The Liquidity Event Podcast: Episode 57

 

Episode 57: Fraud it Till You Make It

Shane and AJ are back at it! If you missed them, don’t worry, they spend at least half the episode talking about themselves. But there is some meat on this bone. Blackrock can’t make up its mind about whether it wants to stop climate change or make money in Texas. Then we’ve got some bad actors in the tax fraud and sexual harassment space. And we round out the episode with some great news for taxpayers: The IRS gets 80 billion dollars to fix itself. This one is evasive.

Read the Full Transcript:

Speaker 1:

This podcast is for informational purposes only and should not be considered tax or investment advice. Welcome to The Liquidity Event, a show about all things personal finance, with a laser focus on equity compensation. Hosted by AJ and Shane of Brooklyn FI, each episode will take you through the week's news on FinTech, IPOs, SPACs, founder wins and fails, crypto and whatever else these nerds think is interesting. Learn more and subscribe today@brooklynfi.com.

AJ:

[inaudible 00:00:38] You're on, you're up, bud.

Shane:

Welcome to The Liquidity Event. We're your hosts, Shane.

AJ:

And I'm AJ.

Shane:

Awe, the old gang's back together.

AJ:

Oh, what's up, what's up?

Shane:

And this is episode number 57 of The Liquidity Event. This is being recorded on August 31, 2022, last day of summer. And it will be released on Friday, September, what, second? I don't know.

AJ:

Friday, September 2nd. That is correct.

Shane:

There it is. This week, we don't have a ton of articles, but we're going to go a little bit deeper than we typically do in the articles this week. We're going to do some catching up with you as well. We've got some ESG boycotts from BlackRock coming out of Texas, the small government folks want to boycott things, surprisingly. Google's home sale purchases have spiked up 2700%. We've got some sexual assault, unfortunately, in the celebrity space.

AJ:

Times two.

Shane:

And then we've got some tax fraud and then we have an in-depth review of what's going on, physically, in the IRS's offices. So, that'll be a fun, deep dive. A lot of IRS media getting pushed out.

AJ:

IRS back in the media. Maybe they finally hired a good PR firm.

Shane:

Oh, right, yes. Well, they just got $80 billion to spend, maybe they'll spend it all on PR.

AJ:

PR. Which they honestly should.

Shane:

Yeah, how you been, AJ?

AJ:

I've been great, yeah. I spent most of August in California and now I'm back in Brooklyn. And to welcome me back yesterday, I was sitting at my desk with my window open and the smell of literal hot garbage was wafting in through my window. I was like, what is that? Oh, it's literally garbage rotting on the street.

Shane:

Yeah.

AJ:

But, it's good to be back in Brooklyn. There's something magical about Brooklyn summers or New York City summers.

Shane:

It's not the smell, that's not the magical part. [inaudible 00:02:26] New York.

AJ:

No, that's part of it.

Shane:

I came back to one of those smells that's just permeating from a corner of the kitchen. I'm not sure what that is.

AJ:

Oh no.

Shane:

It's probably a dead animal.

AJ:

That's probably self-inflicted.

Shane:

Not quite sure what it is, but yeah, I was gone for a while too. I was out at camp, then I was down in New Orleans for Zero Con. And, where else was I? I was upstate for a tubing trip, which had a very surreal twist to it. But yeah, I spent the last few days...

AJ:

Care to share with the class?

Shane:

I probably shouldn't. There was... yeah.

AJ:

Okay.

Shane:

There was an unfortunate accident on the river, that I was, yeah, very close to. Yeah, shouldn't share, honestly. It's kind of a buzz kill.

AJ:

Okay, moving on. We've got some travel coming up. We're both headed to...

Shane:

What a segue.

AJ:

... California.

Shane:

Stuck the landing. I'm sorry, I thought I told you about that thing already.

AJ:

No.

Shane:

Oh yeah, we are going to another conference. It's conference season for us coming up soon, yeah. So, I think the way conference season works, because before COVID was when the last time we could go to conferences, and we weren't quite the size of a company where we could go to all the conferences or really needed to go, really.

AJ:

Right, now it feels like we're going to one every... We literally are going to one every weekend, starting now, through the end of October, pretty much.

