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September, 2009

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

Looking for Money?---Don't look to your IRA or other
retirement accounts!

With severe economic times, many people have asked us about the tax consequences of withdrawing money from retirement accounts. If you're under age 59 ½, not only will you have to pay income tax, but you will also pay an additional 10% penalty; meaning the average person pays 35-40% by taking this money.

Your retirement accounts should be the last place you look in search of cash.

Certified Public Accountants

IRS Times & Inquirer

Inside This Issue...

Las Vegas Attorney Owes $4 Million
N.J. Man Faces Five Years After Guilty Plea
IRS Question Corner

Las Vegas Attorney Owes $4 Million

A Las Vegas personal injury attorney who was convicted last year of tax evasion and owes almost $4 million to the IRS was sentenced to five years in federal prison.

Edmund C. Botha, 47, was also ordered to serve three years of supervised release and to pay $685,505 in restitution to the IRS as a condition of supervised release.

“The length, breadth, and complexity of this scheme and the gravity of the offense warranted a severe penalty,” said Greg Brower, U.S. Attorney for the District of Nevada. “Despite earning more than $7 million between 1996 and 2006, Mr. Botha paid just over $230,000 in taxes and went to great lengths to hide his assets from the IRS.”

According to the court records and evidence presented at trial, Botha evaded the taxes by purchasing luxury vehicles in his ex-girlfriend’s name; transacting all of his business in cash and cashier’s checks; and entering into a sham child-support agreement requiring him to pay about $20,000 per month for two children. Testimony at trial showed that Botha conducted over $2 million in cash transactions from 1998 to 2003 and paid his rent, utilities, payroll, and other business expenses with cash or cashier’s checks.

Evidence further showed that Botha purchased more than 10 vehicles worth more than $400,000 over a six-year period in his ex-girlfriend’s name, while at the same time having only a 15-year-old car with over 100,000 miles on it in his name.

If convicted, Corbin faces up to five years in prison on the false statement charge and up to three years in prison for each of the false tax returns filed. He also faces a fine of up to $250,000 on each count on which he is convicted.

N.J. Man Faces Five Years After Guilty Plea

The owner of a Barnegat, N.J., construction company pleaded guilty to a charge of tax evasion for failing to report income of approximately $242,764.

At his plea hearing, Daniel Carlo, 45, stated that he owns and operates a construction company under the name of “Cartar” from his residence in Barnegat. Carlo admitted that in April 2006, he prepared, signed and filed with the IRS a 2005 individual tax return which stated that his taxable income for calendar year 2005 was $0.

Carlo admitted that he failed to report taxable income of about $242,764, upon which an additional tax of approximately $78,792 was due to the IRS.

Carlo also admitted that in an effort to hide a substantial part of the unreported income, he deposited client receipts into bank accounts in the name of his wife and daughter. He faces up to five years in prison and a fine of up to $250,000.

In addition, Aldridge purchased vehicles in the names of family members and friends during tax years 2001, 2003 and 2004, and purchased a residence using two different nominees between 1992 and 2005.

IRS Question Corner

Question: Give it to me straight and easy. If I owe money to the IRS that I cannot find a way to pay back, how do I go about qualifying for and negotiating with the IRS in an Offer in Compromise?

Answer:  No matter what, your first step at this point should be to consult a qualified tax professional. He or she will not only analyze your previous tax returns, but after doing so,will be able to tell you whether the Offer in Compromise program will work for you.

First, it might help to understand fully what the Offer in Compromise program is. Simply, after years of chasing deadbeat taxpayers with mixed results, the IRS realized that a kinder, gentler enforcement approach can be more effective than an iron-fisted one. Enter the Offer in Compromise program, which allows taxpayers who are absolutely unable to satisfy their debts to negotiate a settlement amount with the IRS. Oftentimes, believe it or not, that settlement is a lot less than you owe.

Now, assuming you do qualify for an Offer in Compromise, your qualified tax professional will closely analyze your previous returns to come up with the exact amount you owe the IRS. After all, why go to the negotiating table starting with an amount even a penny more than you owe? Once that’s complete, you and your tax professional will sit down with an IRS agent and come to an agreement on what you need to pay to settle this tax debt once and for all.

Really, it’s that simple. Keep in mind, too, that should you not qualify for the Offer in Compromise program, you have other options as well — including the Installment Agreement — and you should discuss these alternatives with your tax professional.

I’ve seen it time and time again: Life is much easier for clients once they solve their IRS problems and no longer have to worry about the taxman. I solve tax problems every day. That’s because I’m an IRS Problem Solver.

For a free, no-risk consultation, please 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

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.