Tax Lessons from the NFL Bounty ScandalPosted: March 12, 2012
Being from the South, I have grown up following football, so when the news broke on bounties in the NFL for injuring players, I found it both revolting and intriguing. I came across the following article linked in the CPA Daily letter (http://www.forbes.com/sites/kellyphillipserb/2012/03/03/a-fine-day-for-the-nfl-bounty-scandal-raises-tax-questions/ ) that puts a tax spin on the issue that I thought only CPAs would really enjoy. Then I thought – what if one of those players was also a CPA (it’s not that far fetched, there are a number of former NFL players that are CPAs) and didn’t report the bounties they received as income on their taxes
As a CPA I’ve always been cognizant that we are held to a higher standard when it comes to filing our taxes. In fact, one of the easiest ways to lose your license is to file a false tax return and be convicted of that fact by the IRS. While most CPAs won’t be collecting bounties for injury inducing hits on the football field, a lot of CPAs do receive payments outside of the normal flow of business commerce.
For example, did you declare that money you won by taking your fantasy football league championship last year? That’s income to the IRS and not reporting it is “fraud” as far as the government is concerned. To add insult to injury, unless you are a professional gambler, your fellow league owners won’t be able to declare their losses, but that’s government for you.
What about that money you earn refereeing youth sports. I’m sure everyone declares the income they get 1099’d on, but what about the couple of hundred in cash you earned at the weekend tournament? Do you report all of those payments as well? I know lots of non-CPA referees who do not report cash or non-1099’d referee income, but is it worth the risk if you are a CPA?
These are just a couple of examples where, as a CPA, you should think about the impacts of a “little cheating” on your taxes. I know “everyone” does it, and the odds of the IRS figuring it out are very small, but are you willing to risk your license over those odds? Are you willing to give up the credential that gives you your career and livelihood to save what would probably amount to no more than a couple of hundred dollars in taxes.
I sure know I’m not.