| Q: | I setup an LLC last year for my business. I am a sole proprietor with no employees. The IRS sent me a penalty notice for $300 for failure to file Form 1065 (Partnership Return). Why? | |
| A: | LLCs for most small businesses
are great for protecting your personal assets and operating under
limited liability. When you applied for your LLC through the State
of Washington, you probably were told to send in the IRS Form SS-4
to request an Employer Identification Number (EIN) and marked the
box 1065 for a partnership. However, if you are a sole proprietor
with no employees and file a Schedule C or if you have rental properties
and report them on a Schedule E that attaches to your individual tax
return, you do not need an EIN.
In Washington, a community property state, a married couple can file a Schedule C, E or F with their 1040 for jointly owned property. No other return is necessary. If you don't need the EIN, write a short letter of explanation to the address on the penalty notice and ask them to remove your EIN from the 1065 classification. |
|
| Sincerely, NELSON & COMPANY, P.S. Certified Public Accountants |
|
Inside This Issue....
 FLORIDA CHIROPRACTOR
SENTENCED FOR INCOME TAX EVASION Steven Dolberg, a South Florida chiropractor,
has been sentenced to 12 months and one day in prison, to be followed
by three years of supervised release, after pleading guilty to one
count of tax evasion. Dolberg admitted that he evaded about $244,000
in income tax from 1991 to 1993 by using check-cashing businesses
in Broward County to conceal his business income.
• If you would like to receive future editions of
this publication in plain text, CLICK
HERE.
• If you do not wish to receive any
future editions of this publication, received duplicate copies or
if you have received this bulletin in error, please accept our apologies
and CLICK HERE.
We will promptly remove you from our subscription list.
Copies of this and previous versions
of the Tax Bulletin are available on our web site:
|
IRS Times
& Inquirer
NELSON & COMPANY, P.S. CERTIFIED PUBLIC ACCOUNTANTS 253-752-9522 | 1-800-669-0137 San
Jose, CA. Attorney Indicted On Tax Charges
A South Florida man accused of smuggling into the United States ozone-depleting refrigerant chemicals known as Freon and hiding the income in tax shelters has been convicted of tax evasion and money laundering. A federal grand jury has indicted Owen George Fiore, a 69-year-old attorney in San Jose, Calif., on four counts of income tax evasion. According to the indictment, which is a result of an inquiry by IRS Criminal Investigations, Fiore allegedly attempted to evade income taxes due for years 1996 to 1999 by underreporting his income during those years by a total of $626,623. If convicted, Fiore faces up to five years in prison and a $250,000 fine for each of the four counts. California
Woman Imprisoned For Tax Refund Scheme
A Terra Bella, Calif. woman was sentenced to 46 months in prison, to be followed by three years of supervised release, for her part in an illegal tax refund scheme. Elvia Ruiz, 37, was the organizer and leader of a scheme intended to defraud the IRS. In court, Ruiz admitted that she filed false tax returns to obtain fraudulent tax refunds. She then used post office boxes and some peoples' home addresses to receive those false refund checks. Ruiz told the court that the tax filings were made out in the names of fictitious people who in fact had no federal income tax withholdings. IRS QUESTION CORNER... Question: I'm in deep trouble. My finances are a wreck. I've filed tax returns every year, but as a self-employed professional in the struggling technology industry, I've allowed myself to get into the hole big time with the IRS. I owe $120,000 in back taxes for the years 2000 to 2002. My 2003 return will only add to that amount, I suspect. What can I do? I don't want to go to jail. Answer: Although I certainly understand your nervousness, you should know that you are not going to go to jail. Trust me. Since you've filed your tax returns every year, you haven't broken any laws. People get behind in their bills, and the IRS knows this. You have options. Since it sounds like you will not be able to pay back the $120,000 you owe in taxes, your best strategy will be to consult with a qualified tax professional who can help you file an Offer in Compromise. Believe it or not, since the IRS knows that chasing people across the country is no way to collect back taxes, the agency provides the Offer in Compromise program as a way for delinquent taxpayers to settle up and move on. Oftentimes, an offer can reduce your tax debt by pennies on the dollar. You and your tax professional should first analyze your 2000, 2001 and 2002 tax returns to make sure you are not paying the IRS anymore than you should. After all, why give Uncle Sam a tip? Once that's done, you can enter into negotiations with the IRS. For many of clients, an Offer in Compromise means they can reduce their tax debt, see the light at the end of the tunnel, and never have to change their lifestyle. There's a good chance you may have similar results. Once you've made the offer, the IRS will look at your assets and determine how much of your debt you can pay. A qualified tax professional can often, as I said, reduce that debt to pennies on the dollar. I solve problems such as yours every day. That's what I do: I'm an IRS Problem Solver. I encourage you to call our office at 253-752-9522 or send me an E-mail at Firm@DNelsonCPAs.com for a free, no-risk consultation. There IS a solution for your IRS problem. Call us today!
|