Shane:

Right, so I think the conference season is just after tax season. There's a bunch of conferences because wealth managers and accountants can't really do conferences then. So, it's like late April, May, and I think the summer dies down for a while when people do all their vacation. And then in August, September, October, there's a ton of conferences. So, we're going to XYPN in Denver. We're going to Future Proof in Huntington Beach, just south of LA. What else do we have?

AJ:

I'm going the NASPP, the National Association of Stock Plan Professionals in Chicago, Illinois.

Shane:

Sorry, this is a adult podcast, everybody. And what else do we have? We've got some other stuff coming up. Oh, we're going to TeleCon in the Philippines, as well.

AJ:

Hell yeah.

Shane:

Yeah.

AJ:

Hell yeah.

Shane:

So, what are you thinking? Where are we going with this? We can continue to catch up...

AJ:

You always need to go in order.

Shane:

You were watching... I need to know what you're watching these days.

AJ:

Oh, I am watching some really cool stuff these days. Last night, I just finished Kleo. K-L-E-O. It's a Netflix show about an East German Stasi assassin at the very end of the fall of the Soviet Union. So, it's like Berlin Wall comes down. It's very cool, it's highly stylized. It's like a little Wes Anderson-ie. It's like brutal and a little bit gory, but kind of wacky. It's awesome. I mean, there's something about that West-East Berlin, late eighties, early nineties vibe that I'm fascinated by.

Shane:

You are obsessed with the Soviet Union.

AJ:

I am.

Shane:

And bad bureaucracy. Is that...

AJ:

Have you...

Shane:

Well, also before I forget, RIP to the G, Mikhail Gorbachev.

AJ:

Oh, RIP, yeah.

Shane:

He passed just this morning, I believe.

AJ:

Last night, yeah. RIP. Nobel Peace Prize winner.

Shane:

Yeah.

AJ:

Lots of feelings. Have you ever seen The Lives of Others?

Shane:

Well, you have Russian heritage as well, correct? Is that part of your obsession?

AJ:

I'm like a hundred percent Russian.

Shane:

Oh, right. That's why I read all the Viking books and watch the Viking movies and stuff.

AJ:

Exactly.

Shane:

Now I get your obsession with...

AJ:

Yeah, yeah.

Shane:

The Iron Curtain and such.

AJ:

Have you seen The Lives of Others?

Shane:

No, sorry. I don't know what that is.

AJ:

It's one of my favorite movies of all time. It's kind of about Stasi observation and creative people trying to do their art in Berlin with the secret police going on. And it's just a beautiful, beautiful film. There's that, and there's also Goodbye Lennon. In case you want to have a "last days of Stasi regime" film festival, you could do Cleo, Goodbye Lennon, and the Lives of Others.

Shane:

Not at the top of the list, but...

AJ:

Fantastic weekend, guaranteed.

Shane:

... This sounds great.

AJ:

Oh my God, speaking of what we're watching, I'm sorry. Hello? The Rings of Power is premiering this weekend on Amazon. And I am...

Shane:

Friday.

AJ:

Friday. I am trying to keep my cool, because I want to keep expectations low, because I will end up being disappointed. But as all of you know, we are big Lord of the Rings fans. I'm flashing my Lord of the Rings tattoo right now.

Shane:

Ah, true. We are branded permanently, yes.

AJ:

So, I'm excited.

Shane:

Oh, shall we?

AJ:

No, Peter... No Peter Jackson involved. Got to shave my armpits, anyway.

Shane:

Well, you're in Brooklyn so we could have it... The boys are planning a...

AJ:

I'm having a party. Are you coming?

Shane:

We're literally having a party, so, here it is.

AJ:

Oh, like a party-party or a watch party? I'm having a, let's all sit down the couch and watch the show, party.

Shane:

It'll a party-party until the show starts and then it'll be a watch party.

AJ:

Okay, all right. I might stick to my party. Anyways, let's talk about Texas. Speaking of parties, we've got a Texas blacklisting.

Shane:

That's the segue?

AJ:

It's great. It's a party. It's an oil party in Texas. Texas has blacklisted...

Shane:

Let's get slimed up in this oil and gas party.

