by Gary D. Novack, Ph.D.
President, Pharmalogic Development, Inc. | Guest Contributor, The Daily Anchor
It seems it was just last week that Senate confirmation hearings of one of President Obama’s nominees gave me an idea for a column about small business risks, “Should Small Businesses Use a Payroll Service? Thoughts for Minimizing Your Risks.” Now, there’s another one. Former Senator Tom Daschle, who was to head the Health and Human Services Department, had income that he didn’t report in a timely fashion. We are not talking one day’s tips from being a waiter, we are talking a 6-figure sum. I reference Ron Lieber’s article on this topic, “How to Avoid a Tom Daschle Tax Problem.”
With the caveat that I am not a tax attorney or accountant (and you have already seen that caveat from me before,) here’s the easy answer – Report all of your income. That’s right – report it all. Keep one set of books. Back up your data, we’ve been there before.Floss your teeth and rotate your tires too – but that’s probably way out of my area of expertise.
Seriously, not reporting income is just not defensible. You and your accountant may decide on some creative interpretations on deductions – like whether that Ralph Lauren tuxedo really was a business expense (It WAS a business dinner, right?) And the same for the Nintendo Wii – I mean I only played it at work. In contrast to deductions which may be a matter of opinion, income is very easy to trace. It’s not worth it. You have to remember what you did or didn’t do, you have to worry about the IRS finding out, and, should you ever be nominated to a cabinet position, you will have the embarrassment of trying to explain it. And while you are at it, pay the full taxes on your domestic help or use a service that does. You wouldn’t want to be the subject of another Nanny-gate like Attorney General nominee Zoe Baird or Chief White House Performance Officer nominee Nancy Killefer.
Gary D. Novack is president of PharmaLogic Development Inc. of San Rafael, CA, a Regent Emeritus of the University of California, and a regular contributor to The Daily Anchor.
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