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 01105-1
November, 2005
Message From Nelson & Company, P.S., CPAs
Q & A ---Owe Taxes? There are options.
  Q:  I owe the IRS about $65,000 from my former business plus personal taxes. My house is almost paid for and I don't want the IRS to seize it. What can I do? Can I settle for "pennies on the dollar" like the national ads say?
No. But you have several options. With the large equity in your house, an Offer in Compromise would be difficult, if not impossible to get approved. In spite of what the national offer mills say, with your equity and the IRS's new policies, it would be almost impossible to settle for pennies on the dollar.

However, you can ask for an Installment Agreement since refinancing is not a viable option for you (because you have IRS liens and your income is so low). The IRS can set you up on a monthly payment. It is based on you ability to pay given your income and living expenses. It's subject to review every two years.

Certified Public Accountants


Inside This Issue....

"You can't run away from home! You're the only one who knows how to get Mommy and Daddy's tax records from the computer!"


The owner of a defunct New Jersey-based health benefits management company pleaded guilty to mail fraud and tax evasion, admitting that he misled subscribing participants and employers about the management of premium payments, embezzled from commingled accounts and ran the business into bankruptcy, U.S. Attorney Christopher J. Christie announced.

Donald Ruth, 64, formerly of Hackensack and now of Hudson, Fla., admitted that, with the diverted and commingled funds of Wayne, N.J.-based Meridian Benefit, he purchased a Florida home, a boat and paid for travel and other personal expenses - in addition to receiving more than $1.5 million in income. Ruth left Meridian with approximately $15 million in unpaid insurance claims.

As part of his plea, Ruth admitted that for tax years 2001 and 2002, he embezzled $102,345 and $676,464, respectively, and used the money for personal purposes, including the purchase of a home in Tarpon Springs, Florida and a boat. Ruth admitted that he filed false income tax returns that did not report this additional income.

• If you would like to receive future editions of this publication in plain text, E-Mail Us.
• If you do not wish to receive any future editions of this publication, received duplicate copies or if you have received this bulletin in error, please accept our apologies and E-Mail Us. We will promptly remove you from our subscription list.

Copies of this and previous versions of the Tax Bulletin are available on our web site:

Want to subscribe to this NEWSLETTER?
E-mail Us:

Back to Top

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

Former D.C. Mayor Charged in Tax Case

Former District of Columbia Mayor Marion Barry has been charged with failure to file his 2000 income tax return, a misdemeanor. If convicted, he faces up to a year and a half in prison.

Barry, 69, a former four-term mayor who is now serving as a council member, was videotaped smoking crack cocaine in an FBI sting during his third term as mayor. He served six months in prison, then was reelected to mayor in 1994. He did not seek reelection after that term. Last year, Barry reentered public life when he won election as a council member representing one of the District's poorest neighborhoods.

As a council member, Barry earns $92,605 per year. If he continues to serve through 2008, he will qualify for a lifetime pension.

Barry is allowed to retain his seat unless required to serve felony prison time, according to the law.

CA Man Failed To Pay $673,000 In Taxes

David Lopez Quintana, 39, of Pleasanton, CA., pleaded guilty to one count of willful failure to pay employment taxes to the IRS after he admitted to failing to pay $673,000 in employment taxes.

According to his plea agreement, Quintana owned several businesses related to pagers, cell phones and car stereos from 1998 to 2000. Quintana was required to collect and pay the taxes that he withheld from his employees. Beginning in the third quarter of 1998, Quintana began failing to pay employment taxes to the IRS.

According to the plea agreement, Quintana's pattern of not complying with federal tax laws continued through the fourth quarter of 2000 and totaled $673,013.86. Quintana admitted that he failed to pay the IRS a total of $421,987 in federal income taxes that he withheld from his employees' wages. Quintana also admitted that he failed to pay $251,025 of Federal Insurance Contribution Act (FICA) taxes.

Federal law requires that employers to collect federal income taxes and FICA taxes (Social Security and Medicare taxes).

Quintana faces up to five years in prison, three years of supervised release and a fine of up to $10,000.


Question:     I don't have a lot of debt, aside from one big one: tax debt. Because of bad accounting advice, I owe about $125,000 in back taxes from the past five years. Yeah, I know, I know. I messed up. But what can I do? I can't pay it. And now it looks like I can't even declare bankruptcy?

Answer:     Trust me, there's no need to file bankruptcy. And you are by no means alone. There are many, many American taxpayers in the very same boat you're in. If you have accumulated more tax debt than you could possibly pay off, you might be a good candidate for the IRS's Offer in Compromise program. After spending years chasing down deadbeat taxpayers, the IRS has learned that compromise can be a more effective tax collecting tool than door beating.

In the Offer in Compromise program, you can reduce your tax debt by pennies on the dollar! The first thing you should do is to consult a qualified tax professional. He or she will analyze your previous tax returns with a fine-toothed comb, making sure that you do not claim to owe the IRS a single penny more than you actually do. Once your qualified tax professional has established your true tax debt, he or she will consult with the IRS and make an offer that will settle your tax debt once and for all. This Offer in Compromise usually amounts to, as I said, pennies on the dollar, allowing you finally to pay off your tax debt and move on with your life.

While not everyone is applicable for the Offer in Compromise program, you should know that as a taxpayer you have many rights available to you. Among the programs that you might also be applicable for is the installment agreement, which would allow you to pay down your tax debt over time.

Give me a call. I handle cases like yours every day, because 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