Where Mercy Is Shown, Mercy Is Given - Duane Dog Chapman [105]
We finally started making a little money when we began filming the show, although a lot of it went to paying for my legal defense. I filed my back tax returns and tried to catch up. I paid whatever the accountant told me to pay. By 2005, my tax returns from 2001 to 2004 had all been prepared and filed. Even though I wasn’t making any money from 2001 to 2003, the IRS estimated my income to be somewhere in the neighborhood of $800,000 a year. There was significant money coming into the bail bonds businesses I owned in Colorado and Hawaii, but the income wasn’t flowing to me personally. It was paid to whatever agent wrote the bond, so I never made the money the IRS was taxing me on. Bail bonds is one of the most heavily audited industries because it is such a high-cash business. The IRS has its own special manual just to audit bail bondsmen. A lot of the time, I don’t charge people for picking up a fugitive, so it’s hard to prove when I’ve had to pay a snitch fee or money to informants. Of course, these people don’t want to give up their Social Security numbers so I can 1099 them at the end of the year for giving me a little information. Doing that would leave a trail of who my anonymous contacts are. Over the course of my career, I’ve captured well over six thousand wanted fugitives at no cost to the taxpayers. I am not now, nor have I ever been, out to screw Uncle Sam. The government should have been able to give me the benefit of the doubt, but they didn’t.
The IRS decided to audit me in 2006. I had been audited numerous times in the past, so I knew what to expect. For years, I spent countless hours accounting for every dime and deduction on my past tax returns. I even helped a group of auditors in Denver learn about the bail bonds business so they would understand what they were looking at when they examined my accounts. Every single time they audited me, they never found anything unaccounted for. My final bills were always zero. But this time was different. This time around the government based their assessment on inaccurate information, and it was up to me to prove they were wrong. Until I did, I was on the hook.
While they scrutinized every last detail of my financial life, I sat in limbo, unable to make any payments until they came to me with their findings and a final tally of what they believed I owed. I started saving money in a special account marked just for my taxes, so I could settle up with them as quickly as possible once they were done. I received notice in 2008 that I owed the government for back taxes, penalties, and interest from the past several years. I nearly fell out of my chair when my accountants called with the horrifying news and numbers. How could I possibly owe more than I made? I was confused, shocked, and nearly paralyzed by the daunting task of paying off this debt.
Within sixty days of receiving their notice, I paid the government a substantial part of the sum they said I owed, as a gesture of good faith that we would be able to come to some understanding and agreement for a payment plan on the rest of the balance. When my tax attorney asked the IRS for some type of a payment plan and deal, the response was “No deal for the Dog.” The IRS told my lawyer that I had the ability to earn money, so there would be no deal for me.
Hmmm. I had to think about this reasoning for a moment because I was well aware that the Senate had just confirmed Timothy Geithner as treasury secretary only days after the fact surfaced that he had only belatedly paid $34,000 in income taxes. Tom Daschle withdrew as President Barack Obama’s nominee to be health and human services secretary, even though a day earlier, Obama had said he “absolutely” stood by Daschle in the face of problems over back taxes and potential conflicts of interest. Nancy Killefer, nominated by Obama to be the government’s first chief performance officer, ultimately declined the post