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Show The Paper That Dares To Take Continued from page 7 A Stand AT April 15, 1976 The Utah Independent Page 11 " stood by while his dental practice disinte- - grated and his wifes health decidedly deteriorated. To this day Dr. Foster maintains that he has done nothing wrong. "I made some honest errors, he says. "And I was willing to pay the money the government said I owed. But they closed my office and shut off my credit so I couldnt pay. Now I really dont care what happens. I live from day to day. And I say, to hell with it. Whether Dr. Fosters case will ever come to trial is still a matter of conjecture. And "Even if the judge rules against me, at least it will be over. They've ruined me." learned nothing more of his case until the following April. Thats when the doctor received a bill for $41,000, along with a statement to sign saying that he agreed with the Governments assessment. Says the dentist: "About $7,500 was in undeclared income. It was merely an oversight on my part I added incorrectly. But the remainder some $34,000 came from deductions which, to the best of my knowledge when I declared them, were legitimate. At first Dr. Foster balked at signing the governments tax assessment. But after threats about making some thinly-veile- d bringing fraud charges against the dentist, the agent got both Dr. Foster and his wife to sign. It was one of many mistakes the doctor dentist offered to secure a qualified appraisal to support his deductions. The auditing agent merely indicated that securing such an appraisal would be "a waste of time. The I.R.S. agent had refused to allow fees of $1,356 paid to a local factoring service by Dr. Foster, the amount charged as a discount to factor the dentists accounts in 1969 and 1970. This, despite the fact that the factoring service had a record of Dr. Fosters transactions. . The I.R.S. agent had refused to allow in handling his income taxes. And knowing what they are will help many other dentists from making the same mistakes in the future. Among Dr. Fosters errors: Handling his own books. Though the dentist employed an accountant, he maintained his own books and did his own math. Indeed the only income adjustment the I.R.S. made on the dentists 1968, 1969 and 1970 . would make. At about the same time the agent sprang yet another surprise on Dr. Foster announcing that he now intended to audit his 1971 return. That procedure took whether the Internal Revenue Service will another six months. At the end of that time let such a potentially damaging and the agent returned with another assesscase see the inside of a ment. This one adjusted the dentists income precedent-settin- g tax returns resulted from Dr. Fosters faulty addition. To a dentist, an accountant is as necessary as a dental assistant. for 1971 upwards by $5,000. This time Dr. Foster refused to sign. time will tell. But this much is certain: Dr. Fosters enThen, without warning, Dr. Foster stopped treaties that he has "done nothing wrong receiving his Medicaid checks. Instead, he may be true in the sense that he did not discovered, his money had been seized by the I.R.S. Medicaid was paying the government intentionally set out to defraud the Government. But Dr. Foster did many things wrong for services that Dr. Foster had rendered. In dentists 1968 and 1970 returns, and asked all, $20,000 that was owed to the dentist by for the dentists records for those years, he Medicaid went instead to the I.R.S. At the provided them. Says Dr. Foster today: "I had same time, Dr. Fosters bank, harassed by the same agent, cut off his credit. And Dr. nothing to hide. Dr. Foster got his first inkling that he was Foster, faced with the prospect of laying out in trouble in June, 1971. The auditing agent money for equipment that he needed and called him into his office and promptly took unable to borrow, had to stop performing him upstairs to the I.R.S. frauds division, not such procedures as prosthetics for Medicaid that Dr. Foster knew it at first. The man patients. In other words, the I.R.S. had both who interviewed him stuck pretty much to appropriated the income the doctor. had algeneral (questions his name, age and occu- ready earned and effectively cut off his pation. Finally he advised the doctor of his most lucrative source of future income. The doctor was boxed in. At about this time, Dr. Foster finally managed to take his case to the next I.R.S. courtroom is equally unanswerable. Only The I.R.S. cut off his income level the "conference Failing to retain a lawyer at the first sign of an I.R.S. audit. Rule 1 when dealing with the I.R.S. is this: Dont say anything or sign anything without the presence of an attorney. At this late date there is some dispute over