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The Tax Prophet Newsletter   Issue # 30 January, 2006


In This Issue:
Choosing to Fight
Hatch's "Defense"



"Yes, there are few things that Americans hate more than taxes, but one of them is freeloaders."

U.S. District Court Judge Gleeson

So much for insisting on your day in court. When Richard Hatch, who won $1 million in the first season of "Survivor," was charged with tax evasion for failing to pay taxes on his winnings, he was offered a plea bargain: Plead guilty to two tax evasion charges that carried a maximum 10-year jail sentence and a $500,000 fine and, in all probability, wind up with a much lesser sentence.

Choosing to Fight

Hatch, the infamous bug-eating Survivor, decided to fight the law. Unfortunately for him, on Wednesday, January 25, 2006, his legal tribal counsel gave him thumbs down.

The jury, deliberating for less than a day, found Hatch guilty of tax evasion on his Survivor winnings as well as evading taxes on $327,000 earned as a radio personality. He now faces a maximum of 13 years in the slammer and a $600,000 fine.

Hatch's "Defense"

Hatch raised an curious excuse for not reporting the income: He claimed that CBS agreed to pay his taxes as hush money because he caught other Survivor contestants eating unauthorized food. The judge, however, disallowed the testimony.

Hatch took the witness stand (usually a bad strategy in a criminal case) and promptly acknowledged that money donated to his charity, Horizon Bound, was diverted to his personal living expenses, including tips for his limousine driver and improving his residence.

Hatch also acknowledged signing a contract with CBS making him responsible for his taxes and receiving two letters from IRS telling him to file his tax returns.

His attorney tried to portray him as simply the world's worst bookkeeper who did not intentionally try to cheat on his taxes. In closing, his attorney railed about the complexity of the tax code -- as if "accidentally" leaving off $1,327,000 in income on a tax reutrn was due to misreading the tax law.


Hatch joins "Cabbie" from the Howard Stern show as another instant celebrity convicted of tax evasion. Cabbie is now in prison and the same fate awaits Hatch.

How about those "Extreme Makeover" contestants who received hundreds of thousands of dollars worth of repairs and improvements on their homes - all of which is taxable income. Could they be next? The "reality" regarding these reality shows is that the income, whether in the form of cash, benefits or property, is taxable and must be reported.

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All contents copyright 1995-2006 Robert L. Sommers, attorney-at-law. All rights reserved. This newsletter provides information of a general nature for educational purposes only and is not intended to be legal or tax advice. This information has not been updated to reflect subsequent changes in the law, if any. Your particular facts and circumstances, and changes in the law, must be considered when applying U.S. tax law. You should always consult with a competent tax professional licensed in your state with respect to your particular situation. The Tax Prophet is a registered trademark of Robert L. Sommers.