July, 2006

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

Q & A ---Energy Tax Credits

  Q: What items qualify for the new energy tax credit?
A few items that make your home more energy efficient and also qualify for the new energy tax credit are:
Insulation that reduces heat loss/gain, exterior windows, exterior doors, metal roofs, air circulation fans, hot water heaters, solar panels and fuel cells. The amount of credit varies by item. There should be information included with a qualifying item as to the amount of the credit. The tax credits range from $50 up to $2,000.

Certified Public Accountants

July, 2006

Inside This Issue....

Pro Surfer Pleads Guilty to Making False Statement on Income Tax Return
Court Bans Tax Evasion Scheme. Promoter Ordered to Provide Names, Addresses and Social Security Numbers of Taxpayers Who Purchased Products
Fraud Promoter Gets 54 Months
IRS Question Corner
"Whew! For a minute there, I thought you were going to tell me you were cheating on your taxes!"


A tax fraud promoter has been sentenced to 54 months in prison following an aggressive investigation by federal authorities.

R. Scot Stokes, of Henderson, NV, pleaded guilty to conspiring to defraud the United States and conspiring to commit mail and wire fraud. In addition to 54 months in prison, Stokes must serve three years of supervised release.

Stokes admitted that he and his co-conspirators filed more than 2,000 false and fraudulent federal income and trust tax returns, creating a loss of federal tax revenue of between $7 million and $10 million. In addition, Stokes admitted to participating in fraudulent investment schemes that caused customers to lose between $2.5 million and $5 million.

"People who promote tax fraud are cheating all law-abiding taxpayers," said Assistant Attorney General Eileen J. O'Connor in a statement. "The Department of Justice is determined to root out tax fraud schemes and prosecute those who promote and use them."

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IRS Times & Inquirer
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Pro Surfer Pleads Guilty to Making False Statement on Income Tax Return

Former pro surfer Vincent Sennen Garcia, better known as "Sunny" Garcia on the surf circuit, could catch some of the biggest waves known to man. But there's one thing he couldn't catch: a break from the IRS.

Garcia, a pro surfer from 1996 to 2001, pleaded guilty in federal court in San Diego to a felony count of making false statements on his federal income tax return.

According to court papers, Garcia received income from various sources, including prize money from surfing competitions. As part of his guilty plea, Garcia admitted that in October 2001 he knowingly and willfully filed a U.S. Individual Tax Return that failed to report approximately $161,450 in cash and traveler's checks he received in the year 2000 as prize money from professional surfing competitions at locations around the world, including Fiji, Australia, South Africa, France, Spain, Portugal and Brazil.

Garcia also admitted that he intentionally failed to report another $255,635 in prize money in federal tax returns he filed for the years 1996, 1997, 1998, 1999 and 2001.

The former wave-rider faces up to three years in prison and a fine of up to $100,000.

Court Bars Tax Evasion Scheme----Promoter Ordered to Provide Names, Addresses and Social Security Numbers of Taxpayers Who Purchased Products

A federal court in California permanently barred a San Diego man from promoting a tax evasion scheme.

Christopher M. Hansen promotes a number of tax-fraud schemes using the business names Family Guardian and Sovereignty Education and Defense Ministry. The civil injunction order bans Hansen from making fraudulent statements in connection with his scheme, including the false statement that United States citizens are not subject to federal income taxes.

Hansen's scheme is known as a "zero return" scam and is one of the "Dirty Dozen" scams that the IRS warns taxpayers against using.

The court's order requires Hansen to remove from his websites all advertising for his fraudulent tax programs and to post the permanent injunction order on the websites.

Hansen must also provide the government the names, addresses, e-mail addresses, phone numbers and social security numbers of those persons who have purchased his products.


Question:    I've heard the talk about the Offer in Compromise program, but I don't think it's for me since I do still have significant assets (cars, house, etc.). Trouble is, I have a big tax bill and kids in college. I can't pay the taxman and keep my kids in school. What options do I have?

Answer:  While you might be correct in saying that you are not eligible for the Offer in Compromise program, don't be too quick to rule it out. The Offer in Compromise program is great for those who meet its requirements.

What you need to do is first consult a qualified tax professional. He or she will go through your previous tax returns with a fine-tooth comb, making sure that you are not volunteering to pay the government even a penny more than you should. Now, let's assume for a moment you have significant tax debt and you do not qualify for the Offer in Compromise program. Don't be worried. You still have options.

Your most notable option is an Installment Agreement. Believe it or not, this program shows that, contrary to popular wisdom, the IRS can be flexible. Agents have realized after long years of chasing deadbeat taxpayers that flexibility often works best. The Installment Agreement is a good example of this. By entering into such an agreement, your qualified tax professional and the IRS will negotiate a monthly payment amount that you will make over time to pay down your debt. This payment is meant to eradicate your debt gradually without significantly crimping your lifestyle - or, as in your case, pull your kids out of college. Think of it as a monthly car payment; it's significant---but not overburdening.

The Installment Agreement allows taxpayers, such as you, an opportunity to pay down their debt in a reasonable way. You don't have to sell off everything you own. You just have to buckle down and make a small monthly payment.

I handle cases like yours every day. That's what I do - I'm an IRS Problem Solver.

For a free, no-risk consultation, call my office at 253-752-9522 or send me an E-mail at Firm@DNelsonCPAs.com. Do it today!

--Our Policies-- www.DNelsonCPAs.com

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

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