October, 2006

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

Q & A ---Notice of Non-Payment from IRS?

  Q:  When I filed my income tax, I had a small balance due which I paid with my return. A few days later, the IRS sent me a notice showing the balance as unpaid tax, plus they added penalties and interest. What can I do?
While returns are processed by the IRS, checks are actually processed by the U.S. Treasury Department. There is often a time lag between the time your check is posted to your IRS account and the time your return is processed. All you can do is wait a few days and the IRS will send you another notice showing the unpaid tax as paid. This is a continuing problem between the IRS and Treasury, particularly where people file electronically. The Treasury Department cannot post the checks manually as fast as the IRS's computer system can process your return.

Certified Public Accountants


Inside This Issue....

Church Leader Sentenced to Jail Time
MO Man Jailed for Failing to File Returns
IRS Question Corner

"Eureka! I think I found
a tax break!"


Scot J. Seaman of Wildwood, MO, was sentenced to five months in prison, five months of home confinement and a $3,000 fine for failing to file income tax returns. Seaman admitted with his plea in July that he did not file income tax returns for the years 1998 to 2002, representing a tax loss of $73,141.

"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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IRS Times & Inquirer
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Church Leader Sentenced to Jail Time

An Arizona man who made his money through the church will spend the next 28 Sundays in prison.

John Delo Nichols Jr., 65, of Apache Junction, was sentenced to seven months in prison and five months of home confinement after pleading guilty to one count of Willful Failure to File a Tax Return. Nichols admitted that he failed to pay taxes on money resulting from his promotion of the "Freedom Church of Revelation" (FCR).

Nichols had been charged with three counts for the tax years 1997 to 1999. Each charge carried a maximum penalty of one year in jail and a $25,000 fine or both. The indictment alleged that Nichols received gross income of $136,885 in 1997, $267,491 in 1998 and $565,163 in 1999.

Court papers show that he deposited about $70,000 in church funds into accounts he controlled. At the time he received these funds, Nichols admitted, he knew of the requirements to file a return reporting the income. He acknowledged he "willfully blinded" himself to the truth. In all, Nichols actions resulted in a $40,000 tax loss.


Question:     I heard it is possible to pay your tax debt in installments. Is this true?

Answer:    Yes, it's true. The program is known as an Installment Agreement, and many taxpayers use this program to take care of their tax debt using reasonable monthly payments.

Here's how it works:

You should first consult with a qualified tax professional who will analyze your previous returns to ensure that you are not volunteering to pay anymore than you owe. After all, why overpay the government? Once the figure has been established, your tax professional will meet with an IRS agent to discuss the Installment Agreement.

The purpose of this agreement is to negotiate a monthly payment amount that will allow you to pay down your debt without significantly cramping your current lifestyle. Kids in college? Mortgage to pay? Business loans? The idea is that the Installment Agreement will allow you to meet these other important obligations while also paying down your debt. You could think of it as taking on a second car payment - it's enough to notice every month, but not enough to stop you from living your life.

Another option worth exploring is the Offer in Compromise program. If you do not have the resources to pay down your IRS debt even with the Installment Agreement, the Offer in Compromise program would allow you to decrease your tax debt by pennies on the dollar. Ask your qualified tax professional about this option.

I work on IRS problems such as yours every day. Call my office at 253-752-9522 or send me an E-mail at Firm@DNelsonCPAs.com. Do it today!

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