Tax news April 2007

Tax

AICPA Opposes Tax Base Expansion

The American Institute of Certified Public Accountants (AICPA) has submitted comments to Congress opposing proposals made by the Joint Tax Committee that would expand the self-employment tax base as part of an effort to close the tax gap. The AICPA said in its cover letter, “We believe the JCT proposals are fundamentally wrong in that any abuse with the current system is not related to the SECA/FICA tax base and therefore such tax base should not be expanded to combat the tax gap. The tax gap represents an underpayment by taxpayers who are not complying with existing law.
Education & Careers

Extended Deadlines for Va. Tech Community

The Internal Revenue Service granted a six-month tax filing and payment extension to those affected by the shootings at Virginia Tech, in Blacksburg, Va. This relief applies to the victims, their families, emergency responders and university students and employees. “Taxes are the last thing the Virginia Tech family should be worried about at this time,” IRS Commissioner Mark W. Everson said. “Our hearts go out to the people affected by this tragic event.”The relief announced today allows taxpayers affected by the events at Virginia Tech to have until Oct.
A&A

S Corp Still Learning Experience

According to the Journal of Accountancy, life with the popular S Corporation structure can still be a learning experience. By some accounts, the advent of S corporations in the late 1950s was the most notable revolution in American tax policy since the Revolution. And it’s easy to see why: S corporation owners can protect themselves against personal liability and have their income and gains taxed only once, as opposed to the double exposure of C corporations and their owners at the corporate level and again on individual returns.
Tax

IRS Grants More Deadline Extensions

Taxpayers living in the path of the major storm that affected several Northeastern states on Monday, April 16 will have until Thursday, April 26 to file their federal tax returns, the Internal Revenue Service said. Filers in the storm region were originally given until April 19 to file, but Sen. Charles Schumer of New York said many people were still dealing with the aftermath of the storm and needed more time than the original two-day extension. IRS Commissioner Mark Everson announced the extension during a Senate Finance Committee hearing Wednesday.
Tax

IRS Commissioner to Lead Red Cross

The American Red Cross selected Internal Revenue Service commisisoner Mark Everson to be its new president Wednesday.The Red Cross had been led by an interim president, Jack McGuire, since December 2005, when Marsha Evans resigned because of friction with the charity's board of governors. Her resignation coincided with congressional hearings assailing the Red Cross's uneven performance in Hurricane Katrina's aftermath. Everson, who will take the Red Cross post on May 29, has served as IRS commissioner since May 2003.
Tax

Casework: Beating the Clock on Refunds

Three court cases provide guidance on when to claim tax refunds, according to the Journal of Accountancy Most taxpayers know when to file their annual tax return. But they may be less sure of how much time they have to claim a refund. Three decisions last year may help clarify the rules.In the first, Wachovia Bank (Wachovia Bank v. U.S., 98 AFTR2d 2006-5111 (CA-11)) was trustee for the George C. Nunamann Trust, which was created in 1984 and became a charitable trust in 1991.
Tax

IRS Extends Turbo Tax E-filing Deadline

Taxpayers who were unable to e-file their tax returns Tuesday using Intuit Inc. software products have until midnight on Thursday, April 19, to file their returns, the Internal Revenue Service announced Wednesday.Potentially up to several hundred thousand last-minute tax filers were affected by company server problems on Tuesday evening, and they or their accountants may have been unable to electronically file returns.
Tax

Effects of Accrued Payroll Tax Liability Rulings

New court rulings state payroll tax liability is deductible even if compensation is deferred under Sec. 404, reports The Tax Adviser.A recent ruling states that accrual-method taxpayers may deduct payroll tax liability incurred in the current year, for compensation deferred and deductible in the following year, under Sec. 404, provided the all-events test and recurring-item exception of Sec. 461 are met.FactsX, a corporation, uses an accrual method of accounting and files its Federal income tax returns on a calendar-year basis.
Tax

Security Update: Microsoft Issues Critical Vista Patches

Just before Easter, Microsoft broke from its usual security alert program to issue a bulletin and patches for a vulnerability that could allow malformed Windows animated cursor files to give hackers remote control over infected PCs.
Tax

IRS Spending More Hours on Non-Revenue Corporate Audits

IRS revenue agents are now spending substantially more of their time on corporate audits that produce no revenue for the government than they did in the recent past, according to agency data obtained under the Freedom of Information Act by the Transactional Records Access Clearinghouse (TRAC).
Tax

