August, 2012

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

Taxes and Politics

This week we heard grand ideas from the Republicans regarding tax law changes. We've also seen a great deal in the press about the country going over the financial cliff. It's really difficult to sort out what is fact and what is fiction, but suffice it to say that unless something is done soon, we could well see another Wall Street meltdown. This time it could be squarely laid at the feet of those in Washington D.C.

Let me give you a short example of a real-life case should Congress not pass the Bush tax cuts. Taxpayer is a single mother of two. She will earn approximately $85,000 during 2012. Her regular income tax will be approximately $9,600, plus AMT.

Last year, the alternative minimum tax (AMT) credit was $70,000. If the Bush tax cuts are not renewed, the credit for AMT will be $45,000. The taxpayer in this case will owe an additional $2,500.

The AMT is just one of many issues, however it will probably be the most costly because it can hit average folks, let alone middle and upper-income taxpayers.

Let's hope that cooler heads prevail in D.C. once the election is over, and the AMT along with many other tax benefits are renewed. The sales tax deduction that affects just about every resident in Washington State is one of these benefits.

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


IRS Times & Inquirer

Inside This Issue...

Singer Lauryn Hill Did Not Pay Taxes on $1.5 Mil
N.J. Lawyer Charged With Tax Evasion


Singer Lauryn Hill Did Not Pay Taxes on $1.5 Mil

Singer Lauryn Hill Did Not Pay Taxes on $1.5 Mil

Eight-time Grammy Award-winning singer Lauryn Hill pleaded guilty to federal charges that allege she failed to file income tax returns for three years and did not pay taxes on $1.8 million in income.

Hill, of South Orange, N.J., started her career as an actress in the movie Sister Act 2: Back in the Habit and later became the singer for the hip-hop group Fugees. She later disappeared and dropped out of society.

She owned and operated four sub-chapter S corporations which derived income from Hill’s work in the music and film industries. In 2005, 2006 and 2007, she earned a total of $1.8 million.

Following the charges, Hill posted a comment online in which she said she hadn’t filed tax returns to guarantee the anonymity and safety of her family.


N.J. Lawyer Charged With Tax Evasion

IRS agents arrested a New Jersey lawyer on charges that he evaded federal income taxes and failed to pay payroll taxes for his law firm employee from 2006 through 2009.

Lee Gottesman, 56, of Toms River, N.J., was indicted on four counts of personal income tax evasion and 15 counts of willful failure to pay payroll taxes.

During the tax years covered by the indictment, Gottesman allegedly earned more than $440,000 in taxable income and incurred more than $110,000 in income tax liability. He allegedly did not pay any personal income tax for this period and did he file any personal tax returns.

If convicted, Gottesman faces up to five years in prison and a $250,000 fine for each tax evasion count. He also faces up to five years in prison and a $10,000 fine for each of the payroll tax charges.

 


 

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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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