Tax news February 2007

Tax

Florida Rep. Proposes Interest Exclusion

Representative Cliff Stearns (R-FL) introduced H.R. 228, a bill designed to encourage savings among low and middle-income taxpayers and by allowing the exclusion of $400 of interest income from gross income ($800 for joint filers). It also would save tax preparers the trouble of tracking down information on small amounts of interest earned. E@lert estimates that this bill is only marginally more likely to pass than another bill recently authored by Rep. Stearns that would require the Ten Commandments to be displayed at the U.S. Capitol.
Practice

White Paper: 10 Reasons to Outsource Remote Data Protection

In today’s information-driven organizations, the costs to generate, keep available, manage and recover data are staggering. Many businesses today depend on 100 percent data availability to keep mission-critical functions operating. With the increasingly widespread reliance upon data, the costs of interrupted access to data or data losses could financially compromise an organization and, in some cases, leave it no room to recover. The price of downtime is just too steep. 
Practice Management

Clients Seek 2007's 'Dirty Dozen' Scams

The Internal Revenue Service’s release of its "Dirty Dozen", 12 of the most common – and blatant – tax scams offers tax preparers a most wanted list of don’ts and an opportunity to prepare themselves for customers seeking illegal means for lowering their tax liability.Firm owner Kent West, CPA/PFS, from Mooreland, Okla.
Tax

Obama Pushes Off-shore, Preparer Fee Limits

Senators Barack Obama (D-IL)), Norm Coleman (R-MN) and Carl Levin (D-MI) have introduced a bill designed to crack down on the use of offshore jurisdictions as tax havens and toughen penalties for abusive shelter transactions.The bill, S. 681, would establish a list of 34 "Offshore Secrecy Jurisdictions" and authorize the Treasury Department to impose sanctions on foreign jurisdictions found to be impeding the enforcement of U.S.
Tax

Tax Court Goes All in on Poker

The U.S. Tax Court was not bluffing when it ruled that tournament poker is gambling, not a sport, and thus not exempt from the Section 165(d) limitations of the tax code.
A&A

HSA Rollover Transition Deadline

The Internal Revenue Service and U.S. Treasury recently issued guidance regarding how employers can rollover their health Flexible Spending Arrangements (health FSAs) and Health Reimbursement Arrangements (HRAs) to Health Savings Accounts (HSAs) for their employees. The guidance provides a special transition rule for transfers for 2006. Under the transition rule, the amendment, election and transfer must take place by March 15, 2007.The Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, enacted Dec.
Tax

Kansas Looks to Cut Corporate Income Tax

The Kansas Legislature likely will include a cut in corporate income tax this session, but just how deep such a cut will be made remains uncertain, reports the Wichita Eagle.The House Taxation Committee is expected to receive two bills reducing the corporate income tax rate. Both houses of the Legislature and Gov.
Tax

GAO: IRS Needs Modernization Program Strategy

The Government Accounting Office (GAO) reported to Congress last week on the Internal Revenue Service’s (IRS) progress in implementing its ongoing Business Systems Modernization (BSM) program. While the IRS has made advances in improving its modernization management controls, the GAO report said, two key projects experienced significant cost overruns and “more work remains to be done to fully develop a long-term vision and strategy for completing the BSM program.” The administration has proposed increasing BSM funding by 43 percent for 2008.
Tax

PwC Ordered To Pay $10 Million For Negligence

Big Four firm PricewaterhouseCoopers has been hit with a judgment for negligent misrepresentation in a case relating to the firm's involvement in the collapse of Boston-based The Mariner Health Group. The firm was fined $10,000,004 but was found not guilty of fraud and racketeering.The case stems from a 1995 sale of nursing facilities to the Mariner Group by two Georgia businessmen and brothers, Samuel B. Kellett and Stiles A. Kellett Jr., who took the bulk of their proceeds in shares of Mariner. PwC was Mariner's accounting firm.
A&A

E-mails As Evidence: Business Owners Face New Procedures

Changes in federal employment law may change the way you and your employees store e-mails and e-messages, but Business & Legal Reports reports that one of the key changes facing small business owners this year is not a change in law at all.The U.S. Supreme Court established a set of new procedures dealing with electronic messages that may be needed as evidence in trials. Why is the procedural change important to you? One look at your computer inbox, electronic communication has exploded in recent years, leaving the postal carrier feeling a bit lonely these days.
Practice Management