IRS Tax Fraud Prosecutions Decrease

A USA TODAY analysis reveals that the Internal Revenue Service is seeking fewer criminal prosecutions of tax fraud suspect, calling into question the agency's claims of renewed enforcement success. A review of IRS data reveals the agency's referrals of tax fraud and other financial cases to the Justice Department fell for the last two years.The decline appears even greater when measured by prosecution referrals in which the Justice Department designated the IRS as the lead investigative agency.
Tax

IRS Submits Taxpayer Assistance Blueprint

In response to a congressional mandate for the development of a five-year plan, the Internal Revenue Service submitted to Congress the completed Taxpayer Assistance Blueprint.The Blueprint is the result of extensive IRS research conducted into the needs, preferences and behaviors of taxpayers and partners who assist them in complying with the tax laws, such as volunteer and paid tax return preparers.The plan includes a variety of specific recommendations for improving IRS services for taxpayers and partners, an important element of a comprehensive strategy to reduce the tax gap by helpin
Tax

Fired Accountant Goes on Shooting Spree

A fired accountant bought a shotgun the day after he lost his job, then returned to the office the following week and opened fire on his bosses, wounding both and killing a receptionist, the Associated Press reported.Troy, Mich. police said Anthony LaCalamita III, 38, targeted two managers and also may have intended to shoot another one."There is a suspicion that there might have been a third upper management official he was seeking," said Troy police Lt. Gerry Scherlinck.
Tax

IRS Wants Extension Requests E-filed

The Internal Revenue Service wants taxpayers who need additional time to complete their tax return to submit their request for an automatic extension electronically by April 17. The IRS expects to receive 9.9 million extensions during 2007 compared with 9.5 million extensions in 2006. The extension allows taxpayers until October 15 to file the tax return. An extension does not give the taxpayer an extension of time to pay.
Technology

More Companies Squeezing Employee Internet Use

Businesses are becoming more and more strict when managing employee Internet use at work, a new survey shows. A national poll from Robert Half Technology revealed more than three-quarters (78 percent) of chief information officers (CIOs) polled recently said their company has either installed content-filtering or blocking software, instituted policies that detail acceptable Web browsing, or done a combination of both. The poll includes responses from more than 1,400 CIOs from a stratified random sample of U.S. companies with 100 or more employees.
Tax

IRS Q&A: Withholding Compliance

The Internal Revenue Service is stepping up its withholding compliance program by making more effective use of information reported on W-2 wage statements to ensure that employees have enough federal income tax withheld from their paychecks. In the past, employers were required to submit all Forms W-4 that claimed complete exemption from withholding when $200 or more in weekly wages were regularly expected, or claimed more than 10 allowances. Employers are no longer required to routinely submit potentially questionable Forms W-4 to the IRS.
Tax

When is the Dog Deductible?

Telling the IRS that your client's dog ate their return won’t get them off the hook for paying 2006 federal income taxes, due April 17 this year. And even though she depends on your client for all of her support, you are really asking for trouble if you try to claim the pooch as a dependent says the National Association of Enrolled Agents (NAEA). Nevertheless, love and loyalty may not be all the benefits your client can get from owning their dog—in the right circumstances, they may be eligible for some dog-related tax deductions, as well.
Tax

Jackson Hewitt Begins Internal Review

Jackson Hewitt Tax Service Inc. reports an internal review has begun in the wake of Internal Revenue Service allegations that five franchisees defrauded it out of more than $70 million. "Jackson Hewitt takes allegations against our franchisees seriously," Chief Executive Officer Michael Lister said. Jackson Hewitt, the second-largest U.S. tax preparer, intends to "identify all of the facts related to these allegations and address them appropriately," Lister said.
Tax

Section 987 Regulations Concern AICPA

The American Institute of Certified Public Accountants (AICPA) recommended to the Department of the Treasury and the IRS that they “reconsider the approach of the proposed regulations” relating to Internal Revenue Code section 987 and offered to discuss with government officials other proposals for determining section 987 gain and loss.The AICPA said it is “concerned that the 2006 proposed regulations will frustrate the currency reforms made by The Tax Reform Act of 1986 and will pose an unreasonable compliance burden on taxpayers.”If Treasury and IRS decide to continue the appro
Tax

Michigan Bill to Replace Single Business Tax

The Michigan Legislature is considering a bill designed to replace the "single business tax." The bill, MI HB 4546, would enact a "commercial activity tax" in lieu of the single business tax that expires at the end of 2007.As the bill is currently worded, the 3.05 percent tax would apply to all types of businesses – although many industries will ask to be exempted if it is passed.The bill was referred to the House Tax Policy Committee.

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