NELSON & COMPANY, P.S.
Certified Public Accountants
Tacoma Mall Office Building
4301 South Pine Street, Suite #241
Tacoma, Washington 98409-7205
David S. Nelson, CPA
E-MAIL: Firm@DNelsonCPAs.com
ON THE WEB: NEVERPAYTAX.com
PHONE: 253-752-9522
FAX: 253-276-0144
1-800-669-0137
Edition 0905-1
E-MAIL TAX BULLETIN
September, 2005
Message From Nelson & Company, P.S., CPAs
Q & A ---New Energy Bill
  Q:  President Bush just signed a new energy bill.
Are there any tax breaks for individuals?
  A: 
Yes. Effective for the years 2006 and 2007, there are three major tax breaks. There is (1) a $500 lifetime credit for energy efficient home improvements; (2) a $2000 credit for residential solar or fuel cell heaters; and (3) hybrid cars now become a credit versus a deduction. Some cars will have a credit as high as $3400. The credit ends in 2010. For alternative fuel vehicles or fuel cell vehicles, credits will vary from $4000 to $12,000.

NELSON & COMPANY, P.S.
Certified Public Accountants

SEPTEMBER, 2005

Inside This Issue...

"I can't find anything
wrong with your return.
Just what are you trying to hide?"

CT WOMAN GUILTY OF
TAX FRAUD

Shirley G. Graybill, 69, of Branford, Ct., pleaded guilty to one count of making and subscribing to a false 2002 tax return. As was revealed in court during the plea proceedings, Graybill's Triple Diamond Foundation, which purported to be a charitable organization, was an entity created by her and her spouse to fund cancer research. However, the organization did not have tax-exempt status from the IRS.

During the 2002 tax year, Graybill transferred about $350,000 from the Triple Diamond Foundation account and used those funds as income, failing to pay $93,293 in federal taxes.

On or about October 13, 2003, Graybill filed a tax return in which she failed to claim her actual taxable income, which was about $316,519.79. As part of the plea proceeding, Graybill has agreed to pay the U.S. Treasury $93,293 in taxes plus penalties and interest for the tax year 2002.

Graybill will be sentenced in September. She faces up to three years in prison and up to $100,000 in fines.

"Those who attempt to hide assets and cheat on their taxes cheat their fellow citizens," said U.S. Attorney Kevin J. O'Connor. "Such conduct will be vigorously investigated and prosecuted."

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IRS Times & Inquirer
NELSON & COMPANY, P.S.
CERTIFIED PUBLIC ACCOUNTANTS
253-752-9522 | 1-800-669-0137

Aspen Resident Obstructed IRS Investigation

An Aspen resident has pleaded guilty to obstructing a tax investigation in an attempt to thwart an effort by the Internal Revenue Service to verify the legitimacy of his tax filings.

George S. Gradow, 65, is scheduled to be sentenced December 19. Gradow had previously waived his right to indictment by a federal grand jury and was charged by criminal information on June 6.

According to court records, from August 21, 2000, to March 14, 2001, Gradow allegedly obstructed and impeded the IRS by destroying, altering and/or creating documents and directing corporate employees to destroy or fabricate documents that would be used by an IRS Revenue Agent during an audit of tax returns of the defendant's corporation.

Specifically, Gradow instructed the chief financial officer of his corporation, the Churchill Group, to forward to him original promissory notes and real estate leases. He then altered the interest rates and due dates on the promissory notes and changed the terms of the leases.


Texan Evades Taxes...But Not Prison

A Texas businessman has been sentenced to one year in prison and fined $20,000 after pleading guilty to tax evasion.

David L. Hirschfeld, of San Angelo, Texas, pleaded guilty in February to a one-count information charging him with income tax evasion.

During the calendar year 1996, according to court records, Hirschfeld was the president and CEO of Hirschfeld Steel Co., Inc. As a part of the Hirschfeld Steel's business operations, the company produced scrap metal as a byproduct of its manufacturing process. The scrap metal had to be discarded, but instead of throwing it away, Hirschfeld Steel sold the scrap metal to Acme Iron and Metal Company, another Texas company.

In 1996, Acme paid $140,000 cash for eight shipments of scrap metal. After accounting for business expenses, Hirschfeld received a $67,049 profit from the Acme sale. However, he did not report the income. The sales to Acme continued through 2000, and by then, Hirschfeld received a total of $240,514.16 that he did not report as income to the IRS. The total in income taxes that he evaded was $67,343.96.

IRS QUESTION CORNER...

Question:     To me, the Offer in Compromise sounds just like one of those get-rich-quick schemes on late-night television: too good to be true. Does it really exist? And if so, how is it that the federal government can offer such a program?

Answer:     Yes, the Offer in Compromise does indeed exist. And no, it's not too good to be true.

To understand why such a program exists, first consider the circumstances. The IRS's job is to collect taxes. Over the years, the agency learned that chasing taxpayers for debts they cannot pay will not result in collections. Someone can't pay with money they don't have, right? So the Offer in Compromise program came into effect to allow taxpayers with substantial tax debts to negotiate a price that they can afford.

For most taxpayers with substantial tax debt, here's how it would work: They would first consult with a qualified tax professional who would closely analyze their previous tax return. This is to ensure that the taxpayer is not volunteering to pay even a penny more than he/she owes.

Once the qualified tax professional has the exact debt figure, he/she will then consult with the IRS. Assuming the taxpayer qualifies for the Offer in Compromise program, the qualified tax professional will negotiate a settlement that often amounts to pennies on the dollar. That's right, through this program, you can substantially reduce the amount of taxes you owe.

Now, please realize that this program isn't for everyone. Asking to participate in the program while driving a $100,000 automobile likely won't go over well with the IRS. But participating in the program also won't put at risk your ability to continue sending your children to college. For taxpayers with substantial debt, the Offer in Compromise program is win-win solution. As a tax professional, 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!

David S. Nelson, C.P.A.
NELSON & COMPANY, P.S.
Certified Public Accountants

Tacoma Mall Office Building
4301 South Pine Street, Suite #241
Tacoma, Washington 98409-7205
Phone: 253-752-9522
FAX: 253-276-0144
E-MAIL: Firm@DNelsonCPAs.com
WEB: www.NEVERPAYTAX.com