NELSON & COMPANY, P.S.
Certified Public Accountants
Tacoma Mall Office Building
4301 South Pine Street, Suite #241
Tacoma, Washington 98409-7205
David S. Nelson, CPA
E-MAIL: Firm@DNelsonCPAs.com
ON THE WEB: NEVERPAYTAX.com
FAX: 253-276-0144
1-800-669-0137
NEW E-MAIL ADDRESSES
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Edition 0404
E-MAIL TAX BULLETIN
APRIL, 2004
Messages From Nelson & Company, P.S., CPAs
Q I don't have enough money to pay my taxes this year. Someone told me if I file an extension, I could delay sending the IRS any money.
A. This is one of the great urban myths. You must pay by April 15th at least 90% of any tax due in order for the IRS to grant you an extension. Extensions (use Form 4868) only extend the time to file your return until August 15th. If you don't pay at least 90% of the tax due the IRS can assess failure to file penalties of 25% on all tax shown on the return. Therefore, you can save money by timely filing a return. If you owe, ask the IRS for an installment agreement. You will avoid substantial penalties.

A note to our clients:

  • Extensions do not need to be signed. In fact, there is no place to sign. We E-Filed 285 extensions this year.
  • If you do not owe tax on your return, we will file it electronically through the IRS E-File system. You are not required to sign the return. However, your signature will be required on Form 8879 which we keep in our files.
  • It is not your imagination; tax laws have become more complex. The IRS Code now contains  four times the number of words as the Bible. That's 2,800,000 vs. 776,000 words.
With the added complexity from 5 new tax acts in the last 4 years, accuracy must come first. We try to get cases done as soon as possible, but we can not sacrifice accuracy. Accuracy and a complete return is always our first goal.

We wish to thank all our clients for your patience and referrals. We have again set a record for the number of cases. Again, thank you.
Sincerely,

NELSON & COMPANY, P.S.
Certified Public Accountants
APRIL, 2004

Inside This Issue....

DELAWARE BUILDER CONVICTED ON TAX EVASION CHARGES

Donald L. Donovan, the 53-year-old former owner of a company that constructed pre-engineered steel buildings in Seaford, Del., was convicted of four counts of attempted tax evasion for the years 1996 to 1999. Donovan was also convicted of four counts of willful failure to file income tax returns for the same years.

According to the indictment, Donovan attempted to conceal his income from the IRS by using a personal bank account that listed a fictitious Social Security number and provided customers with false Social Security numbers for 1099 forms.

In his defense, Donovan argued that federal income tax laws do not apply to him. The jury rejected that defense.

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

Owner of Dietary Business Pleads to Tax Charges

The former owner of Geral Vital International, a company in Marina Del Ray, Calif., that marketed dietary supplements to senior citizens, has pleaded guilty to tax charges after the government alleged that he inflated his business expenses to evade millions of dollars in corporate taxes.

Now a resident of Miami Beach, 60-year-old Almon Glenn Braswell pleaded guilty to the felony charge and admitted a tax liability of $10,455,367. What’s more, Braswell has admitted that he has the money to pay the debt. As part of the plea agreement, he agreed to make full payment to the Internal Revenue Service in the next three weeks.

Also as part of the plea, Braswell has agreed to cooperate with the government in providing information on others who helped him evade taxes. He will serve 18 months in prison. However, if a federal judge determines that Braswell does cooperate as promised, he will receive 41 months in prison.

St. Louis Periodontist Sentenced for Filing False Tax Returns

A St. Louis periodontist was sentenced to three years of probation, including six months of home confinement, for filing a false tax return.

Prior to 1996, 54-year-old Linda Marilyn Weaks deposited all non-cash business receipts into one main bank account and reported these deposits to her accountant. In 1996, Weaks opened additional bank accounts and began to deposit her business income into these secondary accounts without notifying her accountant.

In her plea, Weaks admitted that she created the secondary bank accounts to conceal money and underreport income on her tax returns. In all, Weaks evaded $39,026 in taxes.

IRS QUESTION CORNER...

Question:     I owned a business in the late ’90s that boomed during the skyrocketing dot-com era. Although my business was a well-oiled machine, my accounting was a mess. In fact, after the market went bust, I learned that I owed $140,000 in payroll taxes to the IRS. I don’t have that kind of money now, and an IRS agent is threatening levies. What can I do?

Answer:     Yours is definitely a situation in which you should consult a qualified tax professional. Obviously, the IRS is aware that you owe a considerable amount of money and for one reason or another, your revenue officer is determined to collect, even if it requires levies.

The first thing you and your qualified tax professional should do is analyze the company’s books, if available, to determine the exact amount you owe in back payroll taxes. If mistakes were made here, it’s quite possible that you may owe the federal much, much less than $140,000.

But let’s assume for now that you do owe such a substantial amount. You have options. If indeed you do not have assets or the means to pay this debt, you can choose to file an Offer in Compromise. This is generally a cash offer meant to settle your debt once and for all. Oftentimes, believe it or not, a settlement offer that amounts to pennies on the dollar will be accepted if the IRS believes that is the best method to collect the debt.

On the other hand, if you do have the means to settle the tax debt, you may qualify for an installment agreement. Under this program, you and your qualified tax professional will work out an agreement with the IRS that will allow you to make small monthly payments that will satisfy your debt over time.

Although having an IRS agent on your trail is a very scary thing, you should remember that you have rights and options. Right now is the best time for you to have an advocate, someone who knows how to deal with the IRS. That's what I do: I'm an IRS Problem Solver. I encourage you to call our office at 253-752-9522 or send me an E-mail at Firm@DNelsonCPAs.com for a free, no-risk consultation. There IS a solution for your IRS problem. Call us today!

David S. Nelson, C.P.A.
NELSON & COMPANY, P.S.
Certified Public Accountants

Tacoma Mall Office Building
4301 South Pine Street, Suite #241
Tacoma, Washington 98409-7205
Phone: 253-752-9522
FAX: 253-276-0144
E-MAIL: Firm@DNelsonCPAs.com
WEB: www.NEVERPAYTAX.com