A youthful attempt to party their way to popularity and some exaggerated MySpace boasting have turned into a $320,000 tax nightmare for five current and former University of Central Oklahoma students.
“This is crazy,” said Julius Baroi, co-founder of Kegheadz, a loosely organized Edmond-based party business. “The Tax Commission claims we owe more than $300,000. We don't have enough money between us to pay $6,000 to hire an attorney. They won't listen to us.”
Paula Ross, spokesperson for the Oklahoma Tax Commission, said she couldn't comment on an individual taxpayer's case.
Although the Tax Commission wants to tax Kegheadz like a million-dollar business, Kegheadz was really just a group of college guys who got together to throw parties, said Baroi, 29, and co-founder Jordan Glover, 23.
Overall, Baroi estimates Kegheadz only netted about $1,700.
Tax officials got the wrong idea because of embellishments on the Kegheadz MySpace Web site that boasted things like “Over a billion served,” “Biggest party in the state,” and “Biggest party in the country,” Glover said.
But that was just “exaggerated hype” designed to create a buzz and attract people to the parties, Glover said.
The group threw 22 parties in Edmond and Oklahoma City in 2006 and the first half of 2007, Baroi said.
The goal was to meet college women and hopefully make enough money to pay their personal bar tabs, Glover said.
“It wasn't a career choice,” he said. “The goal was to have fun in college. Being a cool guy was the main objective.... You'd think they could tell we weren't masterminds. We were just college students having fun and acting stupid.”
Baroi said his group operated Kegheadz by going to Edmond and Oklahoma City restaurants and businesses and persuading them to host college parties. Off- duty law enforcement officers were hired to provide security and prevent problems, he said.
Men were charged a $5 cover charge. Women were let in free.
“If a guy brought three or four girls, we'd let him in free, too,” Glover said.
Kegheadz paid building owners $100 to $800 from the cover charge and a disc jockey was paid $50 to $200. The building owner got to keep money received from bar sales. If there was money left over from the cover charge at the end of the night, it was split among the Kegheadz friends who had promoted the event, Baroi said.
He said from 60 to 275 people showed up for the 22 parties Kegheadz promoted. Baroi said he made a few hundred dollars on some events and lost money on others.
He said they never really thought about Kegheadz as a business, so they never filed any paperwork with tax officials.
“We're not denying that we threw parties and probably owe the Tax Commission something,” Baroi said.
“That's ridiculous,” Glover said.
How did the Tax Commission arrive at such a high figure?
Baroi and Glover said when they met with tax officials, they were shown a huge stack of evidence that appeared to be page after page printed off the Kegheadz' MySpace Web site.
In the absence of business records, Tax Commission auditors apparently built their tax case around the statements made on the MySpace site, one of several Internet social networking sites the students used to promote their parties, Baroi said.
The former students said they were just having fun.
Letter from Oklahoma Tax Commission