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Tax Times Newsletter - December 2004

- Jay Schlichting

TOP NEWS

• Inventor Convicted of Tax Fraud
       A San Diego, Calif., man who invented a wheel-lock system for four-wheel-drive, off-road vehicles has been convicted of tax fraud.
       Shortly after forming Traction Matters Inc. to market his new product, 62-year-old John Zentmyer sold the company for a cool $1 million.
       One problem: Zentmyer never reported income from the sale on his personal income tax return. Instead, he deposited the money in an offshore account. And the IRS found out. Zentmyer owed $264,335 in back taxes.
       Last month, a federal grand jury in Los Angeles convicted Zentmyer of tax evasion. He could receive up to 50 years in prison at his upcoming sentencing hearing.
• INS Agent Sentenced on Tax Charges
       A former INS official in Nogales, Ariz., was sentenced to five months in prison after being found guilty of filing a false income tax return for the year 1998. Jose K. Livanios, 46, will also serve five months of home confinement and 60 hours of community service.
       Livanios, a former supervisory immigration inspector, did not report substantially more farm income from his cattle business than the $25,000 he claimed on his tax return, according to trial evidence. Government calculations showed under-reported income of $45,066 for 1998. The total under reported income from his cattle business for the years 1996, 1997 and 1998 was approximately $94,760.
• Dallas Man Gets 15 Months in Jail
       A Dallas man was sentenced to 15 months in jail and ordered to pay $176,164 in restitution after making false statements on his federal income tax return.
       James Meyer Lowenstein was involved in Youngevity, a multi-level marketing company in the business of manufacturing and distributing "anti-aging" and nutritional supplements.
       Lowenstein admitted that he reported $7,086 as his adjusted gross income for 1996 when he knew he should have reported an additional $176,164 in adjusted gross income.
       On a corporate income tax return Lowenstein filed, he admitted that he falsely reported advertising expense of $15,928 when the correct amount was $4,910.
• Village Official Indicted for Tax Charge
       A public works superintendent for the Village of Streamwood, near Chicago, was charged with filing a false federal income tax return in which he allegedly failed to disclose roughly $27,175 of additional income during calendar year 2000.
       Timothy Holloway, 45, was charged in a single-count information that alleges that he received additional income in 2000 from American Management Resources in Morton Grove, Ill.
       Holloway allegedly failed to disclose the extra income on his 2000 federal income tax return, which was filed in February 2001.
       If convicted, Holloway could face up to three years in prison and a $250,000 fine. Additionally, he could be required to pay back taxes and fines.
• Delaware Man Pleads Guilty to Tax Evasion
       A Delaware man pleaded guilty to one count of tax evasion after attempting to avoid paying $114,128 in taxes.
       Eugene W. Hilliard, 52, of Clayton, Del., provided approximately 10 bars and clubs in the Newark, Dover and nearby Maryland area with video poker games machines.
       According to government evidence, Hilliard filed a false return in 1998 when he operated the Clayton Inn in Clayton, Del., and paid some of his employees under the table in an attempt to avoid withholding taxes from wages paid to employees for that quarter.
       He faces up to three years in prison and a $250,000 fine.
   

ASK THE EXPERTS

• I'm fretting! I owe a substantial amount to the IRS - somewhere in the neighborhood of $225,000 - thanks to high earnings five years ago, some bad previous advice, and tough times in recent years. I want to move on with my life. What can I do? Are there any options available to me?
       Indeed, I think you'll be surprised by just how many options you have available to you. Although the old saying about death and taxes is certainly true, dealing with the IRS isn't a battle between David and Goliath. You have options.
       Once you find a qualified tax professional who can help you, the first step you and the tax professional will take is to examine your previous tax returns to ensure that you did not overestimate your tax debt in previous returns. Once that is complete, you may find that either an Offer in Compromise or an Installment Agreement is the best option for you.
       An Offer in Compromise, believe it or not, is a way to reduce your tax debt by pennies on the dollar. Through this program, the IRS will allow taxpayers who do not have the financial wherewithal to settle their tax debt to, instead, make arrangements to pay what they can. An Offer in Compromise isn't for everyone, but if you no longer have the financial fortitude you once did, this could present an excellent way for you to finally rid the taxman - and his substantial debt - from your life.
       The other option you have is an Installment Agreement. If you do in fact have the financial resources to pay off your debt but cannot simply write a check for the full amount, the IRS will allow you to settle your debt over time by making small monthly payments. Think of this like a car payment: Though small individually, the payments will add up over a period of years and finally pay off your debt. Simple, right?
       I deal with problems such as yours every day. I'm an IRS Problem Solver with years of experience dealing with the IRS. I think you'll find much of the IRS-related stress you currently feel will be alleviated with one visit. For a free, no-risk consultation, please call my office toll free at 1-877-590-2500.

Tax Times Newsletter is an online Publication by
The Schlichting Group
Specialists in IRS Representation and Tax Preparation