AJ:

BlackRock and other financial planning firms are boycotting oil and gas. So essentially, Texas, the state, is saying, "Hey, BlackRock and Vanguard and other large financial institutions, you can't put these rules on these large pension funds that say, you shouldn't invest in companies that are investing in fossil fuels." So, they're basically saying, "Hey, if you're going to not invest in oil, get the hell out of our state." ESG is hard, doing this environmental, social governance, the socially responsible investing space. This is an example of heads butting together. Texas is literally like, "No, you can't. We're not going to allow you like to operate in our state because you have violated one of our core... Or you have threatened one of our core exports, one of our core GDP producers." So, I don't know. I don't know what to say about this, but the Texans are really mad about ESG, is my take-away from this.

Shane:

Yeah, I mean, I think Texas right now, while its heading towards a more purple distribution of elected representatives. They do have a Republican administration right now with Greg Abbott, who was very aggressive with the abortion politics recently, amongst a bunch of other issues that they've been dealing with. And it's not really surprising that the comptroller is going in a big government direction and trying to boycott companies that don't do what he likes. Kind of find it ironic that it's a free market, Texas, rootin' tootin' society, and here we have boycotts within the government for people that don't support them. Including BlackRock, who there's a quote in here that they do not consider themselves to be an ESG company. They simply have ESG funds, just like Vanguard and a bunch of other giant companies do.

Shane:

By the way, those ESG options are mostly created for the purpose, because there's demand. It's not like they're creating supply and manufacturing demand. This is what people are asking for and they just create the option for them. And just because there's a ton of money in those funds, because they're the biggest investment companies, and there's a bunch of money in those funds because there's a bunch of demand, doesn't mean that they should be penalized for it. And I think it's just really silly, also it shows how hard it is to be a good corporate citizen in a capitalist driven society, right? ESG is in the eye of the beholder. Define ESG, ask a thousand people, you'll literally get a thousand different.

AJ:

You'll get a totally different answer. Yeah, my version of ESG is that I don't want to invest in companies that support abortion, because that is my religious belief, versus someone's other interpretation of that, is I don't want to invest in any companies that pollute rivers and streams. Completely different versions. But I mean, BlackRock, they're saying one thing over here, they're saying, "oh no, don't worry, Texas, we have invested a hundred billion dollars in oil." And then over here, they're writing this sustainability letter to shareholders, saying they're going to commit a hundred billion dollars to ESG by X date. So it's like, they're literally... It's double speak.

AJ:

Speaking of totalitarian society, it's like 1984. They're literally just saying the same thing to different people. And I don't know. Who wins here? It's a free market, ESG comes in... I think when it's as big as BlackRock, which manages so much money, that's when people start to pay attention. And that's BlackRock's whole vibe. They have this huge ESG sustainability push and they're kind of leading the charge, but here it is biting them in their capitalist butts.

Shane:

Well, they want to be part of the future, right? And unfortunately ESG is part of the future, Texas. So, if you need to be a part of the future, then continue to invest in renewable energy and move your ass and start to support solar and wind, et cetera. I mean, this all comes back... Every problem comes back to the same thing, in my opinion, which is money in politics. I mean, why does this government give a shit about supporting oil and gas? I mean, there's not even a state income tax in this state. I mean, they're being lobbied to exclude these ESG funds from the pensions within the state because oil and gas lobbyists have pushed them to do this, because there is still money in politics, right? It's just lobbying, lobbying...

Shane:

I mean, it goes back to the Christian cinema thing. I was just reading about this, which we're not talking about right now. I guess we're going to talk about the Inflation Reduction Act a little bit, but the carried interest loophole, I read that private equities lobbying contributions were something like $15 million in 2020. And then in 2021, when the Inflation Reduction Act and Build Back Better came into play, it got spiked like $275 million or something. I mean, that's so much money.

AJ:

That's a lot of money.

Shane:

It just takes one Senator to be like, I'll take $2 million and then she gets it nixed from...

AJ:

Right. I need a new Tesla, yeah like that. I'm up for re-election in two years. I really need the money. Yeah, I mean this quote is, "the ESG movement has produced an opaque and perverse system, in which some financial companies no longer make decisions in the best interest of their shareholders or their clients. But instead use their financial clout to push a social and political agenda shrouded in secrecy."

Shane:

Shrouded in secrecy.

