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 saysPaula 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. State Rep. Joe Dorman, who criticized the Tax Commission’s earlier handling of the case, said Tuesday he thinks the final settlement is much fairer. Dorman, D-Rush Springs, said he talked with state tax officials, and they told him they would be "much more careful” in the future about how they interpret data from social networking sites. "On the flip side, people need to be careful and need to know there are people out there watching,” he said. "I know I’m a lot more careful what I post.”
Group promoted parties onlineKegheadz was a group of University of Central Oklahoma students who got together to throw student parties in Edmond and Oklahoma City in 2006 and the first half of 2007, Glover and Baroi told The Oklahoman for an article last September. The group persuaded various restaurants and businesses to host the parties and handle all drink sales, they said. Kegheadz would promote the parties through Internet social networking sites and word-of-mouth. The group charged men who showed up a $5 cover charge, while women were admitted free. Baroi said Kegheadz only netted about $1,700 from the 22 parties it promoted, not counting taxes. He said they didn’t think about paying taxes at the time because they never really thought of it as a business. Glover said the group’s goal was just to meet college women, have fun, act cool and hopefully make enough money at the end of the day to pay their bar tabs. Baroi said he paid the Tax Commission $1,151 on June 18 to resolve his portion of the tax obligation. Glover said he is paying his tax debt out at the rate of $195 a month for six months. Others originally cited in the tax case were dismissed and not required to pay any of the settlement, Baroi said.