May, 2007

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

Q & A ---IRA Distributions

  Q:  I will be 70 1/2 this year and have five IRA accounts. Do I have to take the required minimum distribution out of each account or can I take it from just one?
  A:  You can take the total minimum required distribution from just one account. As long as the total minimum is withdrawn by December 31st, you will be in compliance with the code. We do not recommend delaying your withdrawal to the following year, which you can do when you turn 70 1/2. Normally, this only doubles your tax on distributions for the following year.

Certified Public Accountants

MAY, 2007

Inside This Issue....

False Returns from Big House
Tax Evasion:
'Stupidest Crime'
Architect Convicted
Of Tax Evasion
IRS Question Corner


An architect was convicted of tax evasion for accepting $100,000 in kickbacks from a contractor responsible for construction of a $16 million housing complex in Bayonne, NJ.

Avelino Sambade, 50, was the architect commissioned for the $16 million Thomas W. Zito housing complex in Bayonne.

According to the indictment, Sambade accepted kickbacks from August 2003 to August 2006. Sambade had the ability to authorize payments to the project's general contractor. Testimony alleged Sambade demanded $300,000 in cash payments to make the Zito housing project run smoothly.

Sambade faces up to three years in prison and a fine of up to $100,000.

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IRS Times & Inquirer
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False Returns from Big House

Ronald Dean Wells was charged with conspiracy to defraud the United States and making false claims stemming from a false tax refund scheme he operated from Ohio prisons.

According to the charges, Wells obtained the names and Social Security numbers of other prisoners, in most cases without their knowledge, which he used to prepare false tax returns claiming tax refunds in their names based on fictitious wages and tax withholdings. In fact, the named claimants did not have the reported wages and tax withholdings. Wells fabricated the wage and withholding information, generally forged the claimants' signatures, and listed other persons' addresses on the returns.

For the tax years 2000 and 2001, Wells filed 35 fraudulent income tax returns with the IRS, containing combined false and fictitious tax refund claims totaling $236,851. Based on 11 of these false claims, the IRS issued tax refund checks totaling approximately $56,189, which were negotiated by co-conspirators or other persons assisting Wells.

If convicted, Wells' sentence will be determined by the court after review of factors unique to this case.

Tax Evasion: 'Stupidest Crime'

After pleading guilty to tax evasion and admitting owing $159,918 from revenue related to his mail-order divorce business, William Cleveland Thompson, 63, of Newberg, OR, was sentenced to one year and a day in prison to be followed by three years of supervised release. "When individuals deliberately hide their income and fail to report their earnings to the Internal Revenue Service, they risk prosecution," said Kenneth Hines, the IRS Special Agent in Charge.

At the sentencing hearing, Thompson's attorney played a video announcement produced by Thompson in which he called tax evasion the "stupidest crime in America." The announcement has been aired in Thompson's home town of Yakima, WA, and urges those who attempt to evade taxes to stop doing so and cooperate with the IRS.

Thompson faces up to five years in prison a fine of up to $250,000.


Question:   How do I find out if I'm eligible for the Offer in Compromise program? I have significant IRS debt.

Answer:   You'll first need to consult a qualified tax professional. Without the help of a qualified tax professional, you'll be entering treacherous tax waters.

The first thing a qualified tax professional will do is examine your previous tax returns with a fine-tooth comb, making sure that you aren't obligating yourself to pay Uncle Sam even a penny more than you truly owe. This will also allow the tax professional to find out your true tax debt and whether or not you qualify for the Offer in Compromise program.

Some background: The IRS developed the Offer in Compromise program after spending years chasing down deadbeat taxpayers. The beat-on-the-door approach proved to be less successful than the IRS had hoped it would be. As an alternative, the tax-collecting agency turned to a gentler approach: the Offer in Compromise program. By negotiating up front with the IRS, the Offer in Compromise program allows you to reduce your tax debt by pennies on the dollar.

There are some qualification concerns: Obviously, as an anecdotal hurdle, you can't enter into the Offer in Compromise program with an extravagant house, a dozen luxury cars and enough money to take luxurious vacations around the world. The program is created for those who have amassed significant IRS debt but, due to a variety of circumstances, no longer have the money or income to be able to pay down the debt.

In addition to the Offer in Compromise program, taxpayers with significant debt to the IRS have a number of options available to them.

I solve IRS problems like this every day. For a free, no-risk consultation, please call my office at 253-752-9522 or send me an E-mail at Do it today!


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