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Tax Times Newsletter - December 2005

- Jay Schlichting

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

• Paying off a multi-year tax bill
  • Challenge: Over a period of 11 years, I wracked up a tax bill of about $650,000.
  • Solution: The Schlichting Group took on my case. They kept the IRS at bay and started negotiations.
  • Results: The IRS accepted an offer in compromise. They took the equity in my home, which was $93,000, and absolved me of any remaining debts.
• Kissing expensive IRS penalties goodbye
  • Challenge: Because of financial circumstances beyond my control, my software development company was forced to make delinquent payroll tax deposits for two quarters. The IRS assessed penalties of almost $17,000.
  • Solution: The Schlichting Group presented my case before the IRS.
  • Results: Thanks to their convincing arguments and tough negotiations, The Schlichting Group was successful at getting the penalties removed.

TOP NEWS

• Isley Brother Convicted on Tax Charges
       Singer-songwriter Ronald Isley has been convicted on five counts of tax evasion and one count of willful failure to file a tax return for concealing millions of dollars of income from the IRS.
       During a three-week trial that included nearly 20 witnesses, federal prosecutors showed that Isley, 64, received millions of dollars in cash and spent his money on a lavish lifestyle. From 1997 to 2002, evidence showed, Isley evaded more than $3 million in income taxes.
       Isley evaded taxes in a variety of ways, including using for his own benefit royalty checks that were issued to other Isley Brothers-related entities and persons, including Okelly Isley, Isley's deceased brother. Prosecutors argued to the jury that Isley created a vast web of bank accounts and shell companies that he used to conceal his income.  He faces up to 26 years in federal prison.
• Taco Bell Baron Pleads Guilty to Tax Charges
       The owner of 52 Taco Bell franchises in Southern California and Arizona has pleaded guilty to fraud and tax charges.
       Karl James pleaded guilty to a two-count information charging him with bankruptcy fraud and tax evasion as part of a scheme to fraudulently divert millions of dollars of business assets for his personal use.
       According to the plea agreement, from 1998 to 2001, James fraudulently diverted for his own personal use more than $3 million of his companies' income and assets, including beverage and food supplier rebate checks, and expensive residences that were purchased with company funds. James concealed the scheme by opening approximately 19 bank accounts, including "off book" company accounts and nominee accounts in the names of his father and a California limited liability company that his father controlled. In all, James evaded over $1.1 million in income taxes from 1998 to 2001.
       James then hid the money and assets when he filed for corporate and personal bankruptcy, concealing roughly $2 million of corporate income and assets from the United States Bankruptcy Court and creditors.
• Slot Machine Mechanic Sentenced To Prison For Evasion
       A man who serviced slot machines in casinos in the Reno, Nevada, area has been sentenced to 11 months in federal prison for evading more than $40,000 in federal income taxes over a three-year period.
       Paul James Arny was also ordered to pay $42,144 in restitution to the IRS and perform 100 hours of community work service. He pleaded guilty in April to one count of evasion for the year 2000; however, the plea covers evasion of income taxes from 1999 to 2001.
       According to the plea, Arny admitted that during calendar years 1999 to 2001, he worked as a slot route mechanic for United Coin Machine Company and was responsible for maintaining, repairing and filling their slot machines at various sites throughout the Reno area. During that same period, Arny earned additional income that he failed to report on his federal individual income tax return. That income was derived from money he earned working part-time as a slot route mechanic for another company; money he earned from remodeling homes; and money he embezzled from United Coin Machine Company through various methods.
       In all, Arny failed to report $159,218 for all three years. The total tax loss to the government is $42,144.

THE ANSWER SPOT

• I don't mind paying the taxes, but don't want to pay the penalties and interest. Can we get rid of that?
  Yes! Under certain circumstances, the IRS will abate penalties and the interest on the penalties.  To do this, you must establish "reasonable cause."  We can help determine if you qualify.
   

ASK THE EXPERTS

•  I've heard about a program that the IRS offers in which taxpayers can break up their tax debt into smaller payments. I find this absolutely hard to believe. Is it true?
       As hard as it may be to believe, it's actually true. The program is known as an Installment Agreement.
       Here's how it works: For those qualified, the IRS allows taxpayers with large debts to pay off their outstanding balance in installments. This allows someone to take care of their tax debt without, say, having to pull their son or daughter out of college. And that's the point.
       Despite the horror stories about how taxmen are out to get you, IRS agents can actually be very accommodating in some ways. The Installment Agreement is one of those ways. By agreeing to pay the government a set amount every month, you can eliminate your tax debt over time. You can think of this payment as a mortgage or car payment - something substantial but not so insurmountable every month that you have to change your lifestyle drastically.
       If you need a program like this, the first thing you should do is consult a qualified tax professional. He or she will first analyze your previous filings to ensure that you are not paying the government even a penny more than you owe. Once he or she has reviewed your filings, you can get a better idea of what program is best for you. It's possible that the Installment Agreement might be your best bet.
       But remember, it's not your only option. If you have tax debt that you absolutely cannot pay off, you might qualify for the Offer in Compromise program. This allows taxpayers to settle their tax debt for pennies on the dollar. Realizing that chasing deadbeat taxpayers is ineffective, the IRS now offers a number of programs to encourage tax compliance.
       I deal with IRS problems 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