC filming Leatherheads. One day is all it takes in some cases.

Whenever the Seahawks play the Patriots in New England, everyone on the team has Massachusetts income tax withheld because of the 24 hours they spent in that state. Same thing when a Disney affiliate films a movie with scenes shot in multiple locations. If the director insists on spending five days in Central Park while the rest of the movie gets filmed in California, both New York state and New York City expect taxes to be withheld on everyone involved in establishing the story takes place in Manhattan. Ditto if a TV show goes on the road and films at a special location for a week. The local government offices that help arrange locations and permits also check that tax laws are being fully complied with. Thus networks, studios and sports teams are used to sometimes issuing Forms W-2 to a half a dozen different states or more on behalf of a single employee.

Given these industry practices, it's hard for me to believe that TV veteran Franken did not know his state income tax filing obligations.

I have to agree with Smith's conclusions. It would take a "willing suspension of disbelief" for us to take Team Franken's excuses at face value any longer.