Back Taxes

A Davidsonville woman who had received one of the toughest sentences ever given for failing to file state income tax returns had her sentence reduced yesterday because she had paid her back taxes.Carol-Ann R. Baker, 52, had been sentenced to 11 years in prison and fined $6,000 in October for failing to file state income tax returns from 1986 to 1988. Her husband, David Bruce Baker, received 12 years and a $12,000 fine for failing to file returns from 1985 to 1988.In imposing those sentences, Circuit Judge Eugene M. Lerner told the couple he would "substantially reduce" the punishment if they filed their returns and paid their back taxes.

PHILADELPHIA -- When the city of Philadelphia announced two months ago that it was levying a city wage tax on visiting professional athletes, a lot of people, including a number of visiting professional athletes, laughed.But the city is having the last laugh.The Philadelphia Daily News has learned that the city is close to striking deals with the four major professional sports leagues and their unions that would clear the way for the city to start collecting back taxes from out-of-town athletes.

Comptroller Peter Franchot announced yesterday Maryland's first successful attempt at closing a real estate-related "tax-avoidance scheme," which yielded $10.8 million in back taxes. The amount represents three years' worth of taxes from a "major corporation" that was not identified because of tax confidentiality laws. Tax collectors have several other related audits under way and have determined that another company owes $5.7 million for using the same practice, officials said. Under the scheme, a company with stores in Maryland establishes a real estate investment trust to which its stores pay rent.

TIP 5 IRS cuts the recession-ridden a little bit of slack Would you believe a kindler, gentler Internal Revenue Service? The agency says it is cutting some slack now for those who owe back taxes given the economic turmoil. Among the promised changes: * Suspension of collection actions if you lost a job, rely solely on Social Security or welfare income, suffer a "devastating illness" or have huge medical bills. * More flexibility if you can't keep up with your installment payments on back taxes because you lost your job or had some other hardship.

Fred Allnutt Sr. has fulfilled the fantasy of many Americans -- thumbing his nose at the Internal Revenue Service.The longtime Ellicott City tax protester and his son Christopher were acquitted in federal court last week of charges that they conspired to evade taxes by hiding their assets and not filing tax returns.While Mr. Allnutt avoided a possible decade of prison time, his tax woes are far from over.Mr. Allnutt, 54, still owes the IRS about $3 million in back taxes, interest and penalties for taxes he did not pay from 1981 to 1986, according to his defense team.

You might expect people who work for the Internal Revenue Service to be especially diligent about paying their taxes on time and in full. What's more, the agency's rules require disciplinary action against any employee who is a day late or a dollar short.Yet an internal review in April 1994 found that 16,800 IRS employees who owed taxes had paid or filed late or had failed to file a return. And in October, an IRS computer check of 110,665 employees found 733 had not filed a 1993 tax return and 4,192 owed back taxes, more than $2,000 on average.

WASHINGTON -- In another instance of a problem that has plagued the Clinton administration for a year, the White House acknowledged yesterday that Defense Secretary-designate Bobby Ray Inman did not pay Social Security taxes for a part-time housekeeper he and his wife have employed since 1986.Mr. Inman paid some $6,000 in back taxes yesterday, and any additional fees in the form of penalties or interest would becalculated by the Internal Revenue Service, White House officials said.Communications Director Mark Gearan also said that Mr. Inman had informed President Clinton of this situation before being selected last week to replace Les Aspin at the Pentagon.

By introducing legislation to exempt the EnterTRAINment line from amusement and admission taxes, Republican state senators Timothy R. Ferguson and Larry E. Haines have provoked an interesting debate: Whose interests should the legislators be looking out for -- a commercial enterprise that generates jobs and income or a couple of Carroll municipalities that depend on amusement and admission taxes to finance their budgets?EnterTRAINment, a Carroll County-based railroad that provides scenic excursions, owes about $330,000 in back taxes that the previous owner neglected to pay. Although the state collects the tax payments, this is actually a local levy that the municipalities set. According to the Maryland comptroller's office, EnterTRAINment must pay the tax to Union Bridge and Westminster, where the train trips originate.

Baltimore City's annual sale of tax delinquent properties is a colorful affair that has long been popular among speculators. The speculators are often organized in syndicates which buy hundreds of houses sight unseen, hoping their original owners will come up with the back taxes and pay the speculators the required 24 percent interest.While this is exactly what happens in many cases, some houses keep coming up in the annual tax sales year after year. Most of those houses are marginal properties, usually vacant and abandoned.

An auction of the Brokerage, the white elephant of Baltimore's Inner Harbor rejuvenation, brought no bidders as the bank holding a $53 million mortgage foreclosed and took ownership of the Victorian-style shopping mall and office center.The mortgage holder -- B.A. Properties I Inc., a subsidiary of the Bank of America -- took back the Brokerage yesterday for its starting bid of $8 million.James A. Cole, lawyer for B.A. Properties, refused to comment after auctioneer Joseph Cooper failed to summon any bidders from a crowd of about 50 curious onlookers in the elaborately decorated shopping mall at 34 Market Place across the street from the failed Fish Market entertainment complex.