Is Santa Claus On The IRS “Naughty” List?

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The IRS has sent an inquiry to Mr. and Mrs. Santa Claus concerning their non-filing of a US income tax return for a number of years. According to our best information, the Claus family, which lives at the North Pole, claims citizenship in the United States (via Alaska), Canada, Norway, Russia, and Denmark (via Greenland). A number of other countries have also honored the Claus family with citizenship, including China, India, Italy, Israel, and Brazil, just to name a few.

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. This work includes the preparation and distribution of toys, games, and other give-a-ways throughout the US. 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. He tells them:

1. What to wear, that is a red and white suit;
2. Where to show themselves, that is, on the street corners, in department stores, in homes, hospitals, and on the battlefields, and;
3. What “gifts” and “to whom” they should be delivered, by providing a “naughty or nice” list.

The IRS is concerned that not all of these “independent contractors,” some of whom call themselves “Secret Santas,” will be reporting all of the income they receive from their Santa work, as the “big guy” (THE Santa) has not been giving a form 1099 to his helpers. The loss of revenue to the government could be controlled easier if W-2s were issued instead, according to the IRS.

Another issue is the location of “Claus Enterprises,” (also known as “Santa’s Workshops”), which is the factory or factories that produce the give-a-ways. The Sales Tax departments in each of the countries seem to have no record that sales tax has been paid on the purchase or sale of any items the factory or factories produce. If the “give-a-ways” are free to the recipients, then sales tax has to be paid on the purchase of the production materials, including machinery. There appears to be no filing for an “exempt” status anywhere for the business. In addition, Santa does not seem to claim a “clergy” exemption, even though he is also known as “St. Nick.”

A further issue is where the money comes from to produce the “gifts.” We have heard an argument that the materials appear out of thin air, which would account for no need of money. The IRS finds this argument as totally ridiculous as this can only happen in Washington, DC, which, to their knowledge, does create money out of nothing (at the Bureau of Engraving and Printing), and where nothing is created out of nothing, in Congress.

Another part of the inquiry concerns the paying of wages to the workers of Claus Enterprises, that is, the elves. According to the National Labor Relations Board, no request to unionize has been filed. To the board, this appears to be unlawful, considering the work that needs to go into the production. They don’t understand how all of the toys, etc., can be manufactured in such a short amount of time without a large number of overtime hours, for which they are sure the elves are not being properly compensated. And if they are working in a factory, do these elves have proper protective gear, health insurance, coffee breaks, etc?

A further section of the inquiry concerns a possible cruelty to animals. Eyewitness accounts, which may be suspect, state a large sleigh, a fat jolly man, and eight reindeer — one with a “red-nose” condition — have been seen in the moonlit skies, but only late in the evening on December 24. How can these poor animals be forced to pull a sleigh, in the cold winter’s night, in the middle of a snowstorm in some areas, which can carry enough gifts for children of our entire country? In addition, it has been rumored that one of the reindeer has created an at-home, off the-hoof, business, which he calls “Operation Red Nose.” This also is being looked into.

Finally, Homeland Security, the environmentalists, and the mayor of New York City are involved with the investigation as well. In the first place is the question about solar, or lunar, power. The US Government has been spending millions on alternate sources of solar energy, and now wants to check out “moonbeams.” Secondly, they are curious about the “stealth” technology whereby this Santa can move anywhere without detection. They are concerned that a bill might move through Congress that no one can see or knows anything about until it is passed. Thirdly, entering the homes of most Americans without their knowledge appears to be some type of felony as some type of snack is usually taken. And fourthly, the “Santa” is eating totally unhealthy and, according to the mayor of NYC, this is no good for the jolly man’s general well-being. The mayor, just in case Santa Claus is true, wants a law that only one extremely low-sugar dietetic cookie and only one half of a glass of 99 percent fat-free milk be left by the fireplace.

According to reports, the IRS has ordered Mr. and Mrs. Claus to their offices on January 3 with all their receipts and other proofs, or an estimated tax return will be prepared for them. Their tax bill is expected to approach $16+ trillion.

Ho-Ho-Ho and Happy New Year to all, and to all a Good-Night.

Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.