January, 2006

Message from Nelson & Company, P.S., CPAs

Q & A ---The IRS said they never got my check.

  Q:  I sent a check for my estimated taxes for September 15, 2004. IRS said they never got the check. I have the cancelled check. What do I do?
Call the IRS. Have your cancelled check ready and read the numbers off of the back to the IRS. You should be able to solve your problem with a phone call. Always, when sending payment to the IRS, be sure to write your ID number, social security or EIN, the tax form, i.e. 1040, 941 etc., and the period and year, i.e. first quarter, 2006 on your check.

Note: We had several inquiries regarding our November column about owing money to the IRS. Yes, we do offer a free consultation for taxpayers who have serious IRS problems.

Certified Public Accountants


Inside This Issue....

Tax Protestor Convicted of Tax Evasion
NJ Scientist Gets Home Confinement for Tax Fraud
Family Law Attorney Pleads Guilty to Income Tax Evasion
IRS Question Corner


Matthew J. Schaefer, an attorney in Coral Springs, Fla., pleaded guilty last month to one count of income tax evasion for the year 2000. According to court records, Schaefer, an attorney specializing in family law, attempted to evade federal income taxes for the years 1999, 2000 and 2001 by failing to report all of his business receipts and by overstating expenses. In all, Schaefer failed to pay about $133,000 in taxes. He faces up to five years and a fine of up to $250,000. As part of the plea, Schaefer has agreed to file amended income tax returns with the IRS for tax years 1999 through 2001. Additionally, he has agreed to all back taxes.

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IRS Times & Inquirer
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Tax Protestor Convicted of Tax Evasion

A well-known tax protestor in the Pensacola, Fla. area has been convicted on six counts of tax evasion.

Ward F. Dean, a physician, was convicted of tax evasion for the years 1997 to 2002 and for his attempt to interfere with the administration of the Internal Revenue Code.

Evidence presented at trial established that Dean, an outspoken tax protestor, had claimed no income for the years 1997 to 2002 when, in fact, he was paid approximately $1.3 million and owed over $300,000 in taxes. A retired Navy commander, Dean received a pension and other consulting income during the six-year period.

Dean faces up to five years in prison and a $100,000 fine for each of the six felony counts on which he was convicted.

NJ Scientist Gets Home Confinement for Tax Fraud

A Princeton scientist was sentenced to 12 months of home confinement and five years of probation for defrauding the United States regarding grants and tax evasion.

Moshe Lavid, 63, agreed to pay a total of $1.4 million to the government for the tax evasion and to settle allegations that he made false certifications to the NASA and the U.S. Department of the Air Force, among other agencies, to obtain federal research grants under the Small Business Innovative Research Program.

Lavid, a Ph.D., is the owner of M.L. Energia, a Plainsboro-based company involved in scientific research. The company formerly contracted with the federal government to conduct research focusing on the interaction between photons generated by lasers or advanced light sources and matters, mostly gas and liquid.

During his guilty plea Lavid admitted failing to notify the National Science Foundation that he had inappropriately used old data produced under an earlier contract.

Lavid also pleaded guilty to one count of tax evasion, which charged him with evading more than $93,000 in income tax on his personal tax return for 1998. Lavid agreed to pay the government $288,414.04, which included penalties and interest.


Question:     My finances are a mess, an absolute mess. And my taxes? Even worse! I've done exceptionally well in real estate these past two years and used my profits to pay off debts I'd accumulated from previous failed business ventures. Now, after following bad tax advice from a neighbor, I'm discovering that my gains weren't tax-free. I'm in the hole $55,000 in back taxes, and there's no way I can pay it! I just got finished paying off my old debts. What can I do?

Answer:    I know how you feel. It's as if you thought you solved one problem only to discover the cure for the old problem has its own disease. But first, calm down. Things aren't nearly as bad as you might think. You have many options available to you.

The first thing you should do is consult a qualified tax professional. He or she will review your previous tax returns to ensure that the $55,000 you believe you owe is the right amount. After all, why pay Uncle Sam any more than he legally deserves?

Now, considering that you're saying you do not have the resources to pay the tax debt, the Offer in Compromise program is probably your best bet. Believe it or not, this program allows taxpayers to reduce their debt by pennies on the dollar! Why? Because over time the IRS has learned that working with taxpayers is a more effective way to collect taxes than beating down doors.

Here's how the Offer in Compromise program works: Once your qualified tax professional knows exactly what you owe, he or she will approach the IRS with an offer - a reasonable amount that you can pay. Oftentimes, the IRS will accept an amount significantly less than the full amount, literally pennies on the dollar!

It's really that simple, and it's a program more taxpayers would take advantage of if they knew it was available to them.

I handle cases like yours every day. That's what I do - 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!

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Nelson & Company, P.S., CPAs Since 1979

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