Spammer Gets $11 Billion Fine

Spad writes "It's not a typo, The Inquirer (amongst others) is reporting that an Iowa-based ISP has been awarded $11.2 billion in a case against spammer James McCalla, who was found guilty of sending over 280 million illegal spam emails. Under state law, the ISP was entitled to $10 per illegal e-mail sent. According to the Quad-City Times, McCalla has also been banned from using a computer for 3 years. From the article: "CIS acknowledged that it is unlikely to see any of the judgment money but said that it was time that spammers learnt that their actions would result in an economic death penalty"."

Comments

Re:Bankrupcy?

[flicken]

According to the article, the IPS doesn't expect to collect any of the money. So it is likely that they will cancel the debt. Which means, according to IRS publication 525, that the spammer will owe taxes on the forgiven debt.

Let's see... $11.2 billion, at the highest tax bracket of 35%, that's $3.92 billion he'll owe the IRS.

IRS publication 525:

Canceled Debts Generally, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income. You have no income from the canceled debt if it is intended as a gift to you. A debt includes any indebtedness for which you are liable or which attaches to property you hold.

If the debt is a nonbusiness debt, report the canceled amount on Form 1040, line 21. If it is a business debt, report the amount on Schedule C or Schedule C-EZ (Form 1040) (or on Schedule F (Form 1040), Profit or Loss From Farming, if the debt is farm debt and you are a farmer).

If they are smart.

[www.sorehands.com]

Let them cancel half the debt, then report the income to the IRS and then file a report with the IRS that these guys are committing the tax fraud and send dicovery documents to to IRS and then collect the reward of the money from the IRS. That way the IRS can crawl up their ass with a microscope, then they still get some money from that.

Re:If they are smart.

[John Hurliman]

Not only that, but this company will never pay taxes again for the rest of its existence. Report 11 billion income on the books, cancel the loan and write off 11 billion to bad debt and carry that forward as a loss eternally. The company now permanently operates in the red even though they (might) pull a profit every year, and they can 1099 the guy to screw him over with a non-bankruptable debt to the IRS that will seize his assets, garnish up to 25% of his wages and destroy his credit until he's dead.