Domain Name Investor sentenced to jail for Tax fraud

[Arpit131]

An Australian Domain Name investor was sentenced to jail for Tax fraud, by the Australian tax Authorities.

Michael Purse developed an algorithm which notified him whenever the licenses of popular domain name was about to expire, thus allowing him to buy popular domain names.
A psycologist report described him as a person of an above average intelligence.

Purse got $130,134 illegal funds from various companies he set up to buy the domains.

Purse was an active member on several domain name forums. He was also a member of NamePros as reported.
He also sold his domains through his site name f5domains.

Source: http://www.perthnow.com.au/news/nat...ine-domain-names/story-fnii5yv8-1227035999495

 

[Kate]

Please quote your source.
He's a member here, although he hasn't been around for a long time.
This must be serious if there is a jail sentence handed out.

Maybe this will remind the public the kind of scumbags that we (domainers) are

 

[JB Lions]

Found this link from a blog - http://www.perthnow.com.au/news/nat...ine-domain-names/story-fnii5yv8-1227035999495

 

[johname]

Dude should have stuck with what worked for him. The leveraging up at all cost what did him in.

 

[TomTom1]

The world is strange...greediness is bad!

 

[Name Trader]

Well it seems he hadn't paid the taxes on the profits he made from selling the domains bought on the drop. I don't get the wrongdoing of developing an algorithm and using that. He went to jail because he didn't pay his taxes, not for using his algorithm. He couldn't have been all that bright if he couldn't think of ways to reduce his taxes, legally.

 

[carob]

Well clearly this is a name issue. If his name was Google or Amazon he would successfully avoid tax.

 

[Kate]

Sounds like a case of cooking the books.

District Court Judge Steven Milsteed heard Purse had deliberately inflated his businesses activity statements to boost his tax returns and buy domain names such as mowing.net.

http://www.adelaidenow.com.au/news/...870850647?nk=7c52c7372e6729978c15f7235ec4bd5e

 

[SearchEngineZ]

Not so much a domain thing, but rather thinking that domain names, being virtual and all, are different.

He should have moved to Thailand or Isle of Man etc and taken advantage of low/no taxes.

Or just accumulated money offshore without touching it.

But if you bring $$ into the country - especially Australia - the authorities will know.

---

BTW, I pay my Aussie taxes just like I should, but I have no idea how to classify domain names:

expenses?
investments?
stock?

I haven't been able to find any online info. Businesses often have virtual property like logos, goodwill, brand names, but they tend to be singular, valuable, and assessable by an expert.

But how do you value/categorise a domain name that you pay $10 for, might be worth $10K, and you might just as easily expire?

 

[RogueWriter]

The articles about him almost make it sound like he was being punished for developing an algorithm to pick up dropping names. The reporter really needed to clarify it, or else the editor cut parts of it out improperly.

 

[NPer]

Source of income? Was it even domains? This is important.
Mowing.net... really? lol

Renewals = deductible- only if due within a certain period, e.g. 12 months, and cash must have been paid- if not, not deductible for the year of assessment-it carries over. The time period may differ country to country. If no cash has been paid (e.g. renewals are paid on an account)... that ain't deductible- even though your Accountant may correctly recognize it as an expense.
Purchase of a domain above registration price/aftermarket purchase = not deductible
Dropping a name you reg'd = no deduction allowed (already claimed renewals)
Dropping a name you purchased = deduction allowed only up to the price paid-in your local currency. So if your local currency weakens to the currency that you used to buy the name,months or years later, you won't benefit from a larger deduction. This is your "actual" cost price.
Sale of a hand-reg'd domain = forms part of taxable income.
Sale of a purchased domain = forms part of taxable income. In this case, the cost of the purchased domain is deductible.

The above is from a tax perspective.

The accounting perspective is completely different, where hand-reg's or poor names may be classified as "Assets", and good names as "Expenditures"?
Renewals may be capitalized/expensed? So if a renewals are capitalized as an asset, that means a hand-reg domain is automatically an asset,and increases in value as renewals are paid? But we all know that is far from reality. Crazy world.

Tax authorities do not care about Accounting Standards-that's why they have their own legislation to provide guidance on how certain transactions may be classified.

 

[Name Trader]

Sounds like a case of cooking the books.

http://www.adelaidenow.com.au/news/...870850647?nk=7c52c7372e6729978c15f7235ec4bd5e

Why would anyone of over average intelligence deliberately overstate their income on tax returns, and then not pay the taxes? I just don't get it. I don't think losses of $12k on internet gambling equals an addiction to gambling. Something not right here. Maybe he needed a better lawyer?

 

[lll]

Np username is??

 

[Name Trader]

Michael Purse

 

[lll]

Oh wow I remember him
Joined around same time as me..
Thanks for the quick reply stu

 

[Name Trader]

I even bought a domain or two from him.

 

[johname]

Hope you get out soon Michael

 

[Arpit131]

No idea about his NP username!!

 

[JB Lions]

No idea about his NP username!!

https://www.namepros.com/members/michael-purse.160193/

 

[Poldermaffia]

A psycologist report described him as a person of an above average intelligence.O.o

 

[Name Trader]

I don't think so. Who in there right mind inflates their income to tax authorities and then doesn't pay the taxes? I don't see any benefit to his domaining business by doing that. The whole case seems very strange to me.

 

[Matrix1976]

Governments can give billions to their pals, but got forbid one of the slaves makes a couple K$ 'illegally'...(s)he will get chastised for all the world to see. Not sayin this guy did the right thing ( i don't know the case) but there are much worst things done on a daily baisis by so called 'public servants' and that is swept under the rug while this guy gets a sentence similar to what a rapist would get in many countries. A few years back i remember a guy in canada who screwed private investors out of 75million $...that dude got about 2 years jail and a few years probation...had he screwed big gov. he'd be in jail for 20 years...double standards much?

 

[Name Trader]

I don't see anything illegal in buying domains on the drop and reselling them. What he was done for was inflating his income to the tax authorities. Why would anyone of above average intelligence do that?

 

[DomainVP]

lol @ Mowing.net

I'm sorry to say, but the general public is still below average intelligence when it comes to domains.

 

[DU]

@johname
I didn't know Social Jill made a calendar!