March, 2010

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

What Health Care Reform Means for Your Business---

The bill has passed and while many provisions won't kick in until 2014, now is the time to prepare for them.

Small businesses will have until 2014 to set up Small Business Health Options Programs, or "SHOP Exchanges", where small businesses will be able to group together with other small businesses to buy health insurance. Small businesses are those with no more than 100 employees.

Starting in 2014, businesses with over 50 employees will be required to offer healthcare coverage or pay a penalty of $750 per year per full-time worker. The minimum benefit is to cover both a specific set of services and 60% of employee health costs overall, or additional penalties may apply.

"Cadillac" plans that cost more than $10,200 a year for individuals or $27,500 for family will be subject to a 40% tax on the portion of the cost that goes over the limit. The tax would actually be paid by insurers, but it is expected that it would be passed down to plan holders through higher premiums.

A business with 10 or fewer full-time (or equivalent) employees earning less than $25,000 a year on average will be eligible for a tax credit of 35% of health insurance costs. Businesses with 11 to 25 workers earning an average up to $50,000 are eligible for partial credits.

Beginning in 2014, insurers will no longer be able to set rates or exclude coverage based on pre-existing conditions, and can vary premiums only by geographic location, age, and tobacco use. Effective immediately is a ban on lifetime limits on coverage and cancellation of policies already issued, except in cases of fraud.

We will follow-up with more information as it becomes available.

NELSON & COMPANY, P.S.
Certified Public Accountants


IRS Times & Inquirer

Inside This Issue...

Pastor Aided False Income Tax Return
Office Manager Receives 30 Months for Tax Evasion
Couple Guilty of Filing False Returns
IRS Question Corner


Pastor Aided False Income Tax Return

A religious leader in Vancouver, WA was sentenced to five months in prison for aiding the preparation of a false tax return.

Until last September, Maximo Garza, 47, was the pastor for Victory Outreach Church of Portland, a nondenominational church with has operated in Portland, OR for more than 15 years.

During his plea hearing, Garza admitted he provided false expense invoices which purported to reflect public relations and other services provided by Victory Outreach Church to William Thompson, who was then operating a mail-order divorce service using the name Hallwood INC. Thompson used the false invoices to take expense deductions on tax returns filed by Hallwood in order to fraudulently reduce his tax liability. Thompson pled guilty to tax evasion and was sentenced to a prison term in 2007.

Between 2001 and 2003, Garza provided invoices reflecting a total of $735,441 in false business expenses. Thompson agreed to let Garza keep approximately 10% of the expense amounts.


Office Manager Receives 30 Months for Tax Evasion

An Illinois woman was sentenced to 30 months in prison as a result of her convictions for tax evasion, willful failure to file federal income tax returns, embezzlement from an employee benefit plan and failure to pay employment taxes.

In addition, Mary R. Storer, 40, formerly of Wood River, IL, was ordered to serve three years of supervised release and pay restitution in the amount of $266,056 to the victim, Elk Heating and Cooling, and $76,267.29 to the IRS.

The convictions are the result of Storer's conduct after she was hired by Elk Heating and Sheet Metal as their office manager in 2006. Elk Heating and Sheet Metal is a small, family-owned heating and air conditioning company in Madison County.

Storer's responsibilities included answering the telephones, setting up customer appointments and handling accounts receivable and accounts payable. Storer was also in charge of payroll and filing and paying Elk Heating and Sheet Metal's payroll taxes. Storer immediately began embezzling money from the company and gambled away almost all of the money that she embezzled.

At sentencing, information was also presented that she had gambled heavily in 2007, with losses exceeding $200,000 for that year.


Couple Guilty of Filing False Returns

Donald and Kathryn Snoozy, former residents of North Platte, NB, pleaded guilty to willfully failing to file income tax returns for the calendar years 2003 and 2004.

The couple pled guilty knowing they had an obligation to file returns with the Internal Revenue Service. The information alleges that the joint gross income for the couple was approximately $150,230.00 in 2003 and $169,473.00 in 2004.


IRS Question Corner

Question: I believe in the old adage that "If it's too good to be true, then it probably is." Explain to me why that shouldn't apply to the Offer in Compromise program you have talked about.

Answer:  Skepticism is a good, healthy thing, and everyone should be skeptical at first when it comes to tax advice. you want to make sure you're dealing with a qualified tax professional.

First off, let me assure you the Offer in Compromise, while a wonderful program for those who qualify, is not too good to be true, but note those four words in my last sentence: for those who qualify.

The IRS isn't handing out OICs to every taxpayer who owes. The U.S. tax-collecting agency doesn't operate on a pay-what-you-wish model by any means. The OIC was designed for a specific group of taxpayers who amassed sizable debt through previous earnings and interest but who - for reasons that could be personal, professional or medical - are simply unable to pay that debt off, even over time.

This program can be very good news if you qualify for it. By negotiating a settlement offer with the IRS, you can reduce your tax debt to a fraction of what you owe. A tax professional will first review your previous returns - coming to the exact amount you owe the IRS - and then you and your tax professional can negotiate your Offer in Compromise.

I deal with IRS problems such as this every day. That’s because 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!


--Our Policies-- www.DNelsonCPAs.com

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

====NOTICE REQUIRED BY IRS====
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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