January, 2010

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

Energy Credits---Residential and Non-business Credits Residential Energy Property Credit

The new tax law increases the energy tax credit to 30% of the cost of all qualifying energy-efficient improvements to existing homes. It also raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010. Qualified improvements include adding insulation, energy efficient exterior windows, energy-efficient heating, air conditioning systems, and more. A similar credit was available for 2007, but was not available in 2008. Ask your tax professional about the IRS' guidance, deadlines, and other important qualifying factors for this and the following tax credit. Non-business Energy Property Credit -- You can receive a tax credit of 10% of the purchase price of qualified energy-efficient products installed in the taxpayer's main home in the United States. The tax credit for home improvement purchases is limited to $500 and applies to the total credit you can claim for all years combined.

Certified Public Accountants

IRS Times & Inquirer

Inside This Issue...

Oops! Fed Workers Owe $3 Billion
IRS Gone Wild? They File Tax Lien for $33 Million
IRS Question Corner

Oops! Fed Workers Owe $3 Billion

The Internal Revenue’s compliance department found trouble in the back yard. As of Sept. 30, more than 276,000 federal employees and retirees owe $3.04 billion in back taxes.

Federal workers had an overall delinquency rate of 2.9 percent. The Department of Housing and Urban Development boasted the highest delinquency rate among employees at just over 4 percent.

“It’s not right for a few to shirk their obligations, and it’s especially offensive that these tax delinquencies come from federal employees and contractors,” said Sen. Chuck Grassley of Iowa told the Associated Press

IRS Gone Wild?
They File Tax Lien for $33 Million

The Internal Revenue Service filed a tax lien against Girls Gone Wild creator Joe Francis for $33 million.

The government alleges Francis, whose videos of shirt-lifting coeds have made him wealthy, owes back taxes from 2001, 2002 and 2003.

For Francis, this represents another battle in his ongoing war with the IRS. On Nov. 6, he was sentenced to time served and a year of probation after pleading guilty to two misdemeanor counts for filing false income tax returns and bribing jail workers. He was also ordered to pay nearly $250,000 in restitution.

Francis, who told the celebrity news web site TMZ.com that the IRS had seized more than $100 million in cash from his accounts, commented: “This is total retaliation for me beating them in court.”

IRS Question Corner

Question: New Year’s Resolution: I want to get rid of my tax debt! I owe a lot too. A LOT! Between a failed business and bad tax advice, I owe low six-figures. I don’t even have that much money! What can I do?

Answer: Yours is perhaps the best New Year’s Resolution I can even imagine. Eliminating your tax debt once and for all is one of the best things I think you can do — not only from the obvious financial perspective, but from a mental perspective as well. I’ve heard from clients time and time again how relieved they are to have the taxman finally off their back.

So what should your plan of attack be? The first thing you should do is consult a qualified tax professional. He or she will analyze your previous returns, current financial situation and other data and records to determine exactly how much you owe the IRS.

Based on some of the facts you offered in your question, I would guess the Offer in Compromise program might be your best option. The Offer in Compromise is intended for taxpayers who, for whatever reason, are unable to pay their tax debt, even over time. This could be due to a failed business, illness, legal judgments — any numbers of reasons. But no matter the reason, if you as the taxpayer can prove to the IRS that you are unable to pay the debt, the IRS will in certain cases agree to an Offer in Compromise.

This Offer in Compromise can effectively reduce your tax debt by pennies on the dollar, giving you a payoff amount that is not only substantially lower than the amount you owe but which is something you can realistically pay. I suggest you talk to your tax professional specifically about an Offer in Compromise. If, by chance, you do not qualify for the program, you have other options as well, including the Installment Agreement.

I'm an IRS problem solver, so I know Offers in Compromise well; I deal with IRS problems such as yours 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!

David S. Nelson, C.P.A.
Certified Public Accountants

2010 65th Avenue West
Fircrest, Washington 98466

Phone: 253-752-9522
FAX: 253-276-0144
E-MAIL: Firm@DNelsonCPAs.com
WEB: www.DNelsonCPAs.com

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

Circular 230 Disclosure:
To ensure compliance with requirements imposed by the IRS, we inform you that (i) any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.


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