Tax news June 2007

Tax

IRS wins battle to retain private debt collectors

Representative Jim McCrery (R-LA), the leading Republication on the House Ways and Means Committee, has come to the defense of the IRS and their controversial private debt collectors. McCrery cited estimates that the IRS could lose nearly $70 million if they are forced to eliminate the program.A provision in a Treasury Department spending bill would limit the IRS to spending no more than $1 million next year on the private debt collection program.
Tax

IRS provides online help to tax-exempt organizations

The Internal Revenue Service has launched four new "Life Cycles" - Web-based information tools - to help guide tax-exempt organizations through the federal tax rules and requirements that pertain to them.The new tools, patterned after existing life cycles for public charities and private foundations, provide easy navigation through the IRS Web site for:Social welfare organizations — under Internal Revenue Code section 501(c)(4)Labor organizations — 501(c)(5)Agricultural and horticultural organizations, such as farm bureaus — 501(c)(5)
Tax

AMT reform options include possible change in SALT deduction

Senators Charles Grassley (R-IA) and Max Baucus (D-MT) have introduced legislation to completely repeal the Alternative Minimum Tax, without requiring any offset of tax revenue from another source. Other lawmakers are mulling the possibility of trading the revenue from the AMT for a change in another area of individual income tax that would result in replacing the AMT revenue.The U.S.
Tax

IRS to revise corporate foreign tax credit Form 1118

The Internal Revenue Service has announced that it is requesting comments from the public on proposed revisions to Form 1118, "Foreign Tax Credit - Corporations." This form is used by U.S. corporate taxpayers to compute the foreign tax credit for certain taxes paid or accrued to foreign countries or U.S. possessions. Form 1118 is being revised as a result of amendments to section 904 of the Internal Revenue Code relating to the number of separate foreign tax credit limitation categories and the effect of overall domestic losses.
A&A

Taxes now leading concern of small businesses

Taxes were the leading concern of business owners during the second quarter of 2007 replacing health care which previously was cited as being the single greatest issue impacting small businesses according to the latest Small Business Research Board (SBRB) study released this week. Business owners in the U. S. responding to the nationwide poll co-sponsored by International Profit Associates (IPA) said taxes were closely followed by overall economic conditions and energy / fuel costs as key concerns affecting small businesses during the current quarter.
Tax

7 Steps for complying with deferred compensation plan rules

New rules for nonqualified deferred compensation plans under Internal Revenue Code Sec. 409A went into effect on Jan. 1, 2005. Recently, the IRS issued final regulations to provide guidance on the rules. Grant Thornton LLP has developed a Quick Reference Guide to Complying with the Sec. 409A Deferred Compensation Plan Rules that provides seven suggested steps to help companies comply with the rules.
Tax

Computer glitch stalls Ohio tax refunds

Ohio residents continue to wait for tax refunds as the state scrambles to get checks in the mail. The Ohio Department of Taxation bought new optical scanners this year with the intention of speeding up tax refund processing, but instead the state is running behind last year in sending out refund checks.There are still approximately 160,000 tax returns waiting to be processed, according to a tax department spokesman, John Kohlstrand.
Tax

Supreme Court to hear case on deduction of fees for investment advice

The U.S. Supreme Court has agreed to hear a case where the deductibility of investment advice fees incurred by a trust is in question. In the case, Knight v.
Tax

Supreme Court inaction could change nexus rules

The U.S. Supreme Court announced on Monday it would not hear two cases that could have long-ranging effects on the nexus rules followed by state taxing authorities. The cases both involved situations where states assessed income and franchise taxes to companies with no physical presence in the state.In West Virginia, Bank of America's FIA Card Services, formerly MBNA, was attempting to seek a refund of $460,000 in income and franchise taxes assessed by the state.
Tax

Blackstone ruling would close loophole, raise taxes

U.S. House and Senate committee members are scrambling to enact legislation that would close what some call a loophole in the Tax Code, a provision that provides tax breaks to partnerships that engage primarily in passive activities and that are publicly traded.
Tax

