January, 2009

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

Presidential Tax Proposals---

As of today, none of President Obama's proposals have become law. Our best guess is a lowering of some of the tax brackets, and the issuing of new lower withholding tables. The result should mean more money in workers' paychecks.

The many other proposed changes are subject to negotiations with Congress. We expect there to be some tax breaks and/or credits for businesses. We'll advise with special bulletins as soon as any bills are signed into law.

Certified Public Accountants

IRS Times & Inquirer

Inside This Issue...

Feds: Ohio Doc Tried to Conceal $950,000
Las Vegas Attorney Gets 15 Months in Prison for Evasion
IRS Question Corner

Feds: Ohio Doc Tried to Conceal $950,000

An Ohio physician has been charged with trying to conceal more than $950,000 in income. A federal grand jury indicted Dr. Dominic Joseph Maga, 60, of Dayton, charging him with tax evasion and willful failure to file income tax returns on his taxable income of more than $220,000 per year for the past four years.

Maga is an emergency room doctor employed at Grandview Medical Center and Southview Hospital, both located in Dayton. The nine-count indictment includes four counts of tax evasion for attempting to conceal his income of $260,078.85 in 2003, $255,369.89 in 2004, $240,287.91 in 2005 and $220,996.40 in 2006.

Each count of tax evasion is punishable by up to five years in prison and a fine of up to $250,000.

The indictment also alleges five counts of willful failure to file an income tax return for the years 2002 through 2007. Each count is punishable by up to one year in prison and a fine of up to $100,000. If convicted, Maga’s sentence would also include payment of all taxes due plus penalties and interest, as well as the costs of prosecution.

Las Vegas Attorney Gets 15 Months in Prison for Evasion

A Las Vegas lawyer who previously pleaded guilty to tax evasion and willfully failed to file federal income tax returns or pay any taxes for a five-year period was sentenced to 15 months in federal prison.

Mark A. Lobello was indicted by the federal grand Jury in November 2006. According to court records, Lobello handled business disputes, personal injury lawsuits and divorce matters. From 1997 and 2001, Lobello earned more than $600,000 in income but failed to file federal income tax returns or pay any federal income taxes for the those years, even though he owed the IRS more than $140,000. Lobello also attempted to conceal his income from the IRS by dealing in cash and mixing business funds with personal funds.

“Everyone, including attorneys like Mr. Lobello, has a duty to comply with federal tax laws and has an obligation to file accurate tax returns and timely pay their taxes,” said Nathan J. Hochman, Assistant Attorney General of the Justice Department's Tax Division, in a statement. “If they violate these laws, the consequences are severe — indictment and criminal prosecution, being branded a felon for the rest of their lives, significant prison time, and the requirement to pay back all the taxes plus steep penalties and interest.”

IRS Question Corner

Question: Is it true the new head of the IRS is cracking down on tax cheats?

Answer:  Yes. And it's not just the rich that he's after. You read in newspapers about big-name celebrities caught violating U.S. tax law. But beware: You’re at risk too.

"Celebrity lands in tax trouble." That story always finds a way into your newspaper or your favorite news website. After all, who hasn’t read about Brazilian race-car driver and “Dancing with the Stars” winner Helio Castroneves?---the 33-year-old who faces trial in Miami on charges he failed to report $5.5 million in income from 1999 to 2004. That’s news — a good topic for the water cooler, but celebrities such as Castroneves are simply individuals among the thousands of people who land in trouble with the IRS every year.

There are thousands of folks just like you who are facing life-changing charges because they decided to cheat "a little" on their taxes. Average people are having tax troubles and facing prosecution, even prison time, nationwide.

You don't hear about these average Joes, do you? And don’t be fooled: It’s not just people who evade six-figures or more who are getting caught. The small-timers are also facing prosecution. Every year, hundreds of middle class people across the country are being indicted for filing false tax returns.

The IRS’s aggressive enforcement policies are unlikely to change. In fact, they are likely to become more aggressive. Take, for example, what IRS Commissioner Douglas Shulman said of enforcement during a recent speech. “Think of a detective working a case who may employ everything from eyewitness accounts, physical evidence, paper trails and the cooperation of law enforcement officials in other states,” Shulman said. “That’s similar to what we’re doing with the following tools (of enforcement).”

What kind of tools? Well, don't forget the IRS is equipped with massive computers that analyze returns faster than you can blink. Those computers have freed agents from that tedious work so they can focus on investigating those tax returns that are flagged. One slip of the pencil, one percent point "not quite right" and you and your tax return could be placed under their microscope.

The moral of the story? Do not cheat. Do not lie. The IRS has a tough commissioner at the helm and he's after everyone who thinks they can cheat the IRS.

If you or someone you know has been sent a notice by the IRS about their taxes, tell them to consult a tax professional before they say a single word to the IRS. Anything you tell the IRS can be twisted or interpreted differently than you expect, landing you in far worse trouble than originally thought.

I deal with problems like this every day. For a free, no-risk consultation, please call my office at 253-752-9522 or send me an E-mail at Firm@DNelsonCPAs.com. Do it today!

--Our Policies-- www.DNelsonCPAs.com

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

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