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Tax Times Newsletter - June 2005

- Jay Schlichting

SUCCESS STORIES
We help real people with real tax issues - successfully.

• Keeping an IRS audit under control
  • Challenge: The IRS selected me for a complete audit, both of my self-employment incomes and rental properties.
  • Solution: The Schlichting Group handled the audit on my behalf. The process took three months, with a great deal of detail and documentation required. The Schlichting Group worked closely with the IRS auditor, creating spreadsheets of expenses for each business activity from my financial statements and receipts.
  • Results: The final assessment was 75 percent below the original estimate of taxes due. In addition, the IRS limited the audit to one year - rather than expanding it to include other years, as can sometimes happen.
• Spreading payments over time
  • Challenge: I failed to file tax returns for four years. When the IRS contacted me, it claimed that I owed thousands in back taxes.
    Solution: In just two weeks, The Schlichting Group had prepared and filed my missing tax returns. They also negotiated a payment plan - even before the IRS had examined my returns.
    Results: I was able to pay off my taxes over time. Plus, the entire matter was handled quickly, letting me move on with my life.

TOP NEWS

• Opa-locka, Fla. Mayor Admits Tax Crime
       Myra Taylor, the suspended mayor of Opa-locka, Fla., near Miami, has pleaded guilty to a misdemeanor tax charge. She could face up to a year in prison.
       Taylor, together with her husband, John, operated several charter schools and a day-care center in South Florida. In June 2004, federal prosecutors indicted the couple, alleging that they used their schools' money to pay personal expenses - including utility bills, home repairs and cars - then did not declare the substantial sums of money on their personal tax returns.
       Taylor, who was elected mayor of Opa-locka in 2003, has said she will not resume her public office. "She has voluntarily agreed not to be reinstated or seek reinstatement," her lawyer, Ben Kuehne, told the Associated Press.
• Calif. Businessman Sentenced to Six Years
       A Redding, Calif., businessman was sentenced to six years in prison following a two-week trial that found him guilty of 13 tax charges resulting in a tax loss of $256,000.
       The jury convicted Walter A. Thompson, 58, of two counts of filing false claims for refunds on his individual tax returns for 1996 and 1997, filing a false amended individual income tax return for 1998 and 10 counts of willfully failing to deduct, withhold, collect and pay over income and social security taxes from his employees at CENCAL Sales, an aviation flight bag manufacturing business.
       In addition to failing to withhold taxes from his employees' paychecks, the jury found that Thompson filed false amended individual returns for 1996, 1997 and 1998. Thompson had filed returns for these three years, reporting over $300,000 in total income for the three years and substantial taxes. The amended returns purported to reduce the amount of income and tax in each year to $0 and sought refunds of approximately $65,000 for 1996 and 1997.
• Man Pleads Guilty to False Return
       John Delo Nichols, 63, of Phoenix, pleaded guilty to willfully failing to make an income tax return in 1999, even though Nichols had sufficient income.
       Nichols apparently received more than $565,000 in 1999. According to the plea agreement, Nichols admitted he had received a substantial amount of money as a result of his activities promoting the "Freedom Church of Revelation" (FCR) during 1999. Nichols admitted some of the money came as the result of "seminars" conducted to promote FCR.  He faces up to one year in prison and a $25,000 fine.

THE ANSWER SPOT

• I'm behind on payroll taxes, and the IRS has visited my business. What should I do?
  The IRS acts very aggressively in payroll tax cases.  It's crucial that you act now to avoid both civil and criminal penalties.  Call today.
   

ASK THE EXPERTS

• I don't have the time hear to explain exactly why, but let me just tell you that I owe roughly $106,000 in back taxes. The IRS sent me a letter yesterday. I'm freaking out. I don't have that much money! What can I do?
       For most people, dealing with the Internal Revenue Service can be a positively frightening experience. And it should be. IRS agents have the power and ability to make your life extremely difficult - or even send you to prison.
       In fact, I've had clients sit in my office who were perspiring so heavily that the sweat ran down their brow like rivers. They were petrified! But I will tell you what I've told them: If you consult a qualified tax professional, you will quickly discover that, while an IRS problem isn't fun, it doesn't have to be a nightmare.
       Let's take a quick look at your case. While your current estimate of $106,000 in back taxes might be accurate, the first thing a qualified tax professional will do is analyze your tax returns with a magnifying glass to make sure you are not paying even a cent more than you owe.
       Once that is completed, you and your qualified tax professional will meet with an IRS agent. You will likely have two options:

1) Installment Agreement - Similar to how a mortgage or car payment works, you will pay a small amount over time that will eventually pay off your debt. Like a car payment, the amount is substantial but not enough to drastically change your lifestyle.
2) Offer in Compromise - If you do not have the resources to pay off the debt, you will be a likely candidate for an Offer in Compromise. Under this plan, you will present the government with a compromise offer that generally amounts to pennies on the dollar!

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