AJ:

Secrecy. The secrecy is the science that our planet is getting hotter. I don't know how... It's not a secret, Texas. You walk outside, folks. No secrets here.

Shane:

Yeah, so I agree that lighting the universe on fire, the earth on fire, is good for shareholder profits. That is not the only thing that matters, it turns out. Right?

AJ:

Right. I mean, that's the message of that great movie, Don't Look Up. Did you see that?

Shane:

Of course, yeah. I love Don't Look Up. It's great.

AJ:

It reads like, resources, resources, profits, and then actually the world's ending. And I mean, that's such a great metaphor for what's happening on a small scale like this.

Shane:

Leonardo DiCaprio just broke up with his 25 year old girlfriend, again. Did you see that?

AJ:

No, I missed that one.

Shane:

Speaking of Leo, did you know he's never dated anyone over 25? He's 47, I believe. There's a great chart on Twitter that shows his age going up into the right continuously.

AJ:

Oh, I've seen that, yeah.

Shane:

And then every time one of his girlfriends turned 25, he starts over.

AJ:

He dumps them.

Shane:

He rinses and repeats.

AJ:

Oh my God.

Shane:

We'll talk about that. That's coming up, sexual assault or sexual misconduct. Not that that's sexual misconduct.

AJ:

Yeah, yeah, yeah. We don't want to put that in the same sentence.

Shane:

Sorry. Excuse me.

AJ:

That's a preference.

Shane:

Dating, yes, it's simply a preference. But before we get to that, if you're looking for young... If you're searching, like Leo always is, for the next thing and we do have Google search results up 2700%...

AJ:

If you're a millionaire, just like Leo, and you're searching for the next thing, turns out you and a hundred [inaudible 00:14:15] other people...

Shane:

You're probably using Google.

AJ:

You are also searching to try to sell your home, your home has outlived...

Shane:

Here we go.

AJ:

Your home has outlived its purpose, and it's no longer giving you joy or...

Shane:

Oh wow, okay.

AJ:

... Keeping you stimulated.

Shane:

It just no longer brings you joy, just like your home. And you're like one of these searchers from the New York Post article that discusses how Google search results are up 2700% for the phrase, "sell my home fast." This article is actually from August 2nd.

AJ:

It's a little old.

Shane:

Yeah, it's a little old, but we're still within the same trend within the economy. Essentially interest rates are rising, which is pushing down people's ability to afford homes. I went through some home purchasing attempts recently and there literally are identical homes right next to each other, and I bid on both of them. And one of them had 30 plus offers. And the second time I went to bid, just a few months later, there was seven. So, things are a lot different now. I still lost in both cases, so that's not different, but.

AJ:

Your agent is on it. [inaudible 00:15:20] got some secret intel there. You're going to be okay.

Shane:

Interesting. For those that don't know, AJ and I use the same mortgage brokers.

AJ:

We use the same everything.

Shane:

Yes, we do share a brain. It's a lot easier. It's a duplicate, thanks. Anyway, so people are thinking, I find this very funny. I mean, do you really want to be a buyer in a market where people are spiking the search, "how to sell my home fast," how to dump this asset onto somebody else?

AJ:

Yes, please.

Shane:

Oh really?

AJ:

Yeah, but that's what we're seeing. The trend is that, the problem before was that the market got flooded and everyone was in this frenzy. But now if prices are coming down, because interest rates are going up, cash is a lot more expensive. There's more inventory, so we should start to see prices come down. If a hundred people in your small town put their house on the market at the same time, there's more inventory, less competition, hopefully.

Shane:

But if we're looking at the bell curve of prices being high because interest rates are low, thus your payment can be less expensive to you, which we can push up the purchase price. Do you only be purchasing right at that tip before prices start to decrease because people have less money or cheaper capital?

AJ:

Sure. It could be the worst moment right now because we haven't seen the price tip that we're...

Shane:

Buy at the peak.

AJ:

Yeah.

Shane:

Yeah, I'm thinking late 2007 or mid-2008.

AJ:

Yeah. Yeah, I think it's also good because the 30-offer-mania was not good for people, for anyone. I mean, it was great for the sellers, right?

Shane:

Sellers.

