May , 2012

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

Good New for Employers and Veterans from the IRS - Expanded Tax Credit for Hiring Veterans

Congress enacted the Work Opportunity Tax Credit (WOTC) that expanded the credit employers earn when they hire eligible unemployed veterans. The credit can be as high as $9,600 per veteran for for-profit employers or up to $6,240 for tax-exempt organizations. The amount of the credit depends on a number of factors, including the length of the veteran’s unemployment before hire, hours a veteran works and the amount of first-year wages paid. This is for veterans of ALL wars - not just Iraq or Afghanistan. Employers who hire veterans with service-related disabilities can be eligible for the maximum credit.

Certification requirements apply to these new hires. Normally, an eligible employer must file Form 8850 with the Washington State Employment Security office within 28 days after the eligible worker begins work. But under a special rule, employers have until June 19, 2012, to complete and file this form for veterans hired on or after Nov. 22, 2011, and before May 22, 2012. The 28-day rule will again apply to eligible veterans hired on or after May 22. This form can be faxed or electronically transmitted to the state workforce office.

Businesses claim the credit on their income tax return using Form 5884 and Form 3800. A separate claim procedure using Form 5884-C applies to eligible tax-exempt organizations. Details are on IRS.gov.

 

What's the best way to get a return on your investment?

With bank interest rates and 10-year treasuries yielding at 20-year lows, it may be time to consider stocks with high-yield dividends.

10-year treasuries are yielding well below 2%. Many high quality Fortune 500 companies are paying dividend yields of well over 3%.

Certainly, with stocks you risk losing principal, but if you are looking at long-term investing and income, over 260 companies in the Fortune 500 are paying over 3%. You may want to research income producing mutual funds, ETFs or RITs for other high-yield investments.

Consult your financial advisor for recommendations.

David S. Nelson, CPA, CTRS
NELSON & COMPANY, P.S.
Certified Public Accountants


IRS Times & Inquirer

Inside This Issue...

Diddy’s Protégé Owes IRS Six Figures in Taxes
Liquor Store Owner Gets 18 Months for Underreporting
Colo. Pilot Faces Five Years in Prison for Income Tax Evasion


Diddy’s Protégé Owes IRS Six Figures in Taxes

Hip-hop artist Mason Durell Betha, better known by the stage name Ma$e, owes the Internal Revenue Service $124,774.85 for back taxes from the years 2000, 2001 and 2004, according to a tax lien filed against him in Florida.

The 36-year-old Bertha, a protégé of Sean “Diddy” Combs, debuted in 1996 as an artist for the music label Bad Boy Records. His first solo album, Harlem World, debuted at No. 1 on the Billboard 200, and his sophomore release, Double Up, debuted at No. 11.

Following those albums, Betha retired briefly, before mounting a comeback with the appropriately titled Welcome Back. It debuted at No. 4 on the Billboard 200.


Liquor Store Owner Gets 18 Months for Underreporting

The owner of a Columbia, Md., liquor store was sentenced to 18 months in prison, to be followed by one year of supervised release, for making a false statement on his 2009 federal tax return. He was also ordered to forfeit $155,895.41. Jin Ho Kim, 46, owned RP Liquors Inc. A comparison of his sales records for 2006 through 2009, with the amount of income declared on his tax returns for those years, revealed that Kim underreported his income in 2006 by $163,610,69, in 2007 by $180,561.80, in 2008 by $248,046.23, and in 2009 by $252,267.69.

In all, he underreported $844,486.41, which resulted in a federal tax loss of $155,091 and losses to the state of Maryland of $25,225 in income tax and $47,227 in sales tax.

In addition to underreporting his income, Kim made structured deposits into his bank accounts in amounts less than $10,000 in order to avoid bank reporting requirements and to attempt to conceal his income.


Colo. Pilot Faces Five Years in Prison for Income Tax Evasion

Guilty Plea in $54 Million Refund Scam A Colorado man was indicted for income tax evasion and obstructing and impeding an investigation by the IRS.

According to the indictment, from February 2005 to September 2010, William M. Rogers Jr., 69, of Castle Rock, Colo., submitted false IRS forms and opened bank accounts in the names of North Pacific Odyssey, Jasper Wells Limited and Indigo Creek Resources. He used fictitious employer identification numbers to open accounts in the names of Jasper and Indigo.

During the calendar year 2005, Rogers received taxable income of $68,392, on which he owed approximately $25,235 in taxes. Beginning on or about Jan. 1, 2005, and continuing through about April 17, 2006, Rogers failed to file an income tax return. He attempted to evade the income tax due by causing Windstar Travelaire Service to make payments to Sea Scan instead of to Rogers for his work as a pilot, depositing the payments from Windstar and Travelaire to an account in the name of North Pacific, cashing thousands of dollars in checks drawn on an account in the name of North Pacific. During the calendar years 2006 and 2007, Rogers followed a similar pattern to evade income tax.

If convicted, Rogers faces five years in federal prison and a fine of up to $250,000.


 

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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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