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Tax Times Newsletter - July 2006

- 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

• Court Bars Tax Evasion Scheme
       A federal court in California permanently barred a San Diego man from promoting a tax evasion scheme. Christopher M. Hansen promotes a number of tax-fraud schemes using the business names Family Guardian and Sovereignty Education and Defense Ministry.  The civil injunction order bans Hansen from making fraudulent statements in connection with his scheme, including the false statement that United States citizens are not subject to federal income taxes.
       Hansen's scheme is known as a "zero return" scam and is one of the "Dirty Dozen" scams that the IRS warns taxpayers against using.
       The court's order requires Hansen to remove from his websites all advertising for his fraudulent tax programs and to post the permanent injunction order on the websites. Hansen must also provide the government the names, addresses, e-mail addresses, phone numbers and social security numbers of those persons who have purchased his products.
• Tax Fraud Promoter Gets 54 Months
       A tax fraud promoter has been sentenced to 54 months in prison following an aggressive investigation by federal authorities.
       R. Scot Stokes, of Henderson, Nev., pleaded guilty to conspiring to defraud the United States and conspiring to commit mail and wire fraud. In addition to 54 months in prison, Stokes must serve three years of supervised release.
       Stokes admitted that he and his co-conspirators filed more than 2,000 false and fraudulent federal income and trust tax returns, creating a loss of federal tax revenue of between $7 million and $10 million. In addition, Stokes admitted to participating in fraudulent investment schemes that caused customers to lose between $2.5 million and $5 million.
       "People who promote tax fraud are cheating all law-abiding taxpayers," said Assistant Attorney General Eileen J. O'Connor in a statement. "The Department of Justice is determined to root out tax fraud schemes and prosecute those who promote and use them."
• Pro Surfer Pleads Guilty to Making False Statement on Income Tax Return
       Former pro surfer Vincent Sennen Garcia, better known as "Sunny" Garcia on the surf circuit, could catch some of the biggest waves known to man. But there's one thing he couldn't catch: a break from the IRS.
       Garcia, a pro surfer from 1996 to 2001, pleaded guilty in federal court in San Diego to a felony count of making false statements on his federal income tax return.
       According to court papers, Garcia received income from various sources, including prize money from surfing competitions. As part of his guilty plea, Garcia admitted that in October 2001 he knowingly and willfully filed a U.S. Individual Tax Return that failed to report approximately $161,450 in cash and traveler's checks he received in the year 2000 as prize money from professional surfing competitions at locations around the world, including Fiji, Australia, South Africa, France, Spain, Portugal and Brazil.
       Garcia also admitted that, in federal tax returns he filed for the years 1996, 1997, 1998, 1999 and 2001, he intentionally failed to report another $255,635 in prize money.  The former wave-rider faces up to three years in prison and a fine of up to $100,000.

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 the talk about the Offer in Compromise program. But I don't think it's for me, since I do still have significant assets (cars, house, etc.). Trouble is, I have a big tax bill and kids in college. I can't pay the taxman and keep my kids in school. What options do I have?
       While you might be correct in saying that you are not eligible for the Offer in Compromise program, don't be too quick to rule it out. The Offer in Compromise program is great for those who meet its requirements.
       What you need to do is first consult a qualified tax professional first. He or she will go through your previous tax returns with a fine-tooth comb, making sure that you are not volunteering to pay the government even a penny more than you should. Now, let's assume for a moment you have significant tax debt and you do not qualify for the Offer in Compromise program. Don't be worried. You still have options.
       Your most notable option is an Installment Agreement. Believe it or not, this program shows that, contrary to popular wisdom, the IRS can be flexible. Agents have realized after long years of chasing deadbeat taxpayers that flexibility often works best. And the Installment Agreement is a good example of this. By entering into such an agreement, your qualified tax professional and the IRS will negotiate a monthly a payment amount that you will make over time to pay down your debt. This payment is meant to eradicate your debt gradually without significantly crimping your lifestyle - or, as in your case, pull your kids out of college. Think of it as a monthly car payment; it's significant but not overburdening.
       The Installment Agreement allows taxpayers such as you an opportunity to pay down their debt in a reasonable way. You don't have to sell off everything you own. You just have to buckle down and make a small monthly payment.
       Call me today. I handle IRS problems every day. 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