AJ:

Sellers and the real estate agents, it was really great for them. But now, we have a ton of clients who just were desperately trying to buy a home for their kids, all throughout 2021, and just kept getting beat up. So, hopefully we'll start to see that slow down a little bit.

Shane:

I still don't understand the housing market. I have a deep, deep theory that everything is owned by like, 15 people. They just keep snatching it up. How are there not enough? I shouldn't be admitting this on the podcast when I don't understand the real estate market, but a lot of things shift very often in this space, and sometimes they blame it on BlackRock as an institutional investor that's buying up single family homes.

AJ:

[inaudible 00:17:34] But I mean, that's the current blame, right? That's the current finger pointing, is that it's the institutions coming in with all cash and beating out all these actual families.

Shane:

It's the foreign investors, there's the Chinese buyers, the Russian buyers that are trying to put money in a stable government. They don't have to worry about it being snatched from them, where this rule of law is the case. Everyone always likes to blame big people and foreign people that they don't understand, right? But it's more to it than that.

Shane:

Speaking of dealing with difficult people and places of authority with a lot of money, we have this Best Boss in America Accused of Sexual Assault article in the celebrities and billionaire section. You're shaking your head, AJ.

AJ:

Yeah, I hated this.

Shane:

This article made it through a bunch of different publications, of course. It's a very juicy article, but this CEO of Gravity Payments, Dan Price, was also in the news every two fucking weeks for months based on all of his Tweets and Instagram posts and his policies at his small company up in Washington. I was honestly a little bit annoyed at this guy, as well, for a while, on Twitter and all the publication he got for his Tweets. I'm just wondering, does this guy do anything but Tweet? I always wonder that when there's people just constantly Tweeting and building up huge followings on Twitter, especially if they're not truly thought-leaders. Or I don't know, this guy's got long hair, he may of thought he was swagger-jacking my style, honestly.

AJ:

Yeah. Yeah, I think there was a little bit, this is another longed-haired CEO trying to do the right thing by their employees. There's only room for one of us in this town.

Shane:

Yeah, well there were three. I guess now we're down to two. I still look at, what's his name?

AJ:

Oh right, Newman.

Shane:

No. Well, Newman, yeah, everyone with long hair seems to get canceled eventually. Well, I was actually thinking of the guy from Altruist. Jason Wenk.

AJ:

Oh, Jason Wenk. Yeah.

Shane:

No comment.

AJ:

No Comment. Anyways. Right, so this guy was always in my LinkedIn feed, his most famous proclamation, the thing that got him on all the talk shows was, he's like, "I'm the CEO and I'm in a pledge to pay all my employees make $70,000," which I think that's basically, this is just me guessing, that that's pegged to various happiness studies that have been done. That if you make around $70,000, you have enough to pay rent, feed your family, and you're going to be happier. So basically, I'm going to pay my employees a true living wage, not minimum wage, an actual living wage. So, that got him on all the talk shows and then catapulted him to this Twitter, "I'm the best CEO in America," faux celebrity status. And it turns out he was doing some not so great things to a lot of women.

Shane:

Yeah, well there was, I think, a couple things to take away from this. First of all, that his wife accused him of domestic assault. And that was the first big negative news story that went out about him. But I think that was a while ago, maybe 10 years ago, don't get my facts right. But the story really is, that he used Twitter as a place to push down all the search results. If you're Googling Dan Price and the first 20 results are all tweets that have exploded, then the domestic abuse result is now lower down the Google search result, which is an interesting strategy.

Shane:

And one of the other things I took away is that he fabricated a lot of the goodwill that he was receiving from his employees for... There was one tweet where his employees supposedly bought him a Tesla with the money that he had given them as bonuses. Imagine us giving bonuses to our employees and then they buy us a Tesla. And then that came out.

AJ:

He kept it?

Shane:

I believe he kept it, yeah. And I mean, either way, it was his idea and I'm pretty sure that it was company money and not actually the employee money. It was all fabricated. They asked the marketing department and they were like, "yeah, that was Dan's idea. We didn't want to buy him a tesla."

AJ:

Someone thought it was a good idea, yeah.

