NELSON & COMPANY, P.S.
Certified Public Accountants
Tacoma Mall Office Building
4301 South Pine Street, Suite #241
Tacoma, Washington 98409-7205
David S. Nelson, CPA
E-MAIL: Firm@DNelsonCPAs.com
ON THE WEB: NEVERPAYTAX.com
PHONE: 253-752-9522
FAX: 253-276-0144
1-800-669-0137
Edition 0105-1
E-MAIL TAX BULLETIN
January, 2005
Messages From Nelson & Company, P.S., CPAs
Q & A ---Cash in an IRA to pay off debts?
  Q:  I am 62 years old and have built up a large credit card debt. I am thinking about cashing in my IRA to pay them off. Do you think this is a good idea?
  A:  No.
1. Credit card debts generally would not be deductible against your Federal income Tax.
2. You are going to need the IRA money later in life to live on. At 62, it will be very difficult for you to contribute enough money and build up your IRA to its present value. You would be better off to go on a strict budget, reduce your debts and keep your money in the IRA.
  NELSON & COMPANY, P.S.
Certified Public Accountants
        JANUARY, 2005

Inside This Issue....

CT MAN SENTENCED FOR FILING FALSE RETURN

Albert J. Grasson II, 50, of Cheshire, Ct., has been sentenced to three years of probation for filing a false income tax return. Additionally, Grasson was ordered to spend the first five months of his probation confined to his home with electronic monitoring and then perform 120 hours of community service.

According to court records, in April 2002, Grasson filed his federal income tax return for the calendar year 2001 on which he showed a negative taxable income of $15,689. Grasson has admitted, however, that he failed to report $18,684 in earnings from his business, Surgical Instrument Services, a surgical instrument repair service. He also omitted from that same tax return additional rental income of $30,550.

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IRS Times & Inquirer
NELSON & COMPANY, P.S.
CERTIFIED PUBLIC ACCOUNTANTS
253-752-9522 | 1-800-669-0137

Embezzler Convicted of Tax Fraud

A Florida man was convicted on two counts of filing false income tax returns after embezzling more than $23,000 over a two-year period from his former mosque in Overland Park, KS.

Farooq A. Essa, 56, currently of Orange Point, FL., ran the Ismail Community Jamatkhana mosque in his home in Overland Park. (The mosque is now located in Olathe, Kan.) The embezzlement resulted in a tax loss of $69,649. The Ismaili Muslim community is a sect of the Shia branch of Islam whose spiritual leader is Prince Aga Kahn, believed by his followers to be the closest living relative of the prophet Mohammed.

The jury convicted Essa of reporting $76,334 on his 1999 tax return when it should have been $189,148 and $47,734 on his 2000 return when it should have been $166,307. He faces up to three years in federal prison and a fine of up to $100,000 for each count.

Man Allegedly Evaded Half-Mil in Payroll Taxes

The federal government has charged a businessman from Pleasanton, CA. in a 16-count indictment that alleges that he attempted to evade more than $670,000 in payroll taxes over a two-year period.

David Lopez Quintana was the former president of TCCG, Inc., a holding company for Progressive Auto Stereo, Bayfair Auto Stereo, Car Stereo Warehouse and Beeper City. Quintana allegedly tried to evade paying to the federal government the FICA withholdings he had taken from his employees’ paychecks.

Quintana provided false W-2 forms to his employees, transferred funds from corporate bank accounts to his personal accounts to conceal taxable income, and purchased a home in Pleasanton using a nominee name to conceal his ownership interest, the indictment alleges.

The maximum penalty for payroll tax evasion is five years in prison, three years of supervised release, and a fine of $100,000.

IRS QUESTION CORNER...

Question:     I’ve heard people talk about an Offer in Compromise. I find it really hard to believe that the IRS offers this type of program. I owe about $112,000 in back taxes — a mixture of personal taxes and payroll taxes from my failed business. A program like this would help immeasurably. But, c’mon, does it truly exist or is it just a marketing ploy?

Answer:     Oh, believe me, the Offer in Compromise program really does exist. Not everyone qualifies, but those who do can oftentimes reduce their tax debt to pennies on the dollar.

Here’s what would happen: You would first consult with a qualified tax professional, who would then analyze your previous years’ returns to ensure that you are not paying a penny more than you should. Once that is complete — and you and your tax professional know exactly what you owe in back taxes — you would set up a meeting with an IRS agent.

Now, as hard as it may be to believe, IRS agents are open to Offers in Compromise. Why? Because they’ve already spent years chasing deadbeat taxpayers who never pay a thing. When a taxpayer comes forward, they are often welcomed with open arms. At the meeting, your tax professional will propose a payoff amount — that is, the actual Offer in Compromise — that will satisfy your tax debt once and for all.

Although every case is different, people are not lying when they tell you that the final compromise amount can be pennies on the dollar. It’s absolutely true! Of course, as I said, not everyone qualifies. If you’re living in a multimillion-dollar beachfront home, driving a brand-new BMW, and vacationing in the South Pacific every winter, you will most likely not qualify. But if you do not in fact have the resources to pay the tax debt you’ve amassed, the Offer in Compromise program will likely be for you.

I deal with Offers in Compromise daily. That’s my job — I’m an IRS Problem Solver. For a free, no-risk consultation, call my office at 253-752-9522 or send me an E-mail at Firm@DNelsonCPAs.com. Do it today!

David S. Nelson, C.P.A.
NELSON & COMPANY, P.S.
Certified Public Accountants

Tacoma Mall Office Building
4301 South Pine Street, Suite #241
Tacoma, Washington 98409-7205
Phone: 253-752-9522
FAX: 253-276-0144
E-MAIL: Firm@DNelsonCPAs.com
WEB: www.NEVERPAYTAX.com