|Q & A ---IRA Distributions
||Q: I have five IRAs at five different banks and will be 70 1/2 next year. Do I have to take the minimum distribution from each account?
||A: You have options, but either way, you must take the required minimum amount. It is possible to take the minimum distribution from just one bank, but the other banks must be notified of the distribution. This can be difficult to coordinate and because it is easy to lose track of multiple accounts, many folks get an IRS notice a few months later. To have a complete picture of all your holdings, our recommendation is to consolidate your investments as much as possible.
||NELSON & COMPANY, P.S.
Certified Public Accountants
|IRS Times & Inquirer |
NELSON & COMPANY, P.S.
CERTIFIED PUBLIC ACCOUNTANTS
253-752-9522 | 1-800-669-0137
|IRS Extends Long Arm of Income Tax Justice
No one is immune to the Internal Revenue Service’s aggressive investigations of tax cheats, not even millionaire doctors and baseball legends. In this era of hard-hitting enforcement, you could be next. Be prepared.
The Internal Revenue Service doesn’t play favorites when it comes to enforcement of tax law.
No one is immune.
And that includes big-name doctors, well-connected politicians, and even a baseball legend.
Just take a look at the recent headlines. In the past two months, the IRS has received major media play as it’s taken down some famous — and infamous — tax cheats.
· Xelan Inc. — The San Diego-based financial planning firm founded in the mid-’70s by L. Donald Guess has been battling the IRS over its alleged tax shelters. Most of the company’s clients are doctors and dentist who could now face audits. Currently, 220 doctors and dentists who used Xelan’s services have received audit notices from the government. Additionally, the IRS has taken Xelan back to court in an effort to the get the names of 2,000 more of its clients.
· Pete Rose — Baseball’s all-time hit leader recently received a tax lien from the IRS, alleging that he owes nearly $1 million in back taxes. The 63-year-old Rose, who was banned from baseball after betting on sports, served five months in prison on tax charges in 1990 and 1991. Despite the huge debt, Rose does not face criminal charges this time.
· Stephen J. Alexander — The former mayor of Azusa, Ariz., recently pleaded guilty to tax charges alleging that he underreported his income for the tax year 1997. As it turned out, Alexander’s fatal mistake came from his big mouth. In 1997, he claimed he received $14,885 in income. But the IRS learned that during a court proceeding when he was under oath, Alexander said he earned well over $200,000 that year.
· Winston Wendall Borden — The former Minnesota state senator was recently found guilty of not filing tax returns for the years 2000, 2001 and 2002. Borden then pleaded guilty to not filing returns for the years 1997, 1998 and 1999. The former senator, who was previously president of the Minnesota Chamber of Commerce, faces up to one year in prison for each of the six counts.
Of course, these are just four of thousands of cases the IRS has prosecuted in the past two months. These may seem unusual to those who still believe the IRS is a weak agency unwilling to go after America’s most notorious tax cheats.
But that’s a false reputation. Today’s IRS will go after anyone, maybe even you.
IRS QUESTION CORNER...
Question: I’m fretting! I owe a substantial amount to the IRS — somewhere in the neighborhood of $225,000 — thanks to high earnings five years ago, some bad previous advice, and tough times in recent years. I want to move on with my life. What can I do? Are there any options available to me?
Answer: Indeed, I think you’ll be surprised by just how many options you have available to you. Although the old saying about death and taxes is certainly true, dealing with the IRS isn’t a battle between David and Goliath. You have options.
Once you find a qualified tax professional who can help you, the first step you and the tax professional will take is to examine your previous tax returns to ensure that you did not overestimate your tax debt in previous returns. Once that is complete, you may find that either an Offer in Compromise or an Installment Agreement is the best option for you.
An Offer in Compromise, believe it or not, is a way to reduce your tax debt by pennies on the dollar. Through this program, the IRS will allow taxpayers who do not have the financial wherewithal to settle their tax debt to, instead, make arrangements to pay what they can. An Offer in Compromise isn’t for everyone, but if you no longer have the financial fortitude you once did, this could present an excellent way for you to finally rid the taxman — and his substantial debt — from your life.
The other option you have is an Installment Agreement. If you do in fact have the financial resources to pay off your debt but cannot simply write a check for the full amount, the IRS will allow you to settle your debt over time by making small monthly payments. Think of this like a car payment: Though small individually, the payments will add up over a period of years and finally pay off your debt. Simple, right?
It honestly can be. I’m an IRS Problem Solver. I deal with problems such as yours every day. Why not settle your tax debt once and for all? That’s my job — 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,
NELSON & COMPANY, P.S.
Certified Public Accountants
Tacoma Mall Office Building
4301 South Pine Street, Suite #241
Tacoma, Washington 98409-7205