Certified Public Accountants
Tacoma Mall Office Building
4301 South Pine Street, Suite #241
Tacoma, Washington 98409-7205
David S. Nelson, CPA
PHONE: 253-752-9522
FAX: 253-276-0144
Edition 01005-1
October, 2005
Message From Nelson & Company, P.S., CPAs
Q & A ---Katrina Tax Relief Act
  Q:  President Bush, on September 23, 2005,
signed the Katrina Tax Relief Act.
Are there any special tax breaks?
Yes. For two months in a row now, we have a new Tax Law. Individuals who house victims of Katrina in their home for at least 60 days are entitled to claim a $500 deduction up to a maximum of $2,000. The most significant item is the raising of charitable contributions to 100% of income. This opens up tremendous planning opportunities for folks with large IRAs who are at least 59 1/2 years old. The 3% reduction does not affect gifts to any qualified charity by December 31, 2005. Thus, if you had $5,000,000 in an IRA and wanted to give $1,000,000 to your favorite charity, you could do so with no tax effect.

Certified Public Accountants


Inside This Issue....

"Now remember, when we get in there, let me do all the talking."


A Memphis, TN, man has been sentenced to 37 months in prison for his role in an illegal tax scheme.

Stephen Brown, 44, pleaded guilty to one count of conspiracy to defraud the United States and two counts of filing false claims. According to statements during the plea hearing, Brown and his brother, Tommie Brown Jr., devised a scheme to help themselves and others obtain fraudulent income tax refunds by filing false 1999 tax returns.

The Browns recruited individuals to file the false returns, then created false W-2s containing fraudulent wages and federal tax withholding amounts. In all, the Browns submitted a total of 14 tax returns, claiming $80,946.17 in fraudulent refunds from the government.

"Taxpayers are reminded that filing a false tax return is a crime," stated IRS Special Agent in Charge Cleve Daniels. "There are individuals in our community promoting these types of tax schemes. Don't fall victim to them. Identifying and combating tax schemes is one of our highest priorities."

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IRS Times & Inquirer
253-752-9522 | 1-800-669-0137

'Survivor' Winner Indicted for Tax Evasion

A federal grand jury in Rhode Island has charged Richard Hatch, the first winner of the reality television show Survivor, with a 10-count indictment that includes fraud and tax evasion. Prosecutors allege that Hatch tried to evade paying taxes on the $1,010,000 he won on the television show in 2000.

According to the indictment, Hatch hired two separate accounting firms to do his 2000 taxes. One estimated that he owed $441,501 in taxes, the other $234,807. Hatch did not file either return. Instead, he filed a return that did not include the more than $1 million TV prize.

The grand jury also alleges that Hatch used money earmarked as charitable contributions to pay for personal expenses. In fact, Hatch allegedly used for personal expenses a $10,000 prize he won for charity on the TV show The Weakest Link, the indictment alleges.

If convicted, Hatch faces up to five years and a $250,000 fine on each count.

Gun Store Owner Pleads Guilty To Tax Evasion

Brian D. Borgelt, 41, of Lakewood, Wash., the former co-owner of Bull's Eye Shooters Supply in Tacoma, has pleaded guilty failing to file a federal tax return. Borgelt pleaded guilty to the major count of an indictment charging him with failing to file tax returns between 1997 and 2001.

Bull's Eye Shooters Supply gained national notoriety in 2002 when the Bushmaster rifle involved in the D.C. sniper case was linked to the store. Lee Malvo, one of two men convicted of murder in the case, told investigators he had stolen the rifle from the Tacoma store.

The Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) inspections at the store had revealed problems with required paperwork tracking the disposition of firearms. The U.S. Attorney's Office determined there were no viable federal firearms charges that could be pursued against Borgelt. Federal authorities have revoked Borgelt's federal firearms license.

As part of the plea agreement, Borgelt has agreed to pay back taxes, penalties and interest for all the counts alleged in the indictment, a total of $230,884.

He faces up to one year in prison and a fine of up to $100,000.


Question:     I've made a number of bad decisions, and with those decisions came debt. To eradicate the debt, I recently sold a bunch of stock options and some real estate. I'm now debt-free. What I didn't consider were taxes. I owe roughly $46,000 in taxes, and I don't have that kind of money. I'm worried sick. What can I do?

Answer:     You're not alone. Many Americans do not think about taxes when considering their finances. It's a shame, but it happens to thousands of Americans every day. Taxes, like money on credit cards, are money owed.

But don't fret. You're not in such a bad position. It's unlikely that the IRS will knock on your door tomorrow. They most likely won't seize your car or your home. If your child is in college, there's no reason to think you won't be able to pay tuition next year.

What you need is a qualified tax professional who can help you deal with your tax debt. Once you've found a qualified tax professional in your area, he or she will analyze your tax returns to make sure that you indeed owe $46,000. After all, you might actually owe substantially less. Once your true tax debt is established, you'll hear your options.

With more specific details, I would guess that you're in the best position to take advantage of the Installment Agreement. The IRS program allows taxpayers with debt to enter into an agreement in which they pay a set amount each month that will over time satisfy their tax debt. In budgeting for your household, this would hold a similar role as a car payment - a substantial but not debilitating payment every month. What's great about this program is that it allows taxpayers to get rid of IRS debt without having to cut an enormous check.

You might be eligible for other options as well, including the Offer in Compromise program. Give me a call. 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 Do it today!

David S. Nelson, C.P.A.
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