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TOP NEWS

• Celebrity Tax Cases Prove No One Immune From IRS
       An increasingly aggressive Internal Revenue Service has been going after not only regular taxpayers, but also the celebrities we all know and love.
       We all know Lindsay Lohan.  Perhaps we should know her by her role in the 1998 Disney family comedy The Parent Trap. Or for her roles in the popular movies Freaky Friday and Mean Girls.  But we don’t, do we? We know her for her troubles with the law.
       In 2007, Lohan was involved in two driving under the influence incidents — which resulted in numerous courtroom visits (all dutiful documented by the Paparazzi) and three visits to substance abuse rehabilitation facilities.
       But, as it turns out, Lohan’s troubles don’t end there. Now, she’s in the crosshairs of the Internal Revenue Service.  Recently the IRS filed a lien against Lohan for $93,701.57 — the amount she owes in taxes from 2009.
       But I’m not trying to pick on Lohan. She’s just an example — one of several examples.
  In our celebrity-driven culture, many taxpayers believe America’s so-called Royal Family is above the law. But that isn’t true at all. In fact, the IRS has made something of a sport of going after celebrities with tax debt.
       Among other recent examples:
  • Actor and comedian Chris Tucker owes a whopping $11.5 million to the IRS. But he’s kept his signature good humor about the debt. In fact, Tucker made his IRS debt the butt of a joke during a recent Miami Beach standup performance.
  • Nicolas Cage has had a string of tax problems, including a tax lien for $3.8 million. He later blamed his financial advisor for the tax problems.
  • Action star Wesley Snipes, perhaps best known for starring in the Blade trilogy, became involved in the tax protestor movement, went on trial in Florida for failing to file income tax returns and is now in prison.
  • Robert Hatch, the winner of the first season of the CBS reality show Survivor, won $1 million. But now he says he’s broke, and the IRS says he owes $1.7 million in delinquent taxes.
  • Marc Anthony, the internationally known Latin singer who once was married to Jennifer Lopez, owed the IRS $3.4 million thanks in part to a financial advisor who pleaded guilty to tax charges.
  • If you owe money to the IRS, or if you are actively concealing income from the IRS, a list like this should help prove to you that no one is above the taxman’s eagle eye. Remember, too, that for every celebrity who faces IRS scrutiny, hundreds of average taxpayers — your colleagues, neighbors, family members — will as well.

       The IRS shows leniency for those who come forward. So maybe it’s a good time to visit a qualified tax professional.
   

• Fla. Man Says He’s From Heaven, Doesn’t Owe Income Taxes
       A Florida man came up with a creative reason for why he doesn’t need to pay taxes: He’s not a U.S. citizen, he told IRS agents. He’s a citizen of the Kingdom of Heaven!  But Russell P. Gentile’s purportedly heavenly residence didn’t save him a trip in front of a federal judge. Gentile, 44, of Melbourne, Fla., faces one count of obstructions of an IRS agent as well as well as tax charges related to his 2001 and 2002 returns, on which he claimed he had no taxable income.
       As the IRS investigated him, Gentile allegedly threatened tax agents with lawsuits and demanded that they remove his name and Social Security number from government computers.  “You have both violated the law by canvassing me outside your jurisdiction of the District of Columbia and exceeded the scope of your authority,” Gentile wrote in a letter to IRS investigators.  Gentile has pleaded not guilty to the charges.
   
• Man Cashed Six-Figure False Return
       An Arkansas man pleaded guilty in Miami to filing a false claim for a tax refund.  Philip Butcher, formerly a resident of Rogers, Ark., admitted that he filed a false 2008 individual income tax return which sought a fraudulent refund of $672,781.
       According to court documents, PMDD Services LLC, an Idaho-based tax preparation firm, prepared and filed the return. In exchange, Butcher agreed to pay 10 percent of any fraudulent tax refund he received to PMDD Services. Butcher received a fraudulent tax refund of $672,781, paid $67,278 to PMDD Services, and then filed an amended 2008 individual income tax return, claiming a tax refund of nearly $1.5 million.
       He faces up to five years in prison and a $250,000 fine.
   
