EDMOND — The state Tax Commission has agreed to accept less than a penny on the dollar to settle a controversial case that exposed the tax risk of exaggerated Internet boasting.
Kegheadz founders Julius Baroi and Jordan Glover said Oklahoma Tax Commission officials agreed to accept about $2,300 to settle their case — far less than the $320,000 that was originally demanded.
The co-founders of the Edmond student-run party business said they intend to apply for a waiver of penalty and interest charges that could add an additional $900 or so to their tax bill.
"We’re just happy it’s over,” Glover said.
"I mean, how crazy was this case?” Baroi added. "I don’t know which would be considered stupid ... us bragging about parties on MySpace and Facebook, or OTC using those as ‘evidence’ to assess $320,000 worth of taxes.”
Glover said he would like to know how much money the Tax Commission spent investigating and pursuing the case over the past year and a half.
"You’ve got to be talking tens of thousand of dollars here ... just to settle for a scrap of what they originally went for,” Glover said. "In my opinion, them settling like this just goes to show that they knew from the get-go ... but they wanted to make sure and take us through hell.”
No policy changes made, agency says
Paula Ross, spokeswoman for the Oklahoma Tax Commission, said commission employees can’t comment on individual tax cases.
Commission auditors testified during a tax hearing that they were forced to rely on information from the Kegheadz MySpace Web site because the group kept no business records.
Although the commission received a lot of criticism for relying on information from a social networking site to help calculate a tax assessment, Ross said the agency has "not changed any policies due to the case.”
Ross said it is not common for the Tax Commission to use Internet social networks to obtain information, but the commission can use whatever information is available to validate what taxes are owed when business records aren’t available.