May, 2008

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

The New IRS---Technology Creates a Leaner, Tougher IRS

The IRS is getting much stickier on all tax issues. Congress has mandated they close the tax gap, and their computer system has been greatly improved. This means very few things get through without notice. What used to take hundreds of agents hours of tedious number crunching is done by computers...in just seconds. Beware.

NELSON & COMPANY, P.S.
Certified Public Accountants
www.DNelsonCPAs.com


IRS Times & Inquirer

Inside This Issue...

CA Tax Protestors Guilty of Evasion
Dentist Tries to Avoid Income Taxes
IRS Question Corner


CA Tax Protestors Guilty of Evasion

Tax protestors in California were found guilty by a federal jury.

Kathryn Hanes and Madonna Hanes were charged with conspiracy to commit tax evasion and tax evasion. During the trial, the government presented evidence that both defendants used "tax protester" tactics to commit tax evasion for the tax years 1996 to 2000.

According to the indictment and evidence introduced at trial, Kathryn Hanes and Madonna Hanes mailed frivolous letters to the IRS claiming, among other things, Kathryn Hanes was not a U.S. citizen and the IRS had no authority or jurisdiction to collect income tax from her.

Trial evidence showed, between 1996 and 2000, Kathryn Hanes earned hundreds of thousands of dollars from her chiropractic business, "Biophysics Chiropractic," which she operated in San Diego. She then sent the business profits to the personal bank account of Madonna Hanes, who then used this "tax-free" money on their personal expenses, which included multiple vacations to Maui, Hawaii.


Dentist Tries to Avoid Income Taxes

Gerald M. Dortch, a dentist in Illinois, received a six-month prison sentence following his conviction for tax evasion. He will also serve a three-year term of supervised release, with the first six months to be spent on home detention.

In addition, he was ordered to perform 240 hours of community service and pay $127,103 in restitution. During his guilty plea, in which he admitted to tax evasion for the years 2001 to 2003, Dortch indicated he operated Lincoln Place Dental in Belleville, IL, and deposited some business checks into his personal account to avoid taxes. Dortch self-prepared his tax returns for the years 2001, 2002 and 2003, omitting about $346,825 in income


IRS Question Corner

Question: According to the news media, the Internal Revenue Service has been becoming more aggressive with taxpayers. So how does the Offer in Compromise fit in if the IRS is so aggressive these days?

Answer: It's hard to understand, isn't it? At the same time the IRS has become more aggressive with tax cheats and debtors, the tax-collecting agency also has a program like the Offer in Compromise, which seemingly goes easy on taxpayers.

Let me explain: For years, the IRS tried hard-as-nails collection tactics. They worked for some taxpayers. Others just continued to hide, running from their debt and forcing the IRS to throw more and more money at trying to collect from them.

The Offer in Compromise doesn't make the IRS soft. Far from it. In fact, the Offer in Compromise actually allows the IRS to collect more from taxpayers. In some cases, as the IRS has discovered, taxpayers simply can't pay their debts - no matter how many times an agent knocks on the door. What the Offer in Compromise does is allow taxpayers to settle their tax debt once and for all and with an amount they can actually pay.

For taxpayers who want to settled up and end their tax nightmare, the Offer in Compromise is the perfect solution. If you are one of the thousands of U.S. taxpayers unable to pay your tax debt, the first thing you should do is consult a qualified tax professional. He or she will analyze your previous returns, determining exactly how much you owe, and then discuss an Offer in Compromise with an IRS agent.

If you qualify, the Offer in Compromise can reduce your current tax debt to pennies on the dollar.

Closing Get help. 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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Nelson & Company, P.S., CPAs Since 1979

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