• N.M. Contractor Charged With Evasion, Avoiding $241,132 in Taxes
       A New Mexico state contractor was charged with five counts of tax evasion.  Shelda Sutton-Mendoza, 59, of Albuquerque, N.M., was owner and sole shareholder of NYSNC Environmental (NYSNC), an environmental cleanup and testing service established in 2000 and incorporated in October 2003. NYSNC contracted primarily with the New Mexico Environmental Department, where Sutton-Mendoza was employed in the Petroleum Storage Bureau for more than six years before leaving to establish NYSNC.
       The indictment alleges that Sutton-Mendoza evaded approximately $241,132 in federal personal and corporate taxes during tax years 2003, 2004 and 2005 by intentionally filing false tax returns that misrepresented her personal and corporate taxable income.
       As an example of Sutton-Mendoza’s alleged tax evasion, according to the indictment, she filed a false tax return stating that she had taxable income of $0 in 2005 when in fact she had taxable income of $248,389 and thus evaded approximately $63,609 in federal taxes.
   
• KY. Man Gets 24 Months in Prison, Ordered to Pay $2.4 Million in Restitution
       A Boone Count, Ky., man who evaded paying his federal income tax liability from 1995 to 2001 was sentenced today to 24 months in prison.  He was also ordered to pay approximately $2.4 million in restitution to the Internal Revenue Service.  From 1995 to 2001, William C. Shehan Jr., 45, failed to file federal income tax forms and diverted money that should have been paid in taxes into private business ventures and trusts.
       The IRS found the trusts improper during a 2003 audit and determined that Shehan owed approximately $2.1 million, including interest and penalties in tax liability.  In May 2003, Shehan acknowledged that he owed the taxes.  In 2004, Shehan filed inaccurate information with the IRS in an attempt to settle his tax debt.  The inaccurate information concerned Shehan’s ability to pay the assessed income tax. Shehan failed to pay the acknowledged tax liability.  Under federal law, Shehan must serve at least 85 percent of his prison sentence and three years of supervised release.
   
• Law Firm Partner Gets One Year in Prison
       Leslie W. Jacobs, 67, of Gates Mills, Ohio, was sentenced to one year and one day in prison and ordered to pay a $10,000 fine after pleading guilty to making and subscribing to false personal income tax returns. According to court records, Jacobs, a partner in a Cleveland law firm, filed joint income tax return on which he inflated his law firm business expense deductions and, as a result, falsely understated his law firm partnership income by approximately $252,257.
   
• ASK THE EXPERTS::

  Question:    I really find it hard to believe that through the Offer in Compromise, which you’ve discussed in previous issues, the Internal Revenue Service would be willing to accept less than full payment from indebted taxpayers. Can you explain what the government’s motivation is here?

  Answer:  That’s a great question, because it goes to the heart of why some people think the Offer in Compromise is too good to be true. And it’s not.
       First, it’s important to understand what exactly the Offer in Compromise is. This is a program for taxpayers who owe a substantial amount of money to the IRS but who cannot pay this debt, even if given time to make payments. In the past, before the Offer in Compromise was available, these would be taxpayers who would figuratively be running from the IRS for years, paying nothing.
       The IRS discovered that being flexible in repayment amounts actually brought in more tax revenue than chasing down taxpayers day after day in an attempt to get them to pay their debts in full.  So the simple answer to your question is: practicality. The IRS’s job is to bring in tax revenue to fund the government, and the Offer in Compromise actually aids in that mission.
       At the same time, of course, it can be a program of great benefit to indebted taxpayers. If you qualify for the Offer in Compromise — and this is something a qualified tax professional can help you determine — you can reduce your tax debt by a significant amount and finally rid yourself of IRS problems.  Your first step should be to consult with a qualified tax professional, who will analyze your previous returns, determine exactly how much you owe the IRS, and then negotiate a settlement offer on your behalf.
       I solve IRS problems like yours every day. I’m an IRS Problem Solver. For a free, no-risk consultation, please call our office.....

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