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Tax Times Newsletter - October 2005

- Jay Schlichting

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

• Correcting expensive audit mistakes
  • Challenge: After my business was audited, I was told that I owed the IRS more than $20,000.
  • Solution: The Schlichting Group thoroughly reviewed the audit.
    Results: After The Schlichting Group correctly interpreted the tax laws, I only owed the IRS $433. From now on, I'm sending all of my company's tax information to The Schlichting Group for tax planning and preparation.
• Promoting the financial - and physical - health of our clients
  • Challenge: As a self-employed business owner, I struggled for years to build my business. As a result, all of my available funds were tied up in the company, and I neglected to pay my income taxes. I owed the IRS $96,000. I tried to resolve the problem on my own, but the stress began taking a toll on my health.
  • Solution: The Schlichting Group took on my case and began negotiations with the IRS.
  • Results: I was able to fully resolve my $96,000 debt for $700. Even more importantly, I got my life back.

TOP NEWS

• 'Survivor' Winner Indicted for Tax Evasion
       A federal grand jury in Rhode Island has charged Richard Hatch, the first winner of the reality television show Survivor, with a 10-count indictment that includes fraud and tax evasion. Prosecutors allege that Hatch tried to evade paying taxes on the $1,010,000 he won on the television show in 2000.
       According to the indictment, Hatch hired two separate accounting firms to do his 2000 taxes. One estimated that he owed $441,501 in taxes, the other $234,807. Hatch did not file either return. Instead, he filed a return that did not include the more than $1 million TV prize.
       The grand jury also alleges that Hatch used money earmarked as charitable contributions to pay for personal expenses. In fact, Hatch allegedly used for personal expenses a $10,000 prize he won for charity on the TV show The Weakest Link, the indictment alleges.
       If convicted, Hatch faces up to five years and a $250,000 fine on each count.
• Adult Store Owner Guilty of Tax Charge
       The owner of an adult bookstore in Fort Worth, Texas, has received three years of probation after pleading guilty to filing a false tax return.
       Marion Jack McElroy admitted that he filed a false tax return for calendar year 1999. McElroy pocked $15,600 in employment income from his adult bookstore and did not file the income on his personal income tax return for that year.
       McElroy's charge is part of a larger investigation into adult bookstores in the Dallas-Fort Worth area. In March 2005, a federal grand jury in Dallas charged several other people in a 23-count indictment on racketeering, obscenity and tax charges related to the operations of dozens of video arcades featuring obscene materials.
• Memphis Man Sentenced in Tax Scheme
       A Memphis, Tenn., man has been sentenced to 37 months in prison for his role in an illegal tax scheme.
       Stephen Brown, 44, pleaded guilty to one count of conspiracy to defraud the United States and two counts of filing false claims. According to statements during the plea hearing, Brown and his brother, Tommie Brown Jr., devised a scheme to help themselves and others obtain fraudulent income tax refunds by filing false 1999 tax returns.
       The Browns recruited individuals to file the false returns, then created false W-2s containing fraudulent wages and federal tax withholding amounts. In all, the Browns submitted a total of 14 tax returns, claiming $80,946.17 in fraudulent refunds from the government.
       "Taxpayers are reminded that filing a false tax return is a crime," stated IRS Special Agent in Charge Cleve Daniels. "There are individuals in our community promoting these types of tax schemes. Don't fall victim to them. Identifying and combating tax schemes is one of our highest priorities."

THE ANSWER SPOT

• I haven't filed tax returns for five years, and I have lost all my records. Can you help me?
  Yes.  We can get IRS information on your earnings and then estimate your expenses through your oral testimony and other methods.  Contact us immediately.  Don't delay any longer.
   

ASK THE EXPERTS

• I've made a number of bad decisions, and with those decisions came debt. To eradicate the debt, I recently sold a bunch of stock options and some real estate. I'm now debt-free. What I didn't consider were taxes. I owe roughly $46,000 in taxes, and I don't have that kind of money. I'm worried sick. What can I do?
       You're not alone. Many Americans do not think about taxes when considering their finances. It's a shame, but it happens to thousands of Americans every day. Taxes, like money on credit cards, are money owed.
       But don't fret. You're not in such a bad position. It's unlikely that the IRS will knock on your door tomorrow. They most likely won't seize your car or your home. If your child is in college, there's no reason to think you won't be able to pay tuition next year.
       What you need is a qualified tax professional who can help you deal with your tax debt. Once you've found a qualified tax professional in your area, he or she will analyze your tax returns to make sure that you indeed owe $46,000. After all, you might actually owe substantially less. Once your true tax debt is established, you'll hear your options.
       With more specific details, I would guess that you're in the best position to take advantage of the Installment Agreement. The IRS program allows taxpayers with debt to enter into an agreement in which they pay a set amount each month that will over time satisfy their tax debt. In budgeting for your household, this would hold a similar role as a car payment - a substantial but not debilitating payment every month. What's great about this program is that it allows taxpayers to get rid of IRS debt without having to cut an enormous check.
       You might be eligible for other options as well, including the Offer in Compromise program. Give me a call. I handle cases like yours every day. That's what I do - I'm an IRS Problem Solver. For a free, no-risk consultation, call my office at 1-877-590-2500.

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