November, 2009

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

Buy/Sell Agreement---If you own a business, you need one.

If you own a business and have a partner, partner/co-owner, or other shareholders of your business, you need to have a Buy/Sell Agreement.

If you have an existing agreement that has not been recently updated, you should have it reviewed. If you do not have one, you should contact your life insurance agent as soon as possible.

The pending extension of estate tax laws makes it imperative to have an up-to-date Buy/Sell Agreement.

NELSON & COMPANY, P.S.
Certified Public Accountants


IRS Times & Inquirer

Inside This Issue...

Nicolas Cage Owes $6 Million
Mayor Guilty of Tax Evasion, Corruption
Connecticut Builder Sentenced to Prison for Tax Evasion
IRS Question Corner


Nicolas Cage Owes $6 Million

Academy Award-winning actor Nicolas Cage owes the IRS more than $6.6 million in income taxes.

According to a tax lien filed against him, Cage owes $70,190 for the tax year 2002, $179,738 for 2003, $110,617 for 2004 and more than $6.2 million for 2007.

Cage blames his financial and tax problems on his business manager, Samuel Levin, according to a lawsuit the actor filed against the man in California.

The nephew of director Francis Ford Coppola and actress Talia Shire, Cage has long been among Hollywood’s royalty and highest-paid actors. He won the Academy Award for Best Acting for his lead role in Leaving Las Vegas and has earned box-office successes in various summer action films as well as the National Treasure series.

The federal government has not filed criminal charges related to the actor’s $6.6 million tax debt.


Mayor Guilty of Tax Evasion, Corruption

The mayor of Mandeville, LA, pleaded guilty to honest services mail fraud and tax evasion.

According to court records, Edward “Eddie” J. Price III, as the elected Mayor of Mandeville, was a public official who was prohibited by state law from receiving gifts and gratuities from professional service contractors for the city of Mandeville and developers with business interests with the city. From 2003 to 2007, Price accepted numerous trips from the city’s engineer and a developer in the Mandeville, LA area to participate in expensive golf tournaments in Pebble Beach, CA. These trips had a value in excess of $45,000. Price’s plea of guilty to honest services mail fraud included admissions that he illegally utilized money from his campaign fund account to pay various personal expenses.

In addition, Price failed to file a tax return for the 2007 tax year, evading taxes on his income as mayor as well as the value of the gifts and gratuities he received and funds he had taken from his campaign account.

The politician faces up to 25 years in prison and a fine of up to $500,000.

“This investigation is another example where the teamwork between the IRS, FBI and the United State Attorney’s Office has brought justice to our community,” said IRS Special Agent in Charge Michael DePalma in a statement.


Connecticut Builder Sentenced to Prison for Tax Evasion

Leonard Widman, 54, of Sherman, CT., was sentenced to 12 months and one day in prison for failing to pay more than $170,000 in taxes.

Widman owned a sole proprietorship known as Phase II Construction, which performed general contracting services in New York and Connecticut. Phase II Construction had a business checking account into which Widman deposited all business receipts and from which he paid both business and personal expenses.

For tax years 1997 to 1999, Widman filed tax returns and made false statements to IRS employees. In a series of interviews with IRS agents in 2003 and 2004, Widman falsely represented the nature of dozens of expenditures made from the Phase II Construction checking account as legitimate business expense. These expenditures included payments for renovation done to Widman’s home, personal gym equipment, family meals, marina and boat fees, vacations, furniture, and clothing. In addition, Widman told IRS investigators he had received loans and cash gifts from family members and friends, which would be non-taxable sources of income, when in fact he had not.

In all, Widman failed to pay $173,355 in federal income tax and self-employment tax.


IRS Question Corner

Question: I’ve 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 don’t believe I’ll 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 that’s great. But I also recommend to all my clients that they not trust themselves fully. It’s always a good idea to have a qualified tax professional analyze your current situation and previous returns to determine your best options. Don’t 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, let’s assume for now that you do not, 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.

Here’s 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.

Again, assuming you don’t, 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 — 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 like this every day. That's because I'm 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 Firm@DNelsonCPAs.com. Do it today!


--Our Policies-- www.DNelsonCPAs.com

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

====NOTICE REQUIRED BY IRS====
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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