Shane:

But whatever brings attention to the boss is good for the company, keeps you employed, creates a little safety and security, financial security for you at the company. You probably let things slide until you find out that your CEO has been sexually harassing and been accused of rape multiple times. [inaudible 00:21:44]

AJ:

Multiple times. A lot of allegations there. That aside, there's a story about a journalist who went through some of Gravity Payments' practices and uncovered, and this is unverified. You can read this guy's blog where he's like, I pitched this story to the New York Times, Wall Street Journal, no one's ever written me back, but here it is, here's all my facts. It's like a 70 page PDF of all these companies and it's showing how Gravity Payments, which is a credit card processing machine, essentially, and they were basically skimming points off the top. So, if MX is going to charge the merchant 3%, Gravity was basically taking some of that percentage and pocketing it without reporting it correctly. And that money should have gone to the merchants. So, it's a lot of like, "Hey, you wronged these thousands of restaurants that were trusting you to process their customer payments."

AJ:

So, that's another part of this story. Lot of layers here, lot of, when you come out and say you're the best thing ever... I mean, it's like the Tammy Faye Baker story. We proclaim this amazing goodwill and it's all built on that, and then it comes crashing down and you find all these layers of corruption, and cheating people, and not paying people what they're worth, and just nastiness all around.

Shane:

As if restaurants need any more issues.

AJ:

Right? Well that's who you think of. It's like a megachurch, right? That's kind of what he was, and that's this God-like figure of a CEO. Like, "I'm so altruistic, I'm going to pay everyone a living wage. Love me and have Jimmy Kimell kiss my feet for being the best boss in America." You better be able to back that up. You better be that good person and it doesn't seem like we had that meat on the bone, as you would say.

Shane:

Yeah, as I would say, yeah. Interesting metaphor to use in this scenario. Moving on, we have some more fraud. From our...

AJ:

More fraud, more sexual harassment.

Shane:

Yeah! We have some tax fraud and to add to sexual assault, in Yoga to the People, this is an article from The Cut. Yoga to the People leaders are arrested for tax fraud. This is interesting to us for a number of reasons. Do you want to tell people... Did you go to Yoga to the People?

AJ:

Oh yeah. Every day for many, many years. Yeah, Yoga to the People was a New York City and Brooklyn based yoga studio. And their whole thing was, it was donation only. So, you could literally go to a class, it wasn't quite for free, but it was like $10 and it was a hot yoga studio. So, something that might usually cost like $30 elsewhere was incredibly cheap at these studios. So, I would go to the one in Williamsburg all the time for years, from 2010 to 14. And it was a really nice studio. It was great. As a paying customer, I was like, this is a great deal. But apparently, there was fraud, and tax evasion, and some sexual harassment, and not paying workers, and posing as a charity when you're not really a charity. Lots of typical nastiness going on behind the scenes. Have you ever been to a hot yoga class, Shane?

Shane:

Oh, I've been to many, yeah. I'm trying to remember if I've been to Yoga to the People, because I was never a consistent visitor of a single yoga class.

AJ:

It was like right off McKaren Park and the studio was so cool because you could see the Russian Orthodox Church spire from the room. It Was really pretty. It's like a really nice view.

Shane:

Oh yeah. Yeah, beautiful. Did you hear that? It's our ratings dropping, talking about very specific to me.

AJ:

Did you hear that sound?

Shane:

No, I mean... Did you enjoy that sound? Yeah, I mean, the takeaway here, I mean, what's interesting about this place is it's cash donations based. So, you pay whatever you want and then they had, according to these allegations, they would have donation stacking parties at a St. Mark's apartment, which is a party neighborhood in New York City owners...

AJ:

Okay, that was, their main location was off St. Mark's. I think that was their big, main location.

Shane:

Gotcha. Yeah, so they would get all the cash donations together and essentially just count the cash drug dealers, and add it all up and then not put it in the bank so they could avoid taxes on it, which is a great way to be successful as a company if you never get caught. It's a lot easier to be successful when you don't have to pay 30% of your net income to the government like every other competing company does. And you can reinvest that in an additional location or branding. It wasn't just that it was also the shadow work. Did you go to the Instagram page where there was shadow work?

AJ:

Mean, yeah, not to be too vocal, but a lot of the yoga teachers that I have taken since then were very impacted by this. They were teachers at that studio, so I've been following this story for a number of years. The tax fraud part is the recent story, but this guy's a bad dude and bad things were happening there, and it's been going on for years.

