June, 2007

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

Important "New Sales Tax" Information

Two major and important changes in the way Washington State retailers and out-of-state and Internet retailers collect Washington State sales tax begin July 1, 2008.

  1. Washington State retailers delivering or shipping goods to customers in Washington will need to change how they collect sales tax. Sales tax will be collected based on the local tax rate where the customer receives the merchandise

    Ex: A business in Tacoma delivers or sells merchandise to a customer in Eatonville. The business must collect sales tax based on Eatonville's local tax rate, and report said tax providing the local tax code for that jurisdiction.

  2. Washington State Gov. Christine Gregoire signed a measure that "encourages" Internet and out-of-state companies to collect sales tax on purchases made by Washington residents which is also to be based on the local tax rate where the customer receives the merchandise. The measure, requested by Gregoire, easily passed the House and Senate.

Washington joins 21 states as members of  the "Streamlined Sales and Use Tax Agreement" (SSUTA). The State Department of Revenue estimates Washington State will get $35 to $40 million in sales taxes from out-of-state companies that sell products to Washington residents. Under the measure, the state or jurisdiction where the product is delivered gets the tax. Current full member states are: Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, Rhode Island, South Dakota, Vermont and West Virginia. Associate member states are: Arkansas, Nevada, Ohio, Tennessee, Utah and Wyoming.

People who bought items from out-of-state companies were supposed to pay the sales tax all along, but rarely did.

Both changes are effective July 1, 2008, giving businesses and local governments time to implement the taxes.


Q & A ---I paid my taxes, but the IRS said I still owed!

  Q:  When I filed my return on April 17th, I attached my payment with my return. When I called the IRS on May 12th, their records didn't show they had received my check. It wasn't until June 1st that I was able to confirm by phone that my payment was received. Why does it take them so long to process payments?
There are two reasons. (1) There is a great deal of security in the IRS system and there are many checks and balances before a transaction is recorded on a taxpayer's account. (2) Payments normally go through the Treasury Department and it takes time for the data to transfer from the Treasury to the IRS. It's good to know that the IRS is extremely security-conscious---it insures that our data is kept safe.

Certified Public Accountants

JUNE, 2007

Inside This Issue....

CA Woman Got 'Dead' Refunds
Ohio Attorney Charged
With Tax Evasion
Former Lawman, Politician
Pleads Guilty to Fraud
IRS Question Corner


A former Far Hills, NJ councilman who served as the town council's police commissioner pleaded guilty to conspiring to launder approximately $700,000 in what he believed to be the proceeds of loan sharking and illegal gambling as part of a scheme to defraud the IRS of more than $200,000 he owed in personal income taxes.

Thomas A. Greenwald, 53, admitted that he was introduced to two individuals allegedly involved in loan sharking and illegal gambling activities. Greenwald later learned they were undercover FBI agents.

After meeting the undercover FBI agents, Greenwald informed a friend who introduced the two men that he wished to launder $700,000 to create expenses related to an oil tank business he had sold in late 2004 so that he could falsely reduce the amount he owed in personal income taxes for calendar year 2004.

The money laundering count carries a maximum penalty of 20 years in prison, while the conspiracy to defraud the IRS count carries a maximum penalty of 5 years. He faces a fine of up to $250,000 for both counts.

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CA Woman Got 'Dead' Refunds

A Southern California woman was charged in a federal criminal complaint that alleges she stole the identities of hundreds of deceased people and used their personal information to file fraudulent federal tax returns that sought more than $1 million in refunds.

Uzeegoa Makeba Sayles, 39, of Hawthorne, CA allegedly filed more than 200 fraudulent tax returns with the Internal Revenue Service.

According to the affidavit in support of the complaint, during a six-year period Sayles fraudulently sought $1,070,308 in refunds, which resulted in the United States government actually paying $603,971.66.

Ohio Attorney Charged
With Tax Evasion

Attorney John H. Large of Niles, OH was charged with four counts of willful failure to file federal income tax returns. The information charges that Large received $425,645 from his law practice. However, Large failed to file income tax returns on the money. If convicted, Large's sentence will be determined by the court under the Federal Sentencing Guidelines, which depend upon a number of factors unique to each case.


Question:   For reasons that aren't worth describing here, I'm in trouble. I once made six figures but now I make a roughly average income. Worst still, I owe a lot of money in back taxes - taxes owed for when I was making good money. In all, I owe about $127,000 according to an accountant. I don't have that kind of money! What can I do?

Answer:   Unfortunately, yours is an all too common situation. American taxpayers who fall on hard times often have difficulty paying their back taxes.

It happens. But it doesn't mean the end of your life, and it certainly doesn't mean financial ruin.

The first thing you should do is consult a qualified tax professional. Oftentimes, the amount owed to the IRS is inflated due to a variety of reasons, and there is no reason to offer to pay the IRS any more than you owe, right? A qualified tax professional will analyze your tax returns and determine exactly how much you owe.

Once that figure is determined, you have a number of options. The IRS developed the Offer in Compromise after realizing that kinder, gentler enforcement can often be more effective than a beat-down-doors approach. In this program, you and your tax professional meet with the IRS and offer to pay an amount that will essentially eliminate your tax debt. Oftentimes, this program results in taxpayers paying off their debts with pennies on the dollar! The Installment Agreement is a powerful, though quite different, program. With this, you can break up your tax debt in small chunks, paying it off over years the same way you do a car or a home.

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 Firm@DNelsonCPAs.com. Do it today!


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Nelson & Company, P.S., CPAs Since 1979

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