February, 2007

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

Q & A ---Can Better Records Save Money?

  Q:  I am in sales, travel a great deal, and am extremely busy. My accountant keeps telling me to keep better records and that I am overpaying my taxes because I don't have records for all of my expenses. Anything I can do?
  A:  Yes. (1) Get a business credit card and pay the extra fee for a year-end summary of expenses by category. Use your business credit card for only business expenses. (2) Diligently run a test for at least 6 weeks for your auto mileage, keeping a detailed log of your business miles. A little extra time on your records can save you a significant amount of tax.

NELSON & COMPANY, P.S.
Certified Public Accountants
www.DNelsonCPAs.com

FEBRUARY, 2007

Inside This Issue....

Tax Protester Barricaded in
New Hampshire
Associate of Corrupt Politico
Sent to Prison
Nigerian Gets 47 Months
For Tax Refund Scheme
IRS Question Corner

"Dr. Jekyll, how well do you know this Mr. Hyde who prepared your taxes?"

NIGERIAN GETS 47 MONTHS FOR TAX REFUND SCHEME

Matthew Okonkwo, 59, a Nigerian national who had been residing in Dothan, AL, was sentenced to 24 months in prison on one count of conspiracy to defraud the United States and eleven counts of aiding in the preparation of fraudulent income tax returns.

Upon completion of his sentence, Okonkwo will face deportation proceedings.

Convicted by a jury on Nov. 1, 2006, Okonkwo owned Eagle Financial Services, a tax preparation business in Dothan.

Eagle electronically filed 11 tax returns for the tax year 1999 that falsely claimed that the taxpayers had been employed by CJB Ice Cream in Fort Walton Beach, FL.

Many of the returns also listed children and foster children that were not the true children of the taxpayers. The false statement qualified the taxpayers for the Earned Income Credit, and as a result refunds were issued to which the taxpayers were not entitled.

Okonkwo did not tell the taxpayers the true amount of the refunds, giving them a small amount in cash.

The IRS issued a total of $45,508 in refunds as a result of this scheme.



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

Tax Protester Barricaded in New Hampshire

A man convicted of tax evasion charges for not paying income taxes for more than a decade has barricaded himself, along with armed supporters, in his home in Plainfield, NH.

Ed Brown said he won't surrender.

"Live free or die," he told the Associated Press in a telephone interview, referring to New Hampshire's motto. "What else can I say?"

Ed Brown's wife, Elaine, a dentist who earned most of the couple's income, has been in Massachusetts.

Although the government says the couple owes $625,000 in taxes, the Browns say they are not required to pay federal income tax. They stopped paying income taxes in 1996 and stopped filing returns in 1998.


Associate of Corrupt Politico Sent to Prison

A business partner of former New Jersey State Senator John A. Lynch was sentenced for tax evasion to three months in federal prison and seven months of home confinement with electronic monitoring.

U.S. District Judge Stanley R. Chesler also fined John E. "Jack" Westlake, 76, of Red Bank, NJ, $30,000 and ordered him to surrender to the federal Bureau of Prisons by Feb. 28.

Westlake was a close business associate of Lynch and was involved in two consulting companies with the former senator. Westlake pleaded guilty on Sept. 15, the same day that Lynch admitted accepting concealed corruption payments. Lynch was sentenced on Dec. 19 to 39 months in prison and began serving his sentence on Jan. 16.

In pleading guilty to tax evasion, Westlake admitted that for tax year 1999, he filed an individual tax return on behalf of him and his wife in which he failed to include approximately $350,000 in income. As a result, he admitted that he owed the government an additional tax of approximately $75,620.


IRS QUESTION CORNER...

Question:   I owe the IRS more than $75,000. I don't dispute this, and I want to come forward and pay it, but I don't have that time of money. I also don't think the Offer in Compromise program would work for me. But what about an installment plan?

Answer:   Indeed, paying off your IRS debt in installments is absolutely an option. Since I assume you are interested in coming forward before the Internal Revenue Service is forced to track you down, you're in a good position to deal with the federal government. The IRS favors those who want to work with the government to satisfy their debt.

To answer your initial question, yes, most likely you would be able to break your debt down into installments. It's common, as a matter of fact. The IRS's installment option works very much like a car loan - you pay a reasonable amount of money monthly that begins to chip away at your debt without placing undue financial hardship on you or your family.

However, don't be so sure you don't qualify for the Offer in Compromise program. Consult a qualified tax professional before you make that determination. He or she will help you determine how much you owe to the government, as there's no reason to pay any more than you actually owe. Once that amount has been established, your qualified tax professional will approach the IRS and present them with an Offer in Compromise, which can often reduce your tax debt by pennies on the dollar.

While it may seem odd that the IRS would allow such Offers in Compromise, it really is good business for the tax-collecting agency. Years of experience have taught Uncle Sam that it's better to get a guaranteed amount of money rather than having to chase down delinquent taxpayers, often to no satisfaction.

I solve IRS problems like yours every day. I'm an IRS Problem Solver. 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!


 

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