Tax news December 2006

Tax

The New York Yankees Receive $26 Million Luxury Tax Bill

New York Yankees have clinched their ninth straight American League East title, and for their troubles have received a $26 million luxury tax bill from Commissioner Bud Selig, according to the Associated Press. Their tax payment is due in the commissioner’s office by Jan. 31. Their four-year total now comes to $97.75 million.The tax threshold also increased $8.5 million, to $136.5 million this year and only New York and Boston exceeded the threshold, according to the New York Times. Boston will pay only $497,549, while the exact figure for the Yankees is $26,009,039.
Tax

Cafeteria Plans Need Updating

Employers are running out of time to amend and update the old, outdated Section 125 Cafeteria Plans before the end of the year, reports Core Documents, Inc., the nation's primary source for Section 125 Cafeteria, HSA and HRA plan documents. This includes: Section 125 Premium Only Plans, Health Flexible Spending Accounts and Dependent Care Assistance FSA plans. Employers risk making mistakes by not using the many updates in the tax code, revenue rulings and the laws affecting the administration of the tax-free benefit plans.
Tax

IRS Begins Implementing Extenders Legislation

The Internal Revenue Service (IRS) has announced new guidelines helping tax filers in 2007 claim extended deductions and other tax advantages included in the Tax Relief and Health Care Act of 2006.
Tax

Moratorium Lifted on Suspended Cash Balance Conversion Applications

The Internal Revenue Service (IRS) has lifted a moratorium on determination letter applications for conversions from traditional defined benefit pension plans to so-called cash balance plans.
Tax

Hawaiian Tax Review Commission Submits Final Report

The Hawaiian 2005-2007 Tax Review Commission has finished its review of its tax structure and issued its final report to the Legislature. The Hawaii Reporter reports some 23 recommendations were made, covering individuals, businesses, nonprofits, and tax professionals.
Tax

States Must Confront Huge Retiree Obligations

Soaring health care costs and low investment returns in pension funds are forcing state and local governments to make drastic changes to retiree health care benefits and to lengthen vesting periods for new workers. As of December 15, the Government Accounting Standards Board (GASB), requires government entities to record Other Post-employment Benefits (OPEB) as accrued liabilities under statements 43 and 45.
Tax

Holiday Bonuses: The Good, the Bad and the Fruitcake

While giving holiday bonuses to hard-working employees sounds like a simple enough proposition, it’s anything but.“Holiday bonuses are very tricky,” said Kate Zabriskie, founder of Business Training Works. “The wrong bonus sends the wrong message.”She must be right because employees are full of tales of holiday woe. Valerie Bent regularly worked 55-hour weeks at a Los Angeles-area investor relations firm, which gave bonuses equal to about 40 percent of an employee’s annual salary.
Tax

What Gives with Giving?

America is a generous country and during the holiday season even more people think about giving to charity. A study from Network for Good, who process online charitable donations of over one million non-profit groups, reports on the over $100 million donated to 20,000 groups through the site since November 2001. Findings show that: The average age of online donors is 38 Offline donors tend to be over 60 years old The most generous online donors are from New York, Connecticut and
Technology

Many New Home Buyers Face Tax Regulations

The 2005 real estate boom, coupled with low loan rates, produced a large number of first- time home buyers who will deal with new tax regulations when filling out their 2006 taxes. Thousands of filers who will deal with deductions can use the Internal Revenue Service (IRS) Publication 530, which is available for the 2006 tax season and provides specific guidelines to determine eligibility for homeowner deductions. For many new homeowners, the move from standard tax deductions to itemized deductions using the standard
Tax

IRS Offers Tips for Year-End Charitable Donations

‘Tis the season of gift-giving.
Community News

Accounting Firms Receive Tax Breaks, Incentive Grants to Relocate

Accounting firms that are considering moving from their existing locations are getting a lot of help from local governments who want to retain or attract professional firms to their communities. Whitinger Properties, a long established accounting firm in Muncie, Indiana, received $120,890 in tax breaks this week from the Muncie City Council on a new $2.3 million office building in Ontario Place, the StarPress.com reports.
Tax

