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 1104-1
November, 2004

A Message From Nelson & Company, P.S., CPAs

Q & A ---New Tax Acts for 2004
  Q:  The Feds enacted two new Tax Acts for 2004. Are there any new items?
  A:  Yes. Washington State residents will be able to deduct sales tax on their 2004 returns. Manufacturers and construction contractors will have a new deduction in 2005. The 1st-year deduction for 6,000 lb. SUVs has been capped at $25,000. Cars donated to charity in 2005 can only be written-off for the actual amount of the sale of the car. The IRS has been allowed to use outside collection agencies to pursue outstanding tax debts.
The SEC 179 expensing of business equipment, up to $102,000 a year, has been extended through 2007. Beginning in 2005 there will be one definition of a dependant. The Acts contain 721 pages and affects 755 code sections. This is the largest change since 1997.
Certified Public Accountants
        NOVEMBER, 2004

Inside This Issue....


Rickey Dorsey of Birmingham, AL, was sentenced to 37 months in prison for filing false income tax returns. Following prison, he will be supervised by the court for three years and required to pay more than $39,000 in restitution.

Dorsey, 44, who worked as a manager of fast-food restaurant, used fictitious W-2 forms to file 64 false tax returns. Dorsey then would electronically file the returns, requesting refunds to be deposited into bank accounts he controlled. In all, Dorsey received more than $39,000 in illegal tax refunds.

“Jail was an appropriate consequence for trying to cheat by this tax preparer,” said U.S. Attorney Alice H. Martin.

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

Tribal Chair Sentenced on Tax Charges

The elected chair of the Ute Mountain Ute Indian Tribe in Colorado was sentenced to five months in prison and 150 hours of community services for filing a false income tax return.

Judy Knight-Frank, 60, used a tribal payroll advance program to obtain substantial advances. According to the plea agreement, in 1998 Knight-Frank received a total of $153,249.01. Over a three-year period, the tribal chair received payroll advances worth $274,536.82. Knight-Frank used the payroll advances in an effort to deceive the IRS.

“Those seeking to defraud the Internal Revenue Service will meet with prosecution as a just reward for their efforts,” said Anne Marie Minogue, Special Agent in Charge, IRS-Criminal Investigation, Denver Field Office.

Baltimore Police Commissioner Sentenced for Tax Fraud

Former Baltimore Police Commissioner Edward T. Norris, 43, was sentenced to six months in prison for his participation in a scheme to use police funds from a Baltimore City Police Department account for personal use and lying on his tax returns by failing to disclose the funds as additional income.

In addition, Norris was sentenced to supervised release, 500 hours of community service, and ordered to pay a $10,000 fine.

In his guilty plea, Norris admitted that he used police funds to pay for $10,000 to $30,000 worth of personal expenses, including luxury hotels, expensive meals, clothing, gifts from Victoria’s Secret, and taxi services. He then did not claim the fraudulent income on his tax returns.


Question:     I’ve heard all the stories about an Offer in Compromise. I’m almost certain it won’t work for me. While my tax debt is substantial — $29,000 — I still make a living good; enough to pay off the debt. I just can’t cut a check tomorrow. What can I do?

Answer:     While it’s possible that you may be ineligible for an Offer in Compromise, you should consult a qualified tax professional before you automatically write off the option. If indeed you are eligible for an Offer in Compromise, you should by all means take advantage of it.

However, for the sake of answering your question, let’s assume that your assets and income are too substantial, making you ineligible for an Offer in Compromise. You still have other options to alleviate your tax debt.

One of your best options is to enter into an Installment Agreement. Like the Offer in Compromise, an Installment Agreement is not eligible to everyone. But assuming you can prove to the IRS that, though you can’t pay off the debt right now, you can pay it off overtime, then it’s likely the revenue officer will agree to allow you to participate.

Here’s how it works: Your qualified tax professional and the revenue officer handling your case will come up with a monthly payment that will satisfy your debt overtime without significantly altering your lifestyle. The monthly payment works very much like a mortgage or car-loan payment. You’ll notice that it’s there, but you can still send your kids to college and go out for a decent meal on Saturday evening.

With the Installment Agreement, you can soon satisfy the debt that’s been hanging over your head for some time. It’s that simple.

I deal with cases such as 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