September 2007 - Tax Times Newsletter

Tax Times Newsletter - September 2007
	Whether you would like to avoid the IRS, contact the IRS, settle with the IRS, or just want to refer a friend, relative or client, I would be happy to provide you or that special person you refer a no-obligation confidential consultation to explain every option available to them to solve their IRS problem. - Jay Schlichting
*We help real people with real tax issues - successfully.* TOP NEWS Learn a Lesson From Former Taxman’s Troubles Former taxman first got caught being a corrupt revenue agent. Now, he’s spending jail time for trying to cheat the same IRS that once gave him the authority to audit taxpayers. Beware: If they caught him, they can catch you. Cheating on your taxes? Maybe thinking about it? Let the tale of former taxman Ronald C. Heidel be a lesson to you. In the mid-’70s, Heidel went to work for the Internal Revenue Service. He was the dreaded auditor, the G-man who showed up at your door with bad news: You’ve been audited. But as it turned out, Heidel wasn’t the average auditor. According to court records, Heidel was a double IRS agent, so to speak. In 1983, he was convicted on two charges of accepting monetary compensation from a company during his tenure as an IRS agent and filing a false corporate tax return on behalf of a company he had audited during his service with the IRS. So what does a disgraced IRS agent do? Buy a strip club, of course. In March 1999, Heidel purchased the Gentlemen’s Gold Club, a restaurant and bar in Baltimore County that also featured entertainment by exotic dancers. That’s when Heidel began to play fast and loose with the books — and American tax dollars. Federal prosecutors alleged Heidel made false statements to the government on his 2001 tax return, declaring significantly less income than he actually received. And how did Heidel allegedly hide the income? With cash. Unlike other business, strip clubs operates almost entirely as cash enterprises. Heidel’s was no exception. From May 3, 1999, and Dec. 27, 2001, Heidel deposited $1.467 million in cash derived in part from the operations of the club into various personal bank accounts rather than the company’s bank accounts. Many of these cash deposits were between $7,000 and $9,000, just below the $10,000 limit required to alert the IRS. And so since the IRS didn’t officially know about the cash deposits, Heidel didn’t volunteer the information on his and his wife’s joint tax return. But the law finally caught up with Heidel, a 60-year-old who now lives in Sanibel, Fla., on the Sunshine State’s Gulf Coast. He was sentenced to 18 months in prison to be followed by one year of supervised release. Heidel was also fined $30,000 and ordered to pay $135,236 in restitution to the IRS. For taxpayers thinking about fudging their tax returns or for those who are actively participating in a scheme to defraud the IRS, Heidel’s story should be a cautionary tale. They got him — a guy who knows the internal operations and procedures of the IRS. If you’re cheating on your taxes, they’ll eventually get you too. Comtrol Exec Gets 43 Months The former president of Comtrol Corporation of Maple Grove, Minn., was sentenced to 43 months in prison for conspiracy and tax evasion. Lee D. Stagni, 53, of Plymouth, Minn., helped Comtrol’s owner and CEO, Robert Beale, evade $2.5 million in federal and state taxes and more than $280,000 of his own taxes. Stagni also was ordered to pay a $60,000 fine and cooperate with the Internal Revenue Service in paying approximately $200,000 in taxes owed. Following a 12-day trial, Stagni was convicted of one count of conspiring to defraud the United States and five counts of aiding and abetting tax evasion. According to the evidence presented during that trial, Stagni assisted Comtrol’s owner and CEO in a scheme to pay the CEO his salary through a sham company. Beale, the owner and CEO of Comtrol Corporation, remains a fugitive. Nuclear Engineer Sentenced for Evasion A nuclear engineer will spend the next 15 months in prison after pleading guilty to fraud and tax evasion. Mark M. Kaushansky, 56, of Monroeville, Penn., was also fined $20,000 and ordered to serve three years of supervised release after completing his sentence. Kaushansky had previously pleaded guilty to obstructing the Internal Revenue Service in the collection of the revenues and eight counts of personal and corporate tax evasion. The court had determined the total tax loss to the United States to be $63,000. Charges against Kaushansky’s co-defendant, former Russian Federation Minister of Atomic Energy Evgeniy O. Adamov, are still pending. Electronics Dealer Evaded Taxes on $1.2m in Income A federal jury found Neil Stierhoff, of Providence, R.I., guilty of tax evasion for failing to pay taxes on about $1.2 million in income that he earned from 1999 to 2002. During a week-long trial, prosecutors presented evidence that Stierhoff ran a business selling electronic testing equipment. He sold the equipment by mail, in person, and through eBay, the Internet auction site. From 1999 to 2002, Stierhoff earned more than $1.2 million but failed to file income tax returns or pay taxes on that income. Stierhoff attempted to conceal his income by doing business under several aliases. An IRS revenue agent testified that Stierhoff owed more than $450,000 in federal taxes for the years 1999 through 2002. Former IRS Agent, Strip Club Owner Gets 18 Months Former IRS agent Ronald C. Heidel, 60, of Sanibel, Fla., received 18 months in prison to be followed by one year of supervised release for making false statements on his and his wife’s joint tax return for the year 2001. Heidel was also ordered to pay a fine of $30,000 and $135,236 in restitution to the IRS. According to court records, Heidel worked as a revenue agent for the IRS from the mid-1970s to early 1979. He was convicted in 1983 on two charges of accepting