November, 2006

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


Q & A ---Taxes on IRA Conversion

  Q:  I have about a million dollars in my rollover IRA account. I want to convert it to a Roth IRA. How much can I convert and will I owe any tax on the conversion?
  A:  Yes, you will have to pay tax on whatever amount you convert. First, you must make sure that your adjusted gross income does not exceed $100,000, not including the amount you want to convert. The amount you convert will depend on your tax bracket. Therefore, before you convert any IRA accounts, you must run the numbers to make sure that it will save you money in the long run.

NELSON & COMPANY, P.S.
Certified Public Accountants
www.DNelsonCPAs.com

NOVEMBER, 2006

Inside This Issue....

Wesley Snipes Charged with Tax Fraud; Faces 16 Years
Civil Rights Lawyer Charged for Tax Evasion
AL Man Evaded $460,000 in Tax
IRS Question Corner

I need something that says:
"I'm-sorry-I-blew-our-chances-of-getting-a-refund-because-I-didn't-hire-a-tax-professional-to-do-our-taxes".

MAN EVADED $460,000
IN TAX

Charles Wayne Willard, Sr., 54, of Alexander City, AL, pleaded guilty to evading $460,000 in federal income taxes. According to court documents, Willard filed a tax return for 2002 that stated his taxable income was $38,436 when his true income was $1.3 million, resulting in an underpayment of taxes of approximately $460,000. Willard faces up to five years in prison, an order of restitution and a fine of up to $250,000.


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IRS Times & Inquirer
NELSON & COMPANY, P.S.
CERTIFIED PUBLIC ACCOUNTANTS
253-752-9522 | 1-800-669-0137


Wesley Snipes Charged with Tax Fraud; Faces 16 Years

Federal prosecutors in Florida indicted movie star Wesley Snipes on charges of tax fraud.

The government alleges the Blade trilogy star fraudulently claimed refunds totaling more than $12 million in 1996 and 1997.

Snipes was also charged with failing to file tax returns for years 1999 to 2004. He hasn't been arrested. After indicting Snipes, federal prosecutors said they did not know the movie star's whereabouts. Later, it was revealed that Snipes is in Namibia filming a movie. If convicted, Snipes faces up to 16 years in prison.


Civil Rights Lawyer Charged for Tax Evasion

Venice, CA, civil rights attorney Stephen G. Yagman has been indicted on charges of attempting to evade the payment of more than $100,000 in federal income taxes by concealing his assets and committing bankruptcy fraud.

The indictment alleges that Yagman filed federal income tax returns for the tax years 1994 through 1997, but paid only a small portion of the taxes that, according to his own returns, were owed to the IRS. As a result of the underpayment, Yagman accumulated federal income tax liabilities for those four years that, with interest and penalties, totaled more than $158,000. During the four years, Yagman also failed to pay significant amounts of federal payroll taxes owed by his law firm.

Instead of paying these overdue federal taxes, according to the indictment, Yagman tried to conceal assets from the IRS. For example, Yagman allegedly used various bank and brokerage accounts held in his girlfriend's name to deposit and disguise his personal funds.

In 1999, Yagman allegedly attempted to subvert the IRS's collection efforts by filing for both personal and corporate bankruptcy.


IRS QUESTION CORNER...

Question:     How can I find out if I qualify for the Offer in Compromise program? I owe $120,000 in back taxes, and my company just folded. I don't have that kind of money.

Answer:     While it's impossible to say for certain without having reviewed your tax returns and financial files, it sounds like the Offer in Compromise is made just for you.

The Offer in Compromise has allowed many taxpayers to negotiate with Uncle Sam and get rid of their tax debt - often for pennies on the dollar.

After years of chasing deadbeat taxpayers without success, the IRS discovered that it can be more effective to negotiate than beat down doors. That is, essentially, what the Offer in Compromise allows the IRS to do.

To determine if you are eligible and suited for this program, the first thing you should do is consult a qualified tax professional. They will review your previous returns with a fine-toothed comb to ensure that you don't pay the IRS even a penny more than you owe.

Once you and your tax professional have determined your true tax debt, you will meet with the IRS to negotiate a final settlement amount. Often, this amounts to pennies on the dollar.

This settlement amount will eliminate your tax debt once and for all, putting to rest any nightmares you may have of stern IRS agents knocking on your door. It really is that simple.

I work on IRS problems such as yours every day. Give me a call about the Offer in Compromise program and other solutions for IRS troubles. For a free, no-risk consultation, call my office at 253-752-9522 or send me an E-mail at Firm@DNelsonCPAs.com. Do it today!

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Nelson & Company, P.S., CPAs Since 1979

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