November, 2010

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

No Action by Congress Could Mean Higher Taxes - Beginning 2012, 1099Ms required for all purchases over $600

Congress, at this writing, has not passed the Bush-Era tax cuts. There are a number of deductions that the extension of the Bill will affect including the Alternative Minimum Tax. Congress needs to act soon or both 2010 and 2011 income taxes will be higher. Therefore, if you need a tax projection for 2010, please provide us with your information as soon as possible so we have your data to act quickly, once Congress acts.

Congress has not passed a repeal of the requirement to file 1099Ms for all purchases over $600. This requirement will not start until 2012. We still believe Congress will take action to repeal this requirement. The current law that requires a 1099M to be sent to the IRS for any service over $600 of any unincorporated business or individual, except for attorneys, has NOT changed. Any payment by a business for legal services over $600 must be reported on a 1099M to the IRS no matter the type of entity the firm operates under, including PS (a professional corporation).

NELSON & COMPANY, P.S.
Certified Public Accountants


IRS Times & Inquirer

Inside This Issue...

Toni Braxton Sings the Blues: Owes $396,330 in Back Taxes
Fugitive for a Decade, Man Guilty of Evasion
IRS Question Corner


Toni Braxton Sings the Blues: Owes $396,330 in Back Taxes

R&B singer Toni Braxton, best known for her hit songs "You're Makin' Me High" and "Un-Break My Heart," owes $396,330 in back taxes to the Internal Revenue Service.

The federal government filed a tax lien against Braxton for the debt, which includes unpaid income taxes for the tax years 2007 and 2008.

Braxton, 43, is having significant financial problems, according to a bankruptcy petition she filed in October. Braxton told the court she is worth $1 to $10 million, but is between $10 and $50 million in debt.

A former Dancing With the Stars contestant, Braxton will use the bankruptcy protection to sell assets and pay off debts, her lawyer told the Associated Press. in addition to the IRS, Braxton's creditors include AT&T, Four Seasons Hotel and American Express.


Fugitive for Decade, Man Guilty of Evasion

A man from Florida's Tampa Bay area plead guilty to one count of income tax evasion after being a fugitive for more than 10 years.

According to court documents, in or around April 1995 Gerald Denny Armstrong, 61, of Hillsboro Beach, FL, met with a tax return preparer at H&R Block regarding the preparation of his U.S. Individual Tax Return, Form 1040, for 1994.

Based on information supplied by the defendant, a tax return was prepared showing that the tax due and owing was $64,127. Knowing that at least $64,127 in taxes was due and owing, Armstrong attempted to evade and defeat the tax due and owing by failing to file any tax return for that year, by maintaining various assets and bank accounts in his name, that of his company, World Wide Auto, and of others, and by engaging in transactions designed to hide his taxable income.

Armstrong was indicted on tax evasion charges on April 8, 1999, and was considered a fugitive until his arrest on May 6, 2010. He faces up to five years in prison.


IRS Question Corner

Question: I owe a very large amount to the IRS in back taxes. Do I have options? If so, what are they?

Answer:  Hundreds of clients have asked me this question before, and it's an important question. In fact, I truly believe the answer to this question has made each and every one of those hundreds of clients happier.

The short answer: You do have options..

First, you need to make an appointment with a qualified tax professional. He or she will analyze your returns with a fine-toothed comb and determine how much - exactly how much - you owe in back taxes.

Once that figure is determined, it's time to review options. Your first should be the Offer in Compromise. The IRS established this program for taxpayers who are simply unable to pay their debt, even over time. With the program, a taxpayer comes to a settlement agreement with the IRS that often amounts to a significant discount.

Keep in mind: The Offer in Compromise is dependent on your situation. you must be able to show that you cannot, even over time, pay your IRS debt.

Of course, that means there are taxpayers who are struggling with tax debt but who do not qualify for the Offer in Compromise. For those taxpayers, the Installment Agreement is another option. Under this program, you establish a payment plan with the IRS that allows you to pay down your debt over time. This program is designed so that it doesn't significantly alter your lifestyle but creates a plan that will end your debt.

One of these two plans work for most taxpayers. As an IRS Problem Solver, I work with both plans every day.

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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