NGUYEN KINH DOANH

There are some tax law changes for the 2006 tax year. If you are concerned about whether these changes will affect you, you can get the details by going to the Internal Revenue Service (IRS) website.

Most consumers are always looking for ways to cut their tax bill. Unfortunately, con artists are always looking for filers who are eager to find tax breaks. Be on guard for tax scams. Scam artists make money by leading you to believe that you don’t have to pay taxes.

Please be advised that if you don’t pay the correct amount of taxes owed, you will be the one responsible for paying any penalty and interest incurred. If the deductions sound too good to be true, probably they are untrue.

I would like to point out the tax scams we need to avoid as follows:

NO TAXES WITHHELD FROM YOUR WAGES. Illegal schemes are being promoted that instructed employers not to withhold federal income tax or employment taxes from wages paid to their employees. These schemes are based on an incorrect interpretation of tax laws. Employers are required by law to withhold employment taxes from their employees. Employers who do not comply with the employment tax laws may be subject to criminal and civil sanctions for willfully failing to pay employment taxes.

PHONY GRANTS AND PRIZES. Many taxpayers are being contacted by phone or e-mail by people who claim they have won government grants and/ or prizes. This is a ploy intended to get your bank accounts or telling you to pay the income tax due in order to receive it.

Do not believe it. If you really have won a prize, you may need to make an estimated tax payment to cover the taxes that will be due at the end of the year. However, the payment would go to the IRS, not to the private promoters.

AFRICANS – AMERICANS GET A SPECIAL TAX REFUND. Thousands of African – Americans have been misled by people offering to file for tax credits or refunds related to slavery reparations. In the tax law, there is no such provision. Some unscrupulous and wily promoters have encouraged clients to pay them to prepare a claim for this refund. Promoters of this tax scheme have been convicted and imprisoned. In addition, taxpayers could face a $500 penalty for filing such claims if they do not withdraw the claim.

Related claims include claiming an illegal credit by misusing Form 2439 “Notice to Shareholder of Undistributed Long-Term Capital Gains.” The slavery reparations scam was at the top of the IRS 2002 “Dirty Dozen” list and although claims have fallen considerably, the IRS continues to see activity in this area.

BIG REFUNDS…FOR A FEE. These scam artists approach you wanting to “borrow” your Social Security Number or give you a phony W-2 so it appears that you qualify for a big refund. They may offer to spit the refund with you. Keep in mind that anyone who promises you a bigger refund without knowing your tax situation is most likely misleading you. Furthermore, the IRS always checks the accuracy of Form W-2 with original filing from the employer. Never sign a tax refund without looking it over to make sure it is honest and correct.

TRUST MISUSE. Promoters tell taxpayers to hide their money in trusts. Some of these do not sheter taxpayers from taxes and the IRS promises that it is investigating more than 200 such schemes. Talk to a qualified attorney about setting up a trust fund.

FRIVOLOUS ARGUMENTS. If you are arguing that the Sixth Amendment was never ratified or that wages are not incomes, you may want to review the IRS’ rebuttal, “The Truth About Frivolous Arguments.” It is available at www.irs.gov.

RETURN PREPARER FRAUD. Bad tax preparers set a double trap for consumers: Taxpayers pay them for lousy advice and then wind up paying the IRS again. Watch out for anyone who charges on a percentage of wahat your return will be. Ask for and check credentials.

ABUSE OF CHARITABLE ORGANIZATIONS. The IRS says more people are trying to shield assets by moving them to tax-exempt organizations while still retaining control of them. One example the agency gave is contributing a historic façade easement to a tax-exempt conservation organization. If you make large contributions to nonprofit organizations like churches, temples, Goodwill…be sure to get a receipt.

“NO GAIN” DEDUCTIONS. If you deduct your entire adjusted gross income (AGI) on Schedule A, you have no taxable income. While it is true that there are cases AGI is deducted completely on Schedule A, be sure to back up with receipts. If it is the story, ask yourself: Where do I have money to live?

CREDIT COUNSELING AGENCIES. Taxpayers should be careful with credit counseling organizations that claim they can fix credit ratings, push debt payment agreements or charge high fees, monthly service charges or mandatory “contributions” that may add to debt.

The IRS Tax Exempt and Government Entities Division has made auditing credit counseling organizations a priority. The reason is some of these tax-exempt organizations are charging debtors large fees, while providing little or no counseling.

OFFSHORE TRANSACTIONS. The IRS has cracked down on taxpayers who try to evade taxes by hiding money in offshore accounts.

CORPORATION SOLE. Since September 2004, the Justice Department has obtained six injunctions against promoters of this scheme and filed complaints against 11 others. Participants apply for incorporation under the pretext of being a “bishop” or “overseer” of a one-person, phony religious organization or society with the idea that this entitles the individual to exemption from federal income taxes as a nonprofit, religious organization.

Corporation Sole statutes, when used as intended, enable religious leaders to separate themselves legally from the control and ownership of church assets. However, the rules have been twisted at seminars where taxpayers are charged fees of $1,000 or more and incorrectly told that Corporation Sole laws provide a “legal” way to escape paying federal income taxes, child support and other personal debts.

ZERO RETURN, Promoters instruct taxpayers to enter all zeros on their federal income tax filings. In a twist on this scheme, filers enter zero income, report their withholding and then write “nunc pro func” – Latin for “now for then” – on the return.

IDENTITY THEFT. It pays to be choosy when it comes to disclosing personal information. Identity thieves have used stolen personal data to access financial accounts, run up charges on credit cards and apply for new loans. The IRS is aware of several identity theft scams involving taxes. In one case, fraudsters sent bank customers fictitious correspondence and IRS forms in an attempt to trick them into disclosing their personal financial data. In another, abusive tax preparers used clients’ Social Security numbers and other information to file false tax returns without clients’ knowledge.

Sometimes scammers pose as the IRS itself. Last year the IRS shut down a scheme in which perpetrators used e-mail to announce to unsuspecting taxpayers that they were “under audit” and could set matters right by divulging sensitive financial information on an official-looking Web site. The IRS, taxpayers should note, does not use e-mail to contact them about issues related to their account. You can call the IRS 1-800-829-1040 to confirm whether the contact is authentic.

Those 14 scams I listed above are from the IRS, FBI, Better Business Bureau and from my own 27 years of experiences as a tax preparer. If you are so exhausted with taxes, go for some entertainment. Excellent websites for music I would like to recommend www.saigongate.com and www.daothinh.perso.cegetel.net.

MARCH 2006***** NGUYEN KINH DOANH

CELLULAR (213)361-7929

E-MAIL: doanh1@sbcglobal.net

WEBSITE: www.geocities.com/nguyenkinhdoanh1/pix