Tax news February 2006

Tax

Patriot’s Day Delays Tax Day in Six States

Taxpayers in Maine, Maryland, Massachusetts, New Hampshire, New York, Vermont and the District of Columbia will have until April 18, 2006 to file returns and pay any taxes due, according to formal guidance issued Monday as Notice 2006-23 by the Internal Revenue Service (IRS). The extension is being given because April 17 is Patriot’s Day, a state holiday, in Massachusetts and Maine. If the filing and payment deadlines fall on a Saturday, Sunday or legal holiday they are extended to the next business day, by law.
A&A

Study: Northeast Tax Codes Unfriendly to Businesses

A new study pinpoints the Northeastern states as having some of the worst business tax systems in the country.New York has earned the dubious distinction of having the most unfriendly business tax climate in the country.
Community News

H&R Block Owes More Taxes

H&R Block underestimated its own “state effective income tax rate” in previous quarters, all the way back to 2004, and has been found to owe another $32 million in back taxes. The company has cut its full-year 2006 earnings in response to this charge.
Tax

Energy Credit Guidance for Home Owners & Builders

The Treasury Department and Internal Revenue Service (IRS) have issued guidance on the certification the homeowners may rely on when claiming credits for purchases that make their home more energy efficient and the energy efficient homes credit available to eligible contractors constructing qualified new energy efficient homes, including manufactured homes constructed in accordance with the Federal Manufactured Homes Construction and Safety Standards.
Tax

Tax Woes Don’t Stop for Hurricane Victims

Getting answers to the many tax questions that the Gulf hurricanes have wrought is frustrating. Questions about evacuation expenses, property losses deductions, and gains resulting from insurance settlements, are still needing answers for many taxpayers in the disaster areas.
Community News

Hawaii’s Tax Benefits & Headaches

The Hawaii Tax Department is still working on its final reports for 2004 and 2005, but they show that the latest estimate of tax credits claimed in 2002 was $123 million and $143 million in 2003. Tax credits are available for a range of expenses and investments, covering the purchase of an infant car seat, to the making a movie.
Tax

Window Closing for 2002 Nonfilers to Claim Refunds

The Internal Revenue Service (IRS) announced on Tuesday that it is holding $2 billion in unclaimed refunds owed to 1.7 million individual taxpayers who didn’t file a federal tax return in 2002. This money will become the property of the U.S.
Tax

Hurricane Victims Get More Time to Claim Losses, File Taxes

The Internal Revenue Service (IRS) is postponing taxpayer filing and payment deadlines to August 28, 2006, for affected taxpayers hit hardest by Hurricane Katrina.
A&A

Sole Proprietors Likely to Be Focus of IRS Audits

The Internal Revenue Service (IRS) released data last week based on random audits of 46,000 tax returns for 2001 that showed a tax gap of about $354 billion a year. IRS Commissioner Mark Everson said, according to Bloomberg.com, that most of the noncompliance occurs in businesses where there isn’t automatic reporting of information to the IRS, such as sole proprietors who report income and deductions on Schedule C.
A&A

Growth Predicted for Long-Term Care Market

The market for long-term care (LTC) is expected to grow at an annual rate of 10.5 percent through 2009, with revenues expected to reach $394 billion, according to a new study, The Long Term Care Market: Nursing Homes, Home Care, Hospice Care, and Assisted Living, from Kalorama Information, a division of MarketResearch.com.
Technology

Tax Prep Open Source Code Effort Reports Promising Start

A fledgling Internet-based tax preparation platform offering free software to tax preparers and an open source code to that software from which programmers could theoretically build other technologies key to the tax prep process, has attracted a handful of practitioner members and is discussing potential development opportunities with at least one of the tax prep industry’s top five software companies, according to the site’s founder, a CPA.“Providing an open source code format has never been done in tax preparation, but it has been done successfully in many other areas.
Tax

California Sues H&R Block over “Instant” Tax Refunds

California’s Attorney General, Bill Lockyer, filed a suit in San Francisco last week alleging that H&R Block and participating lenders have deceived the tax preparation company’s clients by failing to disclose the true costs of “Instant” refund anticipation loans. The loans are short-term advances of federal income tax refunds, minus fees and interest, that give customers immediate access to their money. The lender who provides the advances – HSBC Bank - collects the borrower’s actual Internal Revenue Service (IRS) refund check as the loan repayment.
Tax

Tax Consequences for Record Jackpot Winner

The holder of a single ticket, sold in Lincoln, Nebraska, is the winner of the nation’s largest lottery jackpot ($365 million), according to the Associated Press.
Tax

EU Opposes US Tax Breaks

The World Trade Organization (WTO) appellate court sided with the European Union (EU) in giving Washington 90 days to bring its tax break legislation into line. The WTO’s highest court affirmed previous judgments in denying this appeal by the United States, according to the Chicago Tribune. The Los Angeles Times reported that the high court gave the EU permission to reimpose sanctions on some $4 billion in U.S. exports.Peter Mandelson, European Union (EU) trade commissioner, told the Chicago Tribune, “The U.S.
Tax

IRS Simplifies Filing for Tax Extensions

The Internal Revenue Service (IRS) on Thursday announced changes simplifying the process of filing for extensions for businesses, partnerships and trusts. Approval of Forms 7004, 4768 and 8892 is automatic, so the IRS will issues a response only if the request is denied. It is important to note that an extension of the time to file is NOT an extension of time to pay.
Tax

Automatic Reporting & Withholding Leads to Less Cheating

The Internal Revenue Service (IRS) on Tuesday announced updated tax gap estimates for the 2001 tax year indicating a difference of $345 billion between what taxpayers should have paid and the amount actually paid.
Tax

Ohio Society of CPAs Launches Operation CPA

The Ohio Society of CPAs, in cooperation with the Ohio National Guard, on Tuesday launched Operation CPA, providing free tax preparation services from the Ohio Society of CPAs member volunteers to members of the Ohio Guard and reserve service members deployed outside Ohio.“The Ohio Society of CPAs and its members want to show support for the men and women in our armed services who are risking their lives for our country,” said Clarke Price, president and CEO of the Ohio Society.
Tax

AIG Reaches Settlement While Investigation of Execs Continues

The Securities and Exchange Commission (SEC), last week simultaneously announced with the Office of the Attorney General of New York State and The U.S. Department of Justice, (DOJ), the filing and settlement of charges that American International Group, Inc. (AIG) committed securities fraud. The agreement also settles charges against the company by New York and The DOJ of claims related to bid rigging and practices involving workers’ compensation funds.
Tax

Policing Resume Padding

The state of Washington is considering a bill that would impose a $1,000 fine on those claiming, in writing, to have an academic degree they didn’t possess. Also, failing to disclose that a listed degree came from an unaccredited institution will cause a fine. The bill passed the Washington House last week and now goes to the Senate, according to the Seattle Post-Intelligencer. These degrees are offered to people based on their general life experiences. The bills aim to close legal loopholes concerning “diploma mills” operating within the state and in foreign countries.
Community News

Tax Revenue Lost Over Building Permit Delays

Increasing the efficiency of the building permit process could add millions of dollars in tax revenues and significantly bolster the economic development of communities.

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