Avoiding the Hated AMT

The alternative minimum tax (AMT) was designed to catch high-income tax dodgers, but that doesn't mean it won't snag you.Sidestepping the AMT takes some education–it's confusing–but get a handle on it now. You've only got a few weeks to develop an exit strategy.The AMT tax brackets are not indexed for inflation like the regular income structure, so more middle-income taxpayers are ensnared every year, especially those with many children who live in high-tax states. The AMT is expected to affect roughly 3.6 million taxpayers this year, bringing in $23.9 billion to the U.S.
Tax

Interest Rates to Remain Unchanged for First Quarter of 2007

The Internal Revenue Service (IRS) has announced there will be no change in interest rates for the calendar quarter beginning January 1, 2007. The interest rates announced in http://www.irs.gov/pub/irs-drop/rr-06-63.pdf Revenue Procedure 2006-63 are: 8 percent for overpayments, 7 percent in the case of a corporation 8 percent for underpayments 10 percent for large corporate underpayments 5.5 percent for the portion of a corporate overpayment exceeding $10,000.
A&A

Few Firms Have a Regulatory Response Team Despite Anti-fraud Programs

In the heightened regulatory environment of the post-Enron business world, a majority of companies have instituted formal anti-fraud programs and controls, according to an online poll released earlier this month by Deloitte Financial Advisory Services LLP (Deloitte FAS).
Tax

Congress' Last Hours Extend Tax Breaks, Creates Iraq Accounting Oversight Office

Residents of states that do not levy income tax, college students and their families, teachers and many high-tech companies, are among the beneficiaries of the tax and trade bill passed by the House on Friday and the Senate on Saturday morning at 4 a.m. Earlier in the week, the Senate extended the term of the Office of the Special Inspector General for Iraq Reconstruction which was set up by Congress to provide oversight of the Iraq Relief and Reconstruction Fund and all obligations, expenditures, and revenues associated with reconstruction and rehabilitation activities in Iraq.
Tax

IRS Headquarters Reopen; Submission Procedures Return to Normal

The first wave of employees returned to the Internal Revenue Service (IRS) Headquarters Building last week, nearly six months after extensive flooding closed the building at 1111 Constitution Avenue NW.
Technology

Free File Begins 5th Year Without Refund Anticipation Loans

Free File, an innovative partnership between the Internal Revenue Service (IRS) and the Free File Alliance, is beginning its fifth year in January with an agreement removing ancillary offerings, including Refund Anticipation Loans (RALs), from the program. For 2007, 70 percent of all taxpayers will be eligible for Free File.
Tax

Congress May Extend Sales Tax Deduction This Week

If the House of Representatives and the Senate do not extend the sales tax deduction during the final days of the lame duck session, residents of the seven states that do not levy personal income tax, who itemize their deductions, will see an increase in federal tax owed for 2006.
Tax

IRS Issues New Guidelines for Charitable Payroll Deductions

The Internal Revenue Service (IRS) on Friday announced new guidelines for taxpayers to follow to substantiate donations to charities made by payroll deductions. Notice 2006-110 explains how a taxpayer who makes charitable contributions by payroll deductions can meet the new recordkeeping requirements. The recently enacted Pension Protection Act of 2006 changed the recordkeeping requirements for taxpayers claiming deductions for cash contributions to charities, including contributions made by payroll deductions.
Technology

Survey Says: E-Filing Not Without New Costs

With the first year of mandatory tax return filing complete, a survey shows what the accounting industry suspected – affected companies had to make some investments to comply with the new IRS mandate.“There is no question that the first year of mandated corporate e-filing was a success, but as we predicted, it did require an additional investment in staff, technology, and time to transition to the new system,” said Michael Dolan, director of IRS policies and dispute resolution in the Washington National Tax practice of KPMG.