October-November, 2011

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

The IRS is Getting Ready for Tax Season - Are you?

The Good: A struggling economy means taxes are down.
The Bad: The government still needs money to operate.
The Ugly: Collections are more important to the government today than they were yesterday, and they’re going to be far more aggressive - and less forgiving.

This isn’t conjecture. It’s fact borne out by numbers. Take into consideration the fact the IRS doubled the number of liens it filed since the start of the Great Recession. High-income earners now face greater scrutiny, with two out of every ten being audited last year. For that reason, if you have something fuzzy on last year’s return and you’re worried about it, you need to come clean and fix what needs to be fixed – now. Are you afraid you’re going to owe? You still have time to make an estimated payment to avoid penalties. If you have any concerns, contact us as soon as possible.

On a more technical note: Tax laws are getting more and more complicated – and conflicting. A single tax issue can have two separate (yet correct) code sections directing how things are to be done, but each will have a completely different result. This is where we help you determine what will work best for you. This may take some time, so if you have an issue to be dealt with, make sure you give us enough advance notice so we can make sure you get the best possible outcome.

David S. Nelson, CPA, CTRS
Certified Public Accountants

IRS Times & Inquirer

Inside This Issue...

Defense Attorney Did Not File Tax Returns

Pastor Collected Employee Tax Withholdings, Diverted Money
Lawyer Addmits Hiding $1.5 Million
Man Filed False Corporate Tax Return

Defense Attorney Did Not File Tax Returns

A New Jersey criminal defense attorney who has not filed a personal income tax return since 2000 admitted to committing tax crimes in connection with income he received from his law practice.

Francis Cutruzzula, 48, of River Vale, N.J., pleaded guilty to two counts of tax evasion and one count of failure to file a tax return.

A 1988 graduate of Seton Hall Law School, Cutruzzula was admitted to practice law in New Jersey and was the sole proprietor of a Jersey City law practice. Despite receiving significant income from his practice, Cutruzzula has not filed a personal income tax return since calendar year 2000.

“Cutruzzula intentionally ducked his legal obligations, hiding personal income in a company account and then spending it on custom suits and travel,” U.S. Attorney Paul J. Fishman said in a statement.

Pastor Collected Employee Tax Withholdings, Then Diverted Money for Personal Use

A Shaker Heights, Ohio, pastor was charged with six counts of willful failure to collect and pay taxes.

A criminal information alleges that Charles J. Matthews, 58, failed to pay at least $90,676 in income and FICA taxes that were withheld from employees at Cleveland's Mount Sinai Baptist Church and Ministries from October 2005 to January 2007.

Matthews was the senior pastor at Mt. Sinai and oversaw financial affairs of the church. He was responsible for collecting income and FICA taxes from Mt. Sinai employees and paying the IRS.

He operated two accounts — a general church operating account and an account for Matthews’ use, known as the “pastor’s account.”
The taxes were collected and withheld from Mt. Sinai employees, but Matthews willfully failed to report and pay over the money to the IRS.

Instead, Matthews used those funds for other purposes, including transferring money to the “pastor’s account” for his personal use, according to the information.  IRS Criminal Investigation Division brought this case to prosecution.

Lawyer Admits Hiding $1.5 Million

A Maryland attorney pleaded guilty to tax evasion and structuring financial transaction to avoid reporting $1.5 million.

Stanley Needleman, 68, of Pikesville, Md., is a criminal defense attorney, practicing law for more than 30 years in state and federal court. Clients made payments mostly in cash, which was kept in a large bank envelope. At the end of each business day, Needleman took the bank envelope with the day’s receipts home with him. No one at the office tallied the daily receipts or completed bank deposit slips. The next day, Needleman would return the bank envelope to the office empty.

“Stanley Needleman committed tax evasion by omitting $1.5 million of income from his federal tax returns over five years, and he concealed his tax fraud by failing to report large cash receipts from his clients and by breaking up his large bank deposits into smaller amounts in an effort to avoid bank reporting requirements,” U.S. Attorney Rod J. Rosenstein said in a statement.

“People who defraud the IRS shift the cost to honest taxpayers, and businesspeople who evade financial reporting requirements allow other criminals to spend their illegal proceeds without being detected by authorities.”

IRS Question Corner

John Joseph Bridge of Minnesota pleaded guilty to one count of filing a false return for his business, Fineline Lakeshore Inc. He admitted that he filed a false 2008 corporate tax return, specifically understating the amount of Fineline's gross revenue by approximately $89,000. Bridge was one of three partners at Fineline and responsible for preparing the corporate tax return. He faces up to three years in prison.

--Our Policies-- www.DNelsonCPAs.com

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.


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