April, 2007

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

Q & A ---Owing the IRS

  Q:  I own a business and just mailed in my tax return, but I could only pay part of the tax due. I owe a lot of tax for back years and every year it gets worse. Is there anything I can do?
  A:  Yes. There are many things you can do, but first you must take a hard look at your business and decide if you want to continue. If you do, you need to change how you operate. Consider forming an S-Corp, downsizing, reorganizing through bankruptcy, or taking other steps to stop increasing your tax debt. Other options include an Offer in Compromise or Partial Pay Installment Agreement. Every month, we see folks who successfully complete one of our action plans. They have put their IRS problems behind them. But, first you must take action and make some changes.

Certified Public Accountants

APRIL, 2007

Inside This Issue....

Palm Beach Politico Did Not Disclose Payment
NJ Company Did Not Pay
Taxes on $99 Million
University Employee
Guilty of Fraud
IRS Question Corner


Eric D. Robins, a former security officer for Tennessee State University, was sentenced to one year in prison ordered to pay $62,865 in restitution to the IRS after pleading guilty to two counts of tax fraud.

From Feb. 1, 2001, to about Nov. 6, 2001, Robins filed at least 56 federal tax returns that resulted in fraudulent claims for tax refunds. These refunds included false information, such as false medical and dental expenses, false property taxes, false charitable contributions, false vehicle expenses, and fabricated business expenses.

As part of his plea agreement, Robins admitted he told individuals he had tax preparation training and could get them significantly larger tax refunds than the individuals had received in the past, or if they had paid taxes in the past, the individuals would now receive a tax refund.

Robins admitted he assured these individuals that the tax preparation he was completing for them was legal. Robins also admitted that, as part of the scheme, he inflated business expenses for certain clients and, in some cases, helped created false businesses in order to fabricate business expenses.

Additionally, Robins admitted the tax returns forming the basis of the information all contained false and fraudulent information.

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IRS Times & Inquirer
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Palm Beach Politico Did Not Disclose Payment

Former West Palm Beach City Commissioner James L. Exline pleaded guilty in West Palm Beach, FL, to filing a false individual income tax return with the IRS for tax year 2004.

Through an information, the United States Attorney's Office alleged Exline failed to report $50,000 in income paid to him by a Palm Beach County land developer. The payment was for past and future real estate commissions and for land-planning services related to a development being proposed by the developer.

Exline directed the land developer to pay the $50,000 to a third party, who then paid Exline. At some point after the $50,000 payment, and while the proposed development was pending in West Palm Beach, Exline met with city staff members about land use and planning issues related to the development.

During the course of these meetings, Exline did not disclose he had been retained by the developer. The development was not in Exline's City Commission district.

Exline faces up to three years in prison and a $250,000 fine.

NJ Company Did Not Pay Taxes on $99 Million

U.S. Attorney Pat Meehan announced the filing of an information charging New Jersey-based E-Star Inc. with failing to pay federal taxes on more than $99 million in employee stock bonuses. He also announced E-Star will plead guilty to this charge. By the time of sentencing, E-Star and its parent company, Hon Hai Precision Industry Company Ltd., will have paid more than $29 million in criminal fines, taxes, penalties and interest.

From January 1998 to December 2002, E-Star paid some of their employees' compensation in the form of stock bonuses but did not account for taxes. "The integrity of our tax system depends on honest reporting and the law applies to both companies and individuals," said Meehan. "In this case, you had more than $99 million in stock bonuses that were never reported."


Question:   I owe nearly $167,000 in back taxes, according to my accountant. It's my own fault, really. I followed some bad advice, and now I'm scared the IRS will be coming after me. I want to pay up, but I simply don't have that kind of money. What can I do?

Answer:   I know it's unnerving to owe money to the IRS, but trust me, you have many options. You should know there are thousands of other American taxpayers in the same situation you are in.

The first thing you should do is consult a qualified tax professional. He or she will examine your previous tax returns with microscope, making sure that you aren't obligating yourself to pay Uncle Sam even a penny more than you truly owe. After all, why volunteer to pay more in taxes?

Once you and your qualified tax professional have determined the exact amount you owe, you can consider some of the options available to you, such as the Offer in Compromise and the Installment Agreement:

- An Offer in Compromise is designed for taxpayers who want to settle up with the government but lack the financial means to pay off their debt in full. After years of chasing deadbeat taxpayers unsuccessfully, the IRS created this program to work more proactively with taxpayers. If you qualify, you could eliminate your tax debt by paying pennies on the dollar.

- The Installment Agreement acts like a car payment, a small monthly payment that allows you to pay off your IRS debt over time. This program is ideal for taxpayers who still have the financial means to eliminate their tax debt over time but do not have the cash on hand right now.

In addition to these two programs, there are others available to taxpayers. I solve IRS problems like yours every day. 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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