whether a single I.R.S. agent had the right to audit the tax returns of one individual for three and four years at one time. Had a lawyer been present at the outset, chances are that only the return for one year would have been audited and possibly with a far happier outcome. Failing to bring his attorney to the I.R.S. office. This mistake naturally follows the previous one (not having an attorney). The dentist should have brought an attorney along when summoned to the I.R.S. district office. By going alone, Dr. Foster became a vulnerable target. Signing the assessment. Under thceatof being charged with fraud, Dr. Foster agreed to sign a piece of paper stating that he, in fact, owed the government the amount that the I.R.S. agent claimed he owed. That put hi m in a hole from which he was never able to extricate himself. The rule here: sign noth- level. Here he sought to gain a reversal on some of the de ductions the I.R.S. had disallowed. Among those deductions: The I.R.S. agent had disallowed almost all the depreciation claimed by the dentist for his office and business equipment for the rights. Dr. Foster was then dismissed without being accused of anything. He years 1969 to 1971. This, even though the and cut off his credit. The doctor was boxed in. ing. Know your adversary Suppose the Government says you owe more tax money, and you cant or wont pay up. Just what can the I.R.S. do about it? Quite a bit, and if you're ever locked in a money hassle with the Revenue Service you should know what weapons it has at its command. The first step in the isprocedure for collecting unpaid taxes is the notice suance of a bill to the taxpayer, known as a and demand, which also calls for payment from the recipient in response within 10 days. As a matter of policy, however, the I.R.S. norit moves to mally sends three such notices before the enforcement stage. y After the final period has expired, a to the statutory lien is automatically attached is reproperty of those from whom payment with the quired. Most delinquent taxpayers settle Service before any confiscatory steps are necessary and permitted, but a small percentage are faced each year with the possibility of levies seizures of property to satisfy a tax 10-da- such levy could be an attachment of pay or professional fees, which would, of course, be subject to the same limitations as garnishment by private businesses. Also, the I.R.S. could claim such assets as bank accounts and securities to obtain the funds due. Certain types of property, however, are exempt from levy, such as wearing apparel, provisions, fuel and books or tools used in a trade or One form take-hom- of e profession. And income from Social Security, Medicare and welfare are, according to the I.R.S., subject to levies only "in flagrant and aggravated cases of refusal to pay." When the I.R.S. claims more in taxes than can be obtained from property easily convertible to cash, other types of property can also be seized. Even the family home can be taken. Sales of property seized for nonpayment of taxes are held after the taxpayers involved have received 10 days warning, during which the property can be redeemed. The proceeds from these sales are applied first to the expenses of the seizure and sale and then to the payment of the tax bill. If anything remains afterward, other creditors receive the opportunity to obtain what they are owed before any money is passed on to the taxpayer. These harsh weapons are not often used. But, as the case of Dr. Gordon Foster proves, the Revenue Service does have them in its arsenal. - Failing to understand why he was chosen for an audit. Dr. Fosters audit was apparently not dictated by the Internal Reye-nu- e Service. Rather, this was an instance of one agent who, on his own, thought he smelled a rat. The rat in question was appar- ently Dr. Fosters huge Medicaid billings, a matter of public record. Since he was such an obvious target for audit, Dr. Fosters returns should have been scrupulously accurate. With a federal judge now about to rule on whether he has the right to sue the Internal Revenue Service for harassment, and with some $50,000 in unpaid taxes still hanging over his head, the story of Dr. Foster is obviously not yet ended. This magazine will report developments as they unfold. DM ooooooooooooooooo As we were going to press, the Court ruled that Dr. Foster may not sue the Internal Revenue Service, but he may sue the individual agent who conducted the examination. For his purfmses, this is just as good, since the Federal Government will be called upon to defend the actions of its agent, and can be held liable for any damages. Dental Management will report the outcome of the suit, and reveal the true identity of "Dr. Foster at that time.-E- d. |