IRS chooses CCH to provide sales tax data

While the memory of filing tax returns seems all too fresh in our minds, the Internal Revenue Service has already begun to prepare for the upcoming tax filing season. The IRS has again selected CCH to provide the sales tax data for use by all taxpayers who file a 1040 tax return. This marks the third consecutive year that CCH has been chosen by the IRS as its selected provider of sales tax information. CCH, a Wolters Kluwer business, is a leading provider of tax information, software and services (www.CCHGroup.com).
Tax

IRS interest rates remain unchanged for third quarter

The Internal Revenue Service has announced there will be no change in the interest rates for the calendar quarter beginning July 1, 2007. The interest rates are as follows:eight (8) percent for overpayments [seven (7) percent in the case of a corporation]eight (8) percent for underpaymentsten (10) percent for large corporate underpaymentsfive and one-half (5.5) percent for the portion of a corporate overpayment exceeding $10,000.Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.
Tax

IRS issues new Form 2678 for employers, payers, agents

The Internal Revenue Service recommends that employers, payers and their agents begin using a new, improved version of the agent appointment form immediately, to avoid delays in having the IRS approve the agent appointments.All versions prior to the May 2007 form are now obsolete.Form 2678, Employer/Payer Appointment of Agent, authorizes an agent to file tax returns and deposit and pay employment or other withholding taxes on an employer or payer's behalf.
Tax

IRS has been asked to consider mid-year increase to standard mileage rate

Colleen M. Kelley, national president of the National Treasury Employee's Union (NTEU), has sent a letter to IRS Acting Commissioner Kevin Brown requesting the IRS to consider a mid-year increase in the standard mileage rate."As you know, gasoline prices are reaching record levels, and all indications are that prices will stay at that level or rise during the summer months and even to the end of the calendar year," said Kelley in her letter.
Tax

Dads just want to have jobs

More than half of working dads (59 percent) would not take paternity leave if it were offered, according to the latest Workplace Insights survey by Adecco USA and just in time for Father's Day. Among those who would not take paternity leave, reasons cited include: fear it would harm their career (31 percent); being too busy at work to be away for an extended period of time off (28 percent) and being depended on too much by co-workers and clients (28 percent).
A&A

Ten reasons to call your clients this summer: a win-win proposition

Many tax professionals look for ways to increase their business and, of course, their income, in the slower, summer months. Opportunities for increasing your business might be lurking in your existing client base. Review client files when you've got time on your hands and you might find there are many useful suggestions you can offer that will help your clients and increase your business.Take the time to look back at the questions your clients raised when you prepared their tax returns, review their tax returns, and examine their financial conditions.
Tax

More tax preparers indicted over telephone tax refund scams

Moving to curb abuse of this year's one-time telephone excise tax refund program, the Justice Department and the Internal Revenue Service obtained federal indictments this spring against tax preparers who allegedly filed thousands of dollars in fraudulent refund claims.In recent weeks, the alleged refund schemes involving preparers in Miami, Fla., Norcross, Ga., Dallas, Texas, and Riverside, Calif., led to federal indictments. This week, the defendant in the Miami case pled guilty to one count of making and presenting fraudulent federal income tax refund claims to the IRS.
A&A

FIN 48 from different perspectives

Financial Accounting Standards Board Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, is intended to substantially reduce uncertainty in accounting for income taxes. Its implementation and infrastructure requirements, however, generate a great deal of uncertainty. This feature provides an overview of FIN 48, addresses some of its federal and international tax issues, as well as issues arising at the state and local level.
Tax

Jackson Hewitt under fire

The federal government has broadened the scope of an investigation into charges that certain franchisees of Jackson Hewitt Tax Services Inc. helped prepare fraudulent tax returns during the 2006 tax filing season. More than 125 offices of the company have been accused by the Justice Department of knowingly filing false tax returns and claiming refunds that resulted from the use of phony W-2 forms and fictitious deductions. The returns were filed on behalