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Santa in Trouble with the IRS

By Michael Cohn
December 28, 2012

Christmas always brings out the satirical bent in a lot of folks, and this holiday season has been no exception, with stories suggesting the beloved Santa Claus is running afoul of the tax authorities.

Sheepshead Bites, an independent news blog based in the Sheepshead Bay section of Brooklyn, ran an amusing item Thursday, provocatively entitled “Is Santa Claus on the IRS ‘Naughty’ List?” According to the author, Joseph S. Reisman, the IRS has sent an inquiry to Mr. and Mrs. Claus because they have not filed a U.S. income tax return in a number of years. Suspiciously, while they live at the North Pole, they also claim citizenship in the U.S. (specifically Alaska), as well as other northerly counties like Canada, Russia, Norway and Greenland.

“The first part of the IRS inquiry seems to be centered on the number of ‘independent contractors’ who are hired in the December month to aid in the work of Santa,” Reisman writes. “This work includes the preparation and distribution of toys, games, and other give-a-ways throughout the U.S. The IRS is concerned that these people are not ‘independent’ because they are controlled by this big jolly fellow whose belly shakes like a ‘bowl full of jelly’ whenever he laughs.”

Earlier this week, on Christmas Day, another entry in the tax annals of Santa surfaced on Twitter. The site Tax1on1 tweeted the alarming news that Santa Claus had been arrested by the IRS following a joint investigation by the IRS, INS and FWS. “At long last, the notorious tax cheat, Santa Claus, has been apprehended,” said a statement attributed to the acting IRS commissioner on the blog.  “He has been living in a foreign country for the last 50 years and during that time he has not filed his U.S. taxes even once.  It has become clear, however, that he has run a lucrative business at the North Pole and has never reported any of the income. In addition to criminal tax evasion, we intend to charge Santa Claus with 190 counts of criminal failure to file Foreign Bank Account Reports (FBAR), as we found evidence in his papers that he is operating or has signing authority on bank accounts in 190 different countries.  It is our contention that the fines alone could help us bring billions in revenue into the United States government.”

However, the item actually hyperlinked back to a blog post from Christmas 2011 on professor Paul Caron’s invaluable TaxProf blog, which in turn linked back to a blog post by Dan Mitchell on the International Liberty blog. And instead of the statement coming from the IRS’s current acting commissioner, it was attributed to then-commissioner Doug Shulman. There are also some extra quotes from the Republican presidential candidates of the time, Ron Paul and Newt Gingrich, which Tax1on1 wisely left out, as that would have been a sure giveaway that the news was old, if not real.

Or at least not as real as Santa Claus.


Buried in the IRS correspondence are voluminous references to violations of wealth transfer tax laws for large gift items of automobiles, boats, airplanes, and jewelry. The IRS, after diligent search under all known aliases, including Kris Kringle, also reported it had not found a single gift tax return on file - which does not mean they were not filed. Also, thn Tennessee Dept. of Revenue is investigating Santa's failure to pay gift tax on items in excess of $3,000 to Class B recipients and in excess of $13,000 to Class A recipients before Jan. 1, 2012. Although Tennessee repealed its gift tax law in May of this year, it does not apply retroactively. There is no statute of limitations for unfiled returns. Connecticut, the sole state that taxes gifts, according to Forbes, has joined in the probe.

Posted by: EnrolledAgent | December 31, 2012 8:18 AM

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Merry X-mas to you dear Santa Claus.

Please remember the adage that death and taxes are certain and inevitable. You may be immortal but taxes and FBARs are perrennial, nay,immortal. This you can afford to forget at your own peril as well as that of IRS (the U.S.A.).


See you late in the year 2013. Bye.

F.C.A.Vallabhdas Raichura

Mumbai: December 31, 2012.

Posted by: | December 31, 2012 7:38 AM

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