Shane:

So, they were getting people to work for free, working the desk, doing janitorial services, all within the guise of it being a community driven, democratized utopia. And it turns out that they were using all those cash donations to not pay their taxes, but instead buy horseback riding lessons, NFL season tickets, throw big parties, lavish lifestyles, and also sexually harass the staff, which is not surprising.

AJ:

Yeah, the tax fraud here is pretty astronomical. It's almost $20 million in business tax.

Shane:

Over the course of seven or eight years.

AJ:

Over the years, of seven years.

Shane:

God, that must be so fun to be an IRS criminal enforcement agent and work on a case like this. Just like, "Oh yeah, you guys thought this was a democratic utopia and you guys were sexually harassing your staff and you're going to NFL season..." It just must be so much fun...

AJ:

Except.

Shane:

... to just uncover... What? Except what?

AJ:

Yes, and it must be so fun for an IRS agent because they've got all that, except if you're an IRS agent, you're literally working in a basement beneath a pile of file papers because the IRS is so underfunded, which leads into our next story.

Shane:

Wow, you really interrupted me to get that segue in. Yeah, you rat bastard.

AJ:

Sorry, you were saying?

Shane:

Wow.

AJ:

Anyways.

Shane:

Yeah, no. You want to talk about this opinion article from why the IRS needs $80 billion? Just Look at the Cafeteria, the article from Washington Post.

AJ:

Yeah, so the Inflation Reduction Act, AKA, IRA, became the worst named bill of all time.

Shane:

Yeah, not a fan.

AJ:

Includes $80 billion to fund the IRS because it has historically been hilariously underfunded. And we get a glimpse in this article. This journalist actually goes in with their camera and takes pictures of the cafeteria.

Shane:

The Austin office.

AJ:

Yeah, the Austin IRS office, which is literally banquet tables in the cafeteria, stacked with piles of paper and files. I mean, it's eye opening, but I don't know. I hope that money goes to something, but who knows? I'd have to look at a budget from them.

Shane:

When I did my Inflation Reduction Act Deep Dive with Ryan, I woke up in the middle of the night like, "ah, I totally forgot to talk about the $80 billion that's going to the IRS." Yeah. And I was going to call in...

AJ:

Now's your chance. You have a minute and 30 seconds.

Shane:

Yeah, we'll have to save it for another time, but I do want to do the top five names for the machines at the IRS, according to this article. We've got Scamps... So, they did a tour of the IRS processing unit. It's like a quarter mile or half a mile long. If you're tax return goes in the front door, it goes through these different machines. There's the Scamps machine, which opens and sorts the mail, which apparently only one guy knows how to fix if it breaks. And so when he leaves, they won't have a replacement.

Shane:

There is the Candling Process, where a guy looks at opened envelopes and he holds it up to a candle or a light to make sure that there's no pieces of mail left inside, since the Scamps machine might have missed it. He says he finds about three docs per a thousand documents. So that's 34,000, so that must be a really cool job.

Shane:

There's then the Tingle Table, where the open documents go to be sorted between different cubby holes. This was invented in 1965 and was "cutting edge technology" for its time. Also featured in the David Foster Wallace book about the IRS office, The Pale King, COBOL is the language it's running on at the IRS and the Nibbler opens up oddly shaped envelopes.

AJ:

Those all sound like Harry Potter things. The nibblers... Oh yeah, I mean, definitely check out this article. It's a Washington Post article called, Why Does the IRS Need $80 billion? It's very visual, as you scroll through, you get to see all the amazing photos.

Shane:

They need it people, trust us.

AJ:

Thanks so much for listening to The Liquidity Event. You have been a wonderful audience. You can find us at BrooklynFI.com/episode57. We'll see you next week.

Shane:

Bye.

AJ:

Bye-bye.

Speaker 1:

Thanks for listening to The Liquidity Event, hosted by AJ and Shane of Brooklyn FI. Head on over to BrooklynFI.com, where you can subscribe to the podcast or YouTube channel. Or if you want to learn about their full service, financial planning, tax, and investment firm, specializing in tech professionals and creatives on the path to financial independence. We'll see you next time on The Liquidity Event.