March, 2006

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

Did you know.... 
Most tax returns will be E-Filed and 99% will not require signatures.
We'll contact you if yours is the exception.

Q & A ---Stock Losses?

  Q:  I have some stock that shows a substantial loss. I understand I can only write off $3,000 a year. Therefore, should I plan to sell only enough shares to generate a $3,000 loss for the year?
No. If the stock is down and you really want to get rid of it, sell it all. Yes, you are limited to a capital loss of $3,000 a year, however, losses over $3,000 are carried over to the next year. Those losses are then available to offset future gains.

Certified Public Accountants

MARCH, 2006

Inside This Issue....

'Survivor' in Even More Tax Trouble
Tax Return Mill Operator Faces 24 Years
Millionaire Guilty of Filing False Return
IRS Question Corner


A jury convicted Michael E. Diesel, founder and president of Telecommunications Research Associates in St. Mary's, KA., on three counts of filing false income tax returns.

According to evidence, Diesel used a trust in Belize to conceal from the IRS $335,500 for the 1998 tax year, $1,417,072 for 1999, and $1,589,250 for 2000.

He did not report those sums as income and did not pay income taxes on them. He faces a maximum penalty of three years in federal prison and a fine up to $250,000.

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IRS Times & Inquirer
253-752-9522 | 1-800-669-0137

'Survivor' in Even More Tax Trouble

Richard Hatch, made famous as the winner of the first season of the Survivor reality television show, is in deep tax trouble.

Convicted in January in federal court for attempting to evade taxes on his $1 million in prize money, plus other miscellaneous income, Hatch is now wanted by authorities in Van Buren County, Michigan They say the 44-year-old Survivor winner has not paid property taxes since 2002, despite owning nine properties in the county.

"He was sent at least three notices [of overdue tax bills]," Township Treasurer Mary Fogarty told the Kalamazoo Gazette.

Hatch is currently awaiting sentencing for the federal tax evasion conviction. He faces up to 13 years behind bars. "I don't think we'll see any money out of him," Fogarty added.

Tax Return Mill Operator Faces 24 Years

A Yorba Linda, CA., man who ran a fraudulent tax return mill pleaded guilty to conspiring to defraud the IRS and aiding and assisting in the filing of false tax returns.

Samuel Joseph DeAngelo, 59, who ran Western Tax Service in Anaheim, admitted that he and his employees prepared tax returns that claimed false deductions. For instance, DeAngelo and his preparers asked questions designed to cause taxpayers to falsely claim that they made charitable contributions amounting to 10 percent of their income. DeAngelo and his preparers also caused taxpayers to claim false deductions for "employee business expenses" and "depreciation."

DeAngelo admitted that Western Tax Service charged fees that were substantially higher than the market rate because taxpayers were receiving inflated tax returns from the IRS.

Western Tax Service prepared more than 8,000 tax returns in 2001. The IRS determined that the tax returns prepared by DeAngelo's preparers caused the government to lose more than $15 million in unpaid taxes for the 2000 tax year. He faces up to 24 years in federal prison.


Question:     I've heard the pitches. I've even seen the street-corner signs and ads on TV advertising services that claim to eliminate tax debt. I've heard it and I've seen it, and still I don't believe it. Due to a number of bad decisions, I owe roughly $70,000 in back taxes. I'd like to believe the advertisements are true, but I'm skeptic. What's the real deal?

Answer:    Sure, you can't believe everything you read on a street-corner sign or see on television. But you can believe this: It is possible to reduce your tax debt by pennies on the dollar! In most cases, the claims are legitimate and true. You just need to find yourself a qualified tax professional.

It's actually very simple. Here's how it works: If you are a taxpayer who has amassed a substantial amount of tax debt that you absolutely cannot pay off - and you would be shocked to learn how many of you are out there! - then you may qualify for what's known as the Offer in Compromise program. Because the IRS now realizes that it's much more effective to be accommodating with tax debtors than to, say, chase them down and beat down their door, the IRS uses the Offer in Compromise program as a way to help taxpayers come back into compliance.

First, you'll want to consult a qualified tax professional who will review your previous tax returns to establish the exact amount of your tax debt. Once this is established, you and your qualified tax professional will meet with an IRS agent to discuss an amount that would settle your tax debt once and for all. Oftentimes, this amounts to pennies on the dollar! No joke. It's absolutely true.

For taxpayers who are having trouble satisfying their tax debt, they have many options available. If you do not qualify for the Offer in Compromise program, you may still be eligible for other programs, including an Installment Agreement that allows you to pay off your tax debt over time.

For a free, no-risk consultation, call my office at 253-752-9522 or send me an E-mail at Do it today!

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

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