February and March, 2012

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

Tax Scam Warning: Targets are Senior Citizens,Working Families and Church Members-

The Internal Revenue Service warns senior citizens and other taxpayers to beware of a scheme tempting them to file tax returns claiming fraudulent refunds.

The scheme promises "free money" through refunds to people who have little or no income and who normally don’t have a tax filing requirement. Promoters of the scam claim they can obtain taxpayers tax refunds or nonexistent stimulus payment based on the American Opportunity Tax Credit - even if the victim was not enrolled in or paying for college.

In recent weeks, the IRS has identified and stopped an upsurge of these bogus refund claims coming in from across the United States and is actively investigating the sources of the scheme. 

“This is a disgraceful effort by scam artists to take advantage of people by giving them false hopes of a nonexistent refund,” said IRS Commissioner Doug Shulman. “We want to warn innocent taxpayers about this new scheme before more people get trapped.”

The IRS has already detected and stopped thousands of these fraudulent claims. Nevertheless, the scheme can still be quite costly for its victims. Promoters may charge exorbitant upfront fees to file these claims - and are often long gone when victims discover they’ve been scammed. 

The IRS is reminding people to be careful because all taxpayers, including those who use paid tax preparers, are legally responsible for the accuracy of their returns, and must repay any refunds received in error.

To avoid becoming ensnared in this scheme, the IRS says taxpayers should beware of any of the following:

David S. Nelson, CPA, CTRS
Certified Public Accountants

IRS Times & Inquirer

Inside This Issue...

Lindsay Lohan Owes IRS Nearly $100,000 in Taxes
Kentucky Man Gets 24 Months in Prison and Ordered to Pay $2.4 Million in Restitution
Law Firm Partner Gets One Year in Prison
IRS Question Corner

Lindsay Lohan Owes IRS Nearly $100,000 in Taxes

Actress Lindsay Lohan has been known for her troubles with the law. Now those troubles involve the Internal Revenue Service.

The IRS filed a lien against Lohan for $93,701.57 - the amount she owes in taxes from 2009.

The Mean Girls star, who recently appeared on the cover of Playboy magazine, can turn to a family member for advice on dealing with the taxman. Her father, Michael Lohan, has had encounters with the IRS as well. He owes $12,429 in back taxes.

Kentucky Man Gets 24 Months in Prison and Ordered to Pay $2.4 Million in Restitution

A Boone Count, Ky., man who evaded paying his federal income tax liability from 1995 to 2001 was sentenced today to 24 months in prison. He was also ordered to pay approximately $2.4 million in restitution to the Internal Revenue Service.

From 1995 to 2001, William C. Shehan Jr., 45, failed to file federal income tax forms and diverted money that should have been paid in taxes into private business ventures and trusts.

The IRS found the trusts improper during a 2003 audit and determined that Shehan owed approximately $2.1 million, including interest and penalties in tax liability.

In May 2003, Shehan acknowledged that he owed the taxes, and in 2004, Shehan filed inaccurate information with the IRS in an attempt to settle his tax debt.

The inaccurate information concerned Shehan's ability to pay the assessed income tax. Shehan failed to pay the acknowledged tax liability.

Under federal law, Shehan must serve at least 85 percent of his prison sentence and three years of supervised release.

Law Firm Partner Gets One Year in Prison

Leslie W. Jacobs, 67, of Gates Mills, Ohio, was sentenced to one year and one day in prison and ordered to pay a $10,000 fine after pleading guilty to making and subscribing to false personal income tax returns.

According to court records, Jacobs, a partner in a Cleveland law firm, filed joint income tax return on which he inflated his law firm business expense deductions and, as a result, falsely understated his law firm partnership income by approximately $252,257.


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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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