August, 2008

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

New Tax Bills---New credits and deductions!

Three new tax bills passed in 2008. The Farm Bill, The Military Heroes Tax Act, and the Housing Act.

The significant items for many taxpayers will be a $7,500 tax credit for first-time home buyers. Also, if you take standard deductions and own your home, you'll now be able to deduct an additional amount for property taxes paid; $500 for single and $1,000 for married/filing joint. There are many other changes in the three new bills. We will keep you informed as we review them.

Want your boss or co-workers to see your financial information?---We don't, either.

If you are receiving our bulletins at work or on a non-private computer, we urge you to provide us with a personal email address. Many clients forget or don't know most workplace email boxes can be reviewed by supervisors, technical support, and even computer savvy co-workers. If you don't already have one, we urge you to get a personal email address, especially if you'll be sending or receiving emails to us about your finances or taxes.

Businesses Beware!---They're watching you...

Beginning in 2011, ALL credit card companies will report the amount of sales they process for businesses. Enough said.

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


IRS Times & Inquirer

Inside This Issue...

Colorado Man Indicted for Attempting to Bribe an IRS Agent
Arizona Businessman Charged with Multiple Violations
‘Donations’ to Group Criminal Acts
IRS Question Corner


Colorado Man Indicted for Attempting to Bribe an IRS Agent

Edward Sobczewski, 47, of Monument, CO, was arrested by special agents with the Treasury Inspector General for Tax Administration.

According to the indictment, Sobczewski attempted to bribe an IRS agent with Colorado Rockies season tickets in return for the agent altering his 2006 personal income tax return audit.

“The message is simple: Don’t even think about bribing an IRS agent with Rockies’ tickets or anything else,” said U.S. Attorney Troy Eid.

He faces up to 15 years in prison and a fine of up to $250,000.


Arizona Businessman Charged with Multiple Violations

A Mesa, AZ man has been indicted for income tax evasion, corrupt interference with the due administration of the Internal Revenue Service and multiple counts of fraudulent use of a Social Security number.

According to the indictment, Stacey owned and operated a paving business under the names A to Z Paving, Triple A Paving, Texas Paving, Pave Your Way Construction, and A to Z Paving Engineering. Stacey did not file individual income tax returns as required by law for tax years 1995 to 2003. After being audited by the Internal Revenue Service, Stacey attempted to evade the payment of his 1995 to 1997 tax liabilities by, among other things, concealing assets using other people’s names.

The indictment further alleges that Stacey tried to interfere with the IRS’s assessment of his 1998 to 2003 income tax liabilities by making false statements to an IRS civil auditor and using false social security numbers to prevent the IRS from receiving accurate information about his income and assets.

Stacey faces up to five years in prison for tax evasion, up to three years for the corrupt endeavor charge and up to five years for fraudulent use of a Social Security number.


‘Donations’ to Group Criminal Acts

A Los Angeles man who made donations to several charitable organizations associated with a New York-based orthodox Jewish group — donations that were in fact refunded in many cases — has agreed to plead guilty to federal tax evasion charges.

In the plea agreement, Uri Mandelbaum, 70, also agreed to pay back taxes totaling more than $1.5 million. The plea agreement with Mandelbaum is the first one involving a “donor” to charitable organizations associated with Spinka, which is at the center of a scheme alleged in a related criminal case. Spinka is a religious group within Orthodox Judaism based in Brooklyn, New York. The Grand Rabbi of Spinka, his assistant, several other defendants and five Spinka charities were indicted last year on a host of federal charges related to a wide-ranging conspiracy to defraud U.S. government agencies by laundering money through an Israeli bank.

Mandelbaum admitted he evaded the payment of $296,731 in federal income taxes for the years 2005 and 2006, the two years that are the subject of the criminal charges. During 2005 and 2006, Mandelbaum made $892,483 in contributions to Spinka organizations, and then 95 percent of the contributions were returned to Mandelbaum. However, Mandelbaum admits that he claimed the entire $892,483 as charitable contributions on his federal income tax returns for the two years.

He faces up to 10 years in prison and a $500,000 fine.


IRS Question Corner

Question: Why do some people qualify for the Offer in Compromise and others do not? If you don’t qualify, what options do you have?

Answer:  The Offer in Compromise is a unique program. To understand why the IRS uses it, I think it’s beneficial to understand the history.

For years, IRS agents found that chasing deadbeat taxpayers offered only limited success. The cat-and-mouse chase ultimately was costly to taxpayers, what with the manpower and research needed to track down delinquent taxpayers and force them to cough up what they owe.

Realizing that it was possible to generate the same, if not more, tax revenue using a kinder, gentler approach, the IRS developed the Offer in Compromise. It’s for taxpayers who are absolutely unable to pay their current tax debt. This could be due to losing a job or another unfortunate circumstance. While an Offer in Compromise can allow you to decrease your tax debt by pennies on the dollar, you must first be able to prove to the IRS that you otherwise can’t pay your tax debt. That’s the sticking point.

If you are overwhelmed with tax debt, I’d first recommend you talk to a qualified tax professional. He or she will analyze your situation and your previous returns and determine if you might qualify for the Offer in Compromise.

Now, if you don’t qualify, you still have options. Among them is the Installment Agreement, which allows you to pay off your tax debt over time, in a manner similar to the way you pay off a car loan or mortgage. The Installment Agreement is perfect for people who have the long-term ability to pay off their tax debt but who, at this time, simply cannot write a check for the lump sum. Whatever situation you’re in, it’s important to remember you have options. 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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