Whether you’d like to avoid the IRS, contact the IRS, settle with the IRS or just want to refer a friend, relative or client, we would love to hear from you.

Tax Times Newsletter - November 2007

- Jay Schlichting

We help real people with real tax issues - successfully.

TOP NEWS

• Broward Sheriff Guilty of Fraud, Tax Evasion
       Ken Jenne, the sheriff of Broward County, Fla., and one of the most politically powerful men in the Sunshine State, has pleaded guilty to mail fraud and income tax evasion. He has also resigned as Broward’s top lawman.
       Court papers filed in United States District Court in Ft. Lauderdale describe Jenne’s scheme to enrich himself by obtaining money from two vendors who were doing business with the Broward County Sheriff’s Office. The information also describes Jenne’s subsequent efforts to perpetuate and conceal the scheme by, among things, making false and incomplete statements in a public filing and to investigators.
       In a statement, U.S. Attorney Acosta said: “Through acts of fraud and deceit, (Jenne) used his position as sheriff to unjustly enrich himself, and for that criminal act, he now faces federal imprisonment.”  Jenne faces more than 9 years in prison.
• Man Imprisoned for Tax Evasion Scheme
       A South Dakota man was sentenced to 30 months in prison for his role in selling and promoting a complicated scheme designed to conceal assets from the IRS.
       While he was employed as an agent for Aegis Corporation of Chicago, Kerwin Miller, 52, of Mitchell, S.D., marketed, sold and promoted the illegal tax scheme, which involved placing an individual’s assets and income in management companies and trusts in an effort to reduce the income tax liability.
       In court, Miller acknowledged that he had received an official IRS notice which advised that the use of these trusts to evade taxes was illegal. Although he said the notice provided a “red flag,” Miller continued to promote the use of the trusts to avoid income taxes.
• Texas Tax Protestor Convicted of Evasion
       A federal jury in Corpus Christi, Texas, found a tax protestor guilty of four counts of tax evasion from 2000 to 2004.
       The investigation of Dale F. Chastain began with an anonymous letter to IRS claiming the chemical company employee bragged to co-workers that he did not pay income taxes.
       Chastain did not file income tax returns for the years 2000 to 2003 and fraudulently claimed an “exempt” status to his employer. In fact, Chastain was a tax protestor. Beginning in 1999, Chastain sent hundreds of letters to tax officials and members of Congress frivolously claiming not to be subject to United States tax laws on a variety of grounds, including being a “nonresident alien” for tax purposes.
       Chastain faces up to five years in prison, a fine of up to $100,000 and up to three years of supervised release on each count of conviction.
• Temp. Employee Firm Owner Guilty of Tax Evasion
       Bruce Alexander Brown, the former owner of an employee-leasing business, Excell Personnel, Inc., pleaded guilty to one count of willful failure to account for and pay more than $300,000 in payroll taxes owed.
       Brown of Dallas, charged with various tax offenses in an 11-count indictment, acknowledged in his plea that he has outstanding obligations to the IRS for taxes owed by Excell Personnel as well as for his personal income taxes.
       According to court records, from 1996 to 2003, Brown’s company “leased” employees to companies that did not want to directly hire their own workers. The customers did not pay the employees that Excell provided, but rather paid a fee to Excell that included the gross wages that would be owed to the employees for their labor, plus an administrative fee. Excell, in turn, paid the employees their wages, making deductions for the required withholding of income taxes.
       Brown admitted he deliberately chose not to pay the IRS the required withholding taxes, Social Security taxes and Medicare taxes. During the fourth quarter of 2002, Brown failed to pay $297,384 in federal income taxes.  He faces up to five years in prison and a $250,000 fine.
   