monetary compensation from a company during his tenure as an IRS agent and filing a false corporate tax return on behalf of a company he had audited during his service with the IRS. In March 1999, Heidel purchased the Gentlemen’s Gold Club, a restaurant and bar in Baltimore County that also featured entertainment by exotic dancers. As president of the club, Heidel received the cash generated by door admissions charges and sales of food and drinks at the club on a daily basis. Between May 3, 1999, and Dec. 27, 2001, Heidel deposited $1.467 million in cash derived in part from the operations of the club into various personal bank accounts rather than the company’s bank accounts. Many of these cash deposits were between $7,000 and $9,000. This income was not reported to the IRS. Tax Scheme Promoter Convicted in New York A federal jury convicted A. Thomas Thorson, 67, of New York, for conspiracy to defraud the U.S. Treasury Department and aiding the filing of false income tax returns in connection with a scheme to sell millions in fraudulent income tax deductions. “People who cheat the IRS are cheating their friends, neighbors and fellow citizens," said United States Attorney Rod J. Rosenstein. Testimony at the three-week trial showed Thorson and his co-conspirators persuaded wealthy individuals to invest in a partnership called Heritage Memorial Park Associates (HMPA). By becoming partners, the investors were told, they would receive a tax deduction and resulting tax benefit that would be substantially larger than their investment. In fact, the HMPA partnership returns fraudulently inflated the deductions that the partners could claim on their individual income tax returns by more than $8 million. Relying on the false partnership returns, the investors filed individual income tax returns for 1996 through 1998 that claimed fraudulently inflated deductions for charitable contributions. Thorson faces up to five years in prison and a fine of up to $250,000. Dental Lab Owners Indicted for Evasion David S. Park and Dae Hee Kwon, the owners of a Dallas-area dental lab, have been charged with eight counts of filing or aiding and abetting the filing of false tax returns. According to the indictment, David S. Park and Dae Hee Kwon each owned 50 percent of Amtech Dental Lab Corporation, which provided lab and technical services for dentists. From 2001 through 2004, some of the checks Amtech received for services were not deposited into Amtech’s operating bank account but were instead cashed. Park and Kwon then split the cash and used it for personal expenses. About $331,372 was not reported on Amtech’s corporate income tax returns. If convicted, each faces up to 24 years in prison and a $2 million fine. Iowa Tailor Sent to Prison for Evading $51,295 in Taxes Joseph Kim, 51, of Urbandale, Iowa, was sentenced to five months in prison for tax evasion. Kim pleaded guilty to income tax evasion for the year 2001. Kim is the sole shareholder of Kim’s Tailor, which is located at Valley West Mall. In imposing the sentence, the court accepted the total tax deficiency to be $51,295. Software Exec Pleads Guilty to Tax Evasion Former Atlas Software chief executive officer Pradeep Kumar Walia pleaded guilty in federal court to a charge of tax evasion. In 1999 and 2000, Walia instructed his accounting and bookkeeping staff to misclassify reimbursements of personal expenses as if they were business expenses in order to evade his income tax obligations on such funds. He faces up five years in prison and a fine of up to $250,000. THANK YOU! THANK YOU!! Thanks to YOU, the word is spreading. Thanks to our clients and friends who graciously referred us to their friends, clients and relatives last month! We enjoy building our business based on the positive comments and referrals from people just like you. We just couldn’t do it without you! ASK THE EXPERTS Question: So a colleague told me about the Offer in Compromise program. Why would the IRS be willing to allow taxpayers to settle for less than they owe, and how do I determine if I’m eligible for the program? Answer: The answer to your first question is simple: After spending years chasing deadbeat taxpayers, going door to door, office to office, city to city, the IRS realized that the hard-knuckled approach isn’t always the most effective. Another effective solution, the IRS discovered, includes compromise and negotiation. With the Offer in Compromise program, the IRS can bring people with tax debt to the table and negotiate a payment amount that will settle their debt once and for all. Oftentimes, as your colleague may have told you, this can amount to pennies on the dollar. For taxpayers whose income has diminished significantly since they racked up their tax debt, the Offer in Compromise can be an ideal way to cancel out their arrears once and for all. In my experience with previous clients, an Offer in Compromise can offer a financial reward as well as an emotional one: Imagine how you’ll feel once you realize you never have to think about your IRS debt again. Your second question is a little more complicated. I recommend you consult a qualified tax professional as soon as possible. He or she will analyze your previous tax returns and your current financial situation to determine exactly what you owe and whether your current financial situation qualifies you to participate in the Offer in Compromise program. An IRS agent will take into account your current income and possessions such as expensive cars when determining eligibility. However, even if you do not qualify for this particular program, there are a number of options available to taxpayers with tax debt. We deal with problems like yours every day. We are IRS Problem Solvers. For a free, no-risk consultation, please call our office at 1-877-590-2500.
Tax Times Newsletter is an online Publication by The Schlichting Group Specialists in IRS Representation and Tax Preparation