September, 2006

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

Q & A ---Your IRA and Donations

  Q:  Is it true that I can donate $100,000 from my Individual Retirement Account (IRA) to my favorite charity this year?
  A:  Yes, if you are at least 70 1/2 and donate to a public charity. However, you will not get a tax deduction on your income tax return. Your favorite charity can explain the procedure to follow to make the rollover. This change was effective August 17, 2006.
Since 2001, Congress has enacted eight major tax law changes that have added hundreds of new pages to the tax code and has just set a record for passing the most tax bills in the shortest period of time. Ever wonder why folks are so confused about tax rules?


Refunds for Long-Distance Excise Tax

The IRS will issue standard refunds of $30 - $60 for long-distance telephone excise taxes as part of individual 2006 income tax returns.

While individual taxpayers have the option of using actual amounts of excise tax paid, businesses and non-profits must calculate the the actual tax paid by totaling the numbers from their bills. Businesses include self-employed and individual (sole proprietors) with separate business phone lines.

You need to start finding your bills and start adding up the numbers amount NOW.

Only the federal tax paid for long-distance services between February 28, 2003 and August 1, 2006 are eligible.

Certified Public Accountants


Inside This Issue....

'The Tax Man' Pleads Guilty to Massive Fraud
Crime: It Really Doesn't Pay
IRS Question Corner


Lori Renee Nickel, 38, of Kingman, IN, was sentenced to 30 months in prison for failure to pay income taxes on approximately $398,000 she failed to declare in personal tax returns. Nickel pleaded guilty to tax evasion, admitting that she embezzled funds from her former employer, A.L. Dougherty Co, Inc., of Danville, Ill. Nickel failed to declare the funds as income on her personal tax returns for the tax years 1998, 1999 and 2000. One way or another; crime just doesn't pay.

"It is the responsibility of every taxpayer to file federal tax returns," said James D. Vickery, Special Agent in Charge of IRS-Criminal Investigation.

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'The Tax Man' Pleads Guilty to Massive Fraud

A District of Columbia man known as "The Tax Man" pleaded guilty to charges in connection with a massive tax fraud conspiracy to fraudulently seek tax refunds, some of which were used to purchase drugs.

Keith Campbell, 55, pleaded guilty to the charges of Conspiracy to Defraud the Government with Respect to Claims and First Degree Theft. In pleading guilty, Campbell admitted that he masterminded a scheme to recruit individuals to file false tax returns.

In total, Campbell and his co-conspirators attempted to defraud the IRS of $109,737.30, the District of Columbia of $141,329.72, and the State of Maryland $24,248.62.

Under the terms of the plea agreement, Campbell will serve 36 months in jail, a $250,000.00 fine and three years of supervised release.

"This case serves as a warning to those who might be tempted to cheat the IRS filing system," said U.S. Attorney Kenneth L. Wainstein.


Question: Common sense says that if it's too good to be true, it likely is. So when my colleague was telling me how he cut his tax debt drastically by participating in the Offer in Compromise program, I was inclined to think something was amiss. What's the deal? Is this program for real?

Answer: It's for real - and while it might be too good, I assure you it's not too good to be true.

The Offer in Compromise is relatively simple, and if you consider the IRS's mission, it's easy to understand why the government would offer such a program. After years and years of beating down doors and chasing deadbeat taxpayers, the government realized that the man-hunter approached might not be the best way to get taxpayers to pay their debts. Being approachable has benefits.

Enter the Offer in Compromise program. This allows the government to offer people with tax debts an incentive. If you have a large debt and are unable to pay the debt, come forward and negotiate a settlement amount with the IRS. It's that simple. By using the Offer in Compromise program, taxpayers with large debts have successfully reduced their tax debt by pennies on the dollar.

If you're interested in this program, the first thing you should do is consult a qualified tax professional. This person will analyze your previous tax returns to figure out exactly how much you owe the IRS. Once your qualified tax professional has figured out how much you owe, he or she will go to the IRS and attempt to negotiate a settlement amount. Really, this settlement can amount to pennies on the dollar when compared to your actual debt. Honest!

Keep in mind that, while many people do qualify for the Offer in Compromise program, not everyone does. The program is intended for taxpayers who cannot satisfy their tax debt.

Give me a call about the Offer in Compromise program. I solve IRS problems.

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

--Our Policies--

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

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