• NEBRASKA COUPLE CAUGHT EVADING TAXES
       Andrew J. Olmer, 44, and Susan E. Olmer, 43, a married couple in Leigh, Neb., were sentenced on federal tax charges. Andrew Olmer was sentenced for tax evasion for the years the 1999 to 2002. Susan Olmer was sentenced for failure to file federal tax returns for the same tax years.
       Andrew Olmer received 10 months in prison and a fine of $3,000. After his release from prison, he will serve three years of supervised release. He was also ordered to pay $38,197 in restitution.
       Susan Olmer received five years of probation. She will serve six months under home confinement and pay a $2,000 fine. She was ordered to pay $25,870 in restitution.
       The Olmers failed to file a tax return since 1998. Each held jobs as wage earners. From 1999 and 2000, Andrew Olmer accumulated income taxes totaling $38,197, and Susan Olmer accumulated $25,870 in income taxes. Each of them filed false W-4s with their employers claiming exemption from federal and state taxes.
       The government’s “efforts are directed at taxpayers who willfully and intentionally violate their known legal duty of voluntarily filing income tax returns and paying the correct amount of income tax,” said IRS Special Agent in Charge James D. Vickery.
• SLOT MACHINE BIZ YIELDS TAX EVASION PLEA FOR BUSINESSMAN
       Martin Jeff Dorf, 53, of Huber Heights, Ohio, pleaded guilty to one count of attempted income tax evasion. From 2001 to 2004, Dorf claimed his income totaled $56,876 when, in fact, he earned $574,147 during that time. The tax loss in this case was $155,000.
       According to a statement of facts filed with his plea, Dorf owned and operated several business, including Slot Machines USA and Diversity Products. He bought, refurbished and sold casino-style slot machines at flea markets, over the Internet, and at retail establishments in the Cincinnati and Dayton, Ohio, areas. When he filed income tax returns, he reported only the income from his pension payments and not the income he earned from his business activities.
• CASINO OWNER PLEADS GUILTY TO TAX EVASION
       Rene Medina, the owner of Lucky Chances Casino in Colma, Calif., pleaded guilty to three counts of tax evasion. Medina, 62, pleaded guilty to evading income taxes by paying more than $1 million in personal expenses from Lucky Chances’ business account. The payments were written off as ordinary and necessary business expenses. Medina has agreed to pay $591,083 in taxes owed and faces up to five years in prison and a $250,000 fine.
• PENN. INMATE FILES $1 MILLION IN FRAUDULENT INCOME TAX RETURNS
       Kevin William Small, 44, was sentenced to 150 months in prison for filing false returns. While an inmate in Pennsylvania, Small filed tax returns for years 2003, 2004 and 2005. He claimed tax refunds due to him of $5,027 for 2002, $603,107 for 2003, and $415,769 for 2004. The total loss to the United States would have been more than $1 million had he received the fraudulent refunds.
   

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:  For various reasons, I owe a substantial amount in back taxes. I’ve heard you talk about the Offer in Compromise program. How does it work, and how do I know if I am eligible to use it?

Answer:  The Offer in Compromise program has a specific purpose for a specific taxpayer. To understand how it works and why it’s used, it can be helpful to understand the history.
     For years, IRS agents spent countless man hours trying to track down deadbeat taxpayers and force them to cough up what they owe. Some taxpayers avoided the IRS because they didn’t want to pay. Others avoided the tax-collecting agency because they couldn’t pay.
     That second group is important. The IRS discovered that being more flexible can be a more effective strategy in some cases, particularly with taxpayers who want to settle their tax debt but lack the financial wherewithal to do so.
     Enter the Offer in Compromise program. With this program, taxpayers who amassed substantial tax debt but do not, and will not, have the financial resources to settle can make a compromise offer that will settle their debt once and for all.
     If you’re among these taxpayers, the first thing you should do is consult a qualified tax professional. He or she will go over your previous returns with a magnifying glass to ensure that you do not pay the IRS even a penny more than you owe.
     Once your tax figure has been established, you and your tax professional will make an offer to the IRS to settle your debt. Oftentimes, this amounts to significantly less than the amount owed! Truly, it is that simple.
     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