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October, 2009

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

IRA-Retirement Plan Payout/Minimum Distributions ---You can put money back.

If you took a "required" minimum distribution from your IRA or another retirement plan for 2009, the IRS is giving you a chance to put the money back.

For 2009, the normal ban on paying back required minimum payouts does not apply because, due to market conditions for 2009, Congress suspended the rule requiring mandatory distributions from IRAs and defined contribution plans.

Since many people may not have known about the suspension, they now have the option to pay the money back into IRA or retirement plans by November 30, for "mandatory" payouts taken before October 1; even those withdrawn early in 2009. The 60-day rule applies for such payouts taken after September 30.

This relief is limited to one pay back for distributions made from an IRA. Therefore, if you took monthly payouts in 2009 from an IRA to meet the now-suspended rule on minimum required distributions, you can only pay back one of the withdrawals.

Contact your broker or visit: if you have any questions.

Certified Public Accountants

IRS Times & Inquirer

Inside This Issue...

Miami Woman Gets 60 Months
Man Gets Four Months for Following Bad Advice
77-Year-Old Sentenced to Prison on Tax Charges
IRS Question Corner

Miami Woman Gets 60 Months

A Miami woman was sentenced to 60 months in prison after being convicted by a jury on tax fraud charges.

Maritza Valiente, 41, was convicted on all 11 counts against her relating to a tax fraud scheme that Valiente and others committed in 1999 and 2000. Valiente and three co-defendants were initially indicted in 2004, but Valiente was not located until 2008.

According to trial evidence, Valiente and her co-conspirators created false W-2s claiming wages and withholdings from fiscal year 1999 in the names of bogus employees of Valienteís company, United Mortgage Financing. They used the false W-2s and other information to prepare fraudulent tax returns claiming refunds for the fictitious employees. Then, in early 2000, Valiente and her co-conspirators filed the false tax returns with the IRS and obtained refund-anticipation loan checks in the names of the fictitious employees. In sum, more than 30 false tax returns were filed with the IRS as part of the scheme, causing the IRS to issue more than $100,000 in fraudulent refunds.

Man Gets Four Months for Following Bad Advice

Stephan Karchut, of Kalispell, MT, was sentenced to four months in prison, four months of home detention with electric monitoring, and three years of supervised release following incarceration for attempting to evade his 2004 income taxes. He was also ordered to pay restitution to the IRS of $44,901 of taxes owed for the years 2003 and 2004 and to cooperate with the IRS in determining additional income taxes, penalties, and interest that he may owe for the years 2002 through 2004.

Karchut previously pleaded guilty to the charge, which involved Karchutís efforts to conceal income he earned as sole operator of a business known as PC Surveillance, located in Cortland, Ohio, where he formerly resided.

Beginning in 2002, Karchut followed erroneous advice of a person who held himself out as a tax professional to conceal his income and tax liabilities. Karchut failed to file income tax returns for 2002 to 2004, on false advice that under Section 861 of the IRS Code income is not reportable unless it is received from foreign source ó the so-called ď861 argument.Ē

77-Year-Old Sentenced to Prison on Tax Charges

The developer of a Morris County, N.J., condominium community was sentenced to a year in prison for evading corporate income taxes.

Morton Salkind, 77, of Denville, N.J., and Aventura, FL, was ordered to turn himself in to the federal Bureau of Prisons on Oct. 5 to begin serving his prison sentence at a facility yet to be determined. He was also ordered to pay a $30,000 fine and to serve two years of supervised release after leaving prison.

Salkind had previously agreed to pay back civil taxes, penalties and interest on his individual income taxes of approximately $17 million and to date has paid $11.5 million. That leaves a balance to the government of nearly $6 million for which he remains liable.

ďTodayís sentence sends a strong deterrent message that tax evasion is not a victimless crime,Ē said William P. Offord, Special Agent in Charge of the IRS Criminal Investigation Division, in a statement.

In pleading guilty, Salkind admitted that the false accounting entries included claiming approximately $5.7 million in expenses related to the development of Fox Hills that were never incurred. He also admitted that false accounting entries inflated legitimate project expenses.

IRS Question Corner

Question: Iíve been reading your newsletter, and I understand why the Offer in Compromise program is an excellent one for those who qualify. Although I have a significant tax debt, I donít believe Iíll qualify for the program. What can I do?

Answer:  Many of my clients are very good at analyzing their current tax situation and estimating what options might be best for them. I think thatís great. But I also recommend to all my clients that they not trust themselves fully. Itís always a good idea to have a qualified tax professional analyze your current situation and previous returns to determine your best options. Donít assume that you do not qualify for the Offer in Compromise program. Have a qualified tax professional help you make that determination.

But for the sake of your question here, letís assume for now that you do in fact qualify for the Offer in Compromise program. The good news is that you do have options, and the best might be the Installment Agreement.

Hereís what you should do first: Find a qualified tax professional. He or she will closely analyze your previous returns to come up with the exact figure you owe the IRS. This qualified tax professional will also help you determine whether you qualify for the above-mentioned Offer in Compromise.

Now, assuming you donít, your qualified tax professional will likely tell you about the Installment Agreement. This is a program the IRS offers to indebted taxpayers who currently lack the ability to pay off their debt in full but possess the future earnings potential to pay off that debt over time. Simply, under this program, the IRS agrees to allow you to pay down your tax debt with small, monthly payments. This payment plan is intended to be similar to a car payment ó significant enough that it will allow you to pay off your debt over a period of time but not so significant that your life will change drastically.

I deal with IRS problems such as yours every day. Thatís because Iím 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.