Tax news February 2006

Tax

Accounting Students Giving Free Tax Help

Senior accounting students at Wartburg College in Waverly, Iowa, are helping low- and middle-income taxpayers to prepare their federal and state income taxes, free, through the Voluntary Income Tax Assistance (VITA) program co-sponsored by schools and other organizations throughout the country and the Internal Revenue Service (IRS). VITA volunteers at Wartburg must have completed the first income tax course offered in the Fall, The Wartburg Trumpet says.
Tax

NSA Testifies Before IRS Oversight Board

Joseph L. Santoro, a member of the National Society of Accountants (NSA), testified before the Internal Revenue Service (IRS) Oversight Board last week regarding the customer service needs of taxpayers.
A&A

Family Limited Partnerships Being Probed by the IRS

Family limited partnerships (FLPs) are the target of increased scrutiny by the Internal Revenue Service (IRS). These vehicles are apparently a popular technique for reducing estate and gift taxes. The IRS is increasing the number of audits it performs, focusing on those taxpayers with incomes of $100,000 or greater, according to the Wall Street Journal.The IRS is concerned FLPs are being set up for other than legitimate business purposes. Audit interviews are focusing on how these partnerships are set up and run, according to the Wall Street Journal.
Tax

States Increasing Tax Burden on Residents

Wondering how your state stacks up when it comes to the tax burden placed on its residents? New data released by the U.S.
Tax

White House Pushes Tax Cuts in Face of Other Advice

The Treasury reports that tax proposals pressed by the White House will cost the government billions in revenue, according to the Washington Post. The White House wants to make permanent the tax breaks for dividends and capital gains that expire at year end, 2008. These tax breaks would cost the government $7.74 billion in 2008 and $37.02 billion in 2009, according to its “Blue Book” description of revenue proposals in the president’s fiscal 2007 budget.
Tax

Be on the Lookout For: IRS Names “Dirty Dozen” for 2006

Two new schemes have joined the Internal Revenue Service’s (IRS’) list of most noxious tax scams this filing season. Several usual suspects also remain on the list, which was released earlier this week.
Tax

Senior Marriage Penalty

“It’s galling that they have a marriage penalty for seniors, when they’ve addressed it for everyone else,” Lonell Spencer, a 77-year-old retiree from Arcadia, Connecticut, told the Hartford Courant.The penalty he’s referring to is the tax on Social Security income, which applies to every dollar of income over $32,000 for married couples, compared to $25,000 for a single taxpayer.
Technology

What’s New for TaxTools 2006?

CFS Tax Software Tools 2005 lineup of six programs has been updated this year with updates to two existing applications and added six new applications. CFS Tax Software Tools offered these applications in 2005.
Technology

13 States Mandate E-filing, Tax Administrators Group Hopes More Join

Thirteen states now mandate that tax preparers electronically file their clients’ individual tax returns. More such mandates may be required, if the Internal Revenue Service (IRS) is to ever realize its vision of widespread e-filing, argues the Federation of Tax Administrators (FTA).Last week, when reports surfaced that the IRS is five years behind its goal of having 80 percent of all returns electronically filed this year, FTA President Harley Duncan said that his organization has concluded that the e-filing growth that has occurred is primarily due to the state mandates.
Technology

Vertex Property Tax Reference Joins CCH State Tax Offerings

CCH, a Wolters Kluwer business, announced on Monday that the company had acquired the Property Tax Reference from Vertex Incorporated. The product will immediately be rebranded CCH Property Tax Reference as it joins CCH’s authoritative and popular line of state tax online, print and CD-ROM products for tax, accounting and compliance professionals.“CCH is committed to providing professionals with the most authoritative, comprehensive research resources available,” Angela Darrow, CCH product manager, said in a prepared statement.
Tax

IRS Taking New Steps to Improve Questionable Refund Program

The Internal Revenue Service (IRS) announced today that new steps, including the notification of taxpayers when refunds are frozen and the more timely release of frozen refunds not warranting further review, have been undertaken to improve the Questionable Refund Program (QRP) and reduce the number of taxpayers subject to frozen refunds.Advertisement
Practice

Circular 230 Changes Proposed

The Treasury Department and the Internal Revenue Service (IRS) last week proposed amending Treasury Department Circular 230, governing tax professionals practicing before the IRS. The proposed amendments are the result of a thorough review of the extensive public comments received in response to an advanced notice of proposed rulemaking relating to the Office of Professional Responsibility in December 2002. A hearing on the proposed regulations is scheduled for Wednesday, June 21, 2006.
Technology

Comparing Tax Prep Software

The use of computerized tax preparation software has risen with the number of taxpayers filing their returns electronically. According to the Internal Revenue Service (IRS), some 68.5 million individual returns were filed electronically in 2005. That is more than half of all returns filed and 11.3 percent more than in 2004. Of those, 17 million were prepared on home computers, up 17 percent in 2005, according to the Associated Press. Lois Forsythe, owner of MMP Computers, told the Associated Press, “It’s so much easier.
Tax

Mark Your Calendar: Location-Based Tax Incentives

Location, location, location. This familiar mantra of the retail and real estate industries now applies to tax incentives. The numerous valuable tax incentive programs available to businesses based upon their location, will be the topic of a live, 150-minute audio conference presented by CCH, a Wolters Kluwer company, on at 2 p.m.
Technology

Cell Phone Users May be Eligible for Federal Excise Tax Refund

A federal appeals court in Washington D.C., in December, became the third appeals court to void the federal excise tax on telephone services which are billed only by time, and not by time and distance, USAToday reports. The excise tax, originally levied to support the Spanish-American War, was last amended in 1965, when the statutory definition of long distance charges became “time and distance”, according to technology-reports.com. The government has argued that the intent of the law is to tax all commercial long distance.
Technology

GoDirect Campaign Aimed at Baby Boomers

A nationwide telephone survey of 1,400 adults sponsored by The U.S. Department of the Treasury and the Federal Reserve Banks, part of their join GoDirect initiative, revealed that, contrary to widely held perceptions, baby boomers are less inclined to use direct deposit than today’s seniors, a U.S. Treasury press release reports.
Tax

Online Tax-Paying Options

In an effort to better connect with taxpayers, the Internal Revenue Service (IRS) has added online payment options to the usual ways for us to pay our taxes. Paying your taxes online integrates with their current electronic filing program. In 2004, more than 68 million taxpayers filed electronically, according to Bankrate.com. Most people file electronically because they are due refunds, but now the IRS is offering ways to pay for the rest of us who might pay writing a check, according to Bankrate.com. Any of these options will surely be welcome come Monday, April 17th.
Tax

Think Personal E-Mails are No Big Deal? Think Again

We all do it. Using the company's e-mail system to send jokes, “talk” with friends or even comment on the boss–it's considered just a small part of an ordinary work day.But consider this: How would you like those e-mails to be made public? An anti-spam software maker has done just that, posting 515,000 e-mail messages from Enron employees at EnronEmail.com. The e-mails were released to the public in 2003 by the Federal Energy Regulatory Commission, which collected them during its Enron investigation. The company, InBoxer Inc.
Tax

IFAC Issues Exposure Draft for Non-Exchange Revenue

The International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants (IFAC) this week issued an exposure draft (ED) on the financial reporting of revenue from non-exchange transactions, including taxes and transfers.

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