KPMG Tax Shelter Woes Continue

Big Four firm KPMG has received more setbacks in the firm's quest to clear its name of wrongdoing in the much-publicized tax shelter fraud scandal. Judge T. John Ward of the Federal District Court for the Eastern District of Texas ruled recently that Blips, the name of one of the tax shelters created, marketed, and sold by KPMG and the subject of ongoing legislation against 16 former KPMG employees, is not a legitimate tax shelter.Blips stands for Bond-Linked Issue Premium Structure.
A&A

IRS Offers Free Small Business e-Newsletter

The IRS has started a news service, e-News for Small Businesses. Distributed every Wednesday, it brings timely, useful tax information right to your computer, including, but not limited to:Important, upcoming tax dates What’s new on the IRS Web site Reminders and tips to assist businesses with tax compliance IRS news releases and special IRS announcements E-News’ convenient format will put IRS tax information at your fingertips.
Tax

IRS Shuts Down Preparers Seeking Bogus Phone Refunds

IRS e-News reports that search warrants were carried out in seven cities this week by special agents from the Internal Revenue Service. According to affidavits filed in federal court, the IRS is seeking evidence from tax-preparation businesses suspected of preparing returns on behalf of clients requesting egregious amounts involving this year’s special telephone excise tax refund.IRS criminal investigators served search warrants at tax preparation businesses in Atlanta, Ga.; Dallas, Tyler and Athens, Texas; Riverside, Calif.; Miami, Fla.; and Baton Rouge, La.
A&A

Small Business Tax Breaks Included In Minimum Wage Bill

The U.S. House of Representatives agreed on Friday to attach $1.3 billion in tax breaks for small businesses to legislation that would raise the federal minimum wage from $5.15 to $7.25 an hour over two years.
Tax

DiCaprio To Star In Enron Movie

Oscar-nominated actor Leonardo DiCaprio will star and produce the story of Enron’s collapse according to Variety.Warner Bros. reportedly is finalizing the rights for “Conspiracy of Fools,” the book written by New York Times report Kurt Eichenwald.DiCaprio has been slotted to play a newcomer to the Houston-based energy company who exposes the greed and fraudulent accounting that plunged Enron into bankruptcy in 2001.
A&A

IRS Launches Virtual Exempt Organizations Workshop

There's a new learning alternative for tax practitioners, financial professionals, and others who have an interest in the tax matters relating to not-for-profit entities. Effective immediately, the Internal Revenue Service has begun offering its popular Exempt Organizations Workshop in an online format on the Internet. The five modules of the workshop, which take approximately three hours to complete, can be accessed at www.stayexempt.org .
Tax

CalCPA Provides Pro Bono Tax Services For Military

Members of the California Society of CPAs (CalCPA) are offering free tax counseling services to military personnel and their families at National Guard armories throughout the state. CalCPA members, in cooperation with the California National Guard's Operation Ready Families Program, have scheduled tax counseling sessions at seven locations throughout California.“This is the second year that we have worked with CalCPA and their members,” said Monica Malmberg, state benevolence coordinator of the Operation Ready Families Program.
A&A

Tips For Reporting Misclassified Employees

Most employers make every effort to meet their employment tax obligations. They take the care to review all factors affecting their relationship with their workers and classify their workers as employees or independent contractors accordingly.
Tax

Unpaid Trust Fund Taxes Are Serious Business

One category of taxes the IRS considers a priority is unpaid employment taxes. Unfortunately some businesses engage in “pyramiding” – repeatedly withholding trust fund taxes from employees but intentionally failing to send them to the IRS. Regardless of the reason a business has for not paying, federal law requires that employment taxes be paid to the government on time. Failure to do so may subject you to penalties and interest, collection actions, or seizure of assets.
Tax

Reminder: New Address For Form 1042 Filers

The IRS is reminding taxpayers that all forms in the 1042 series should now be mailed to Ogden Service Center, P.O. Box 409101, Ogden, UT 84409. These forms had been mailed to Philadelphia, PA in past years. The forms affected include: Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, and Form 1042-T, Annual Summary and Transmittal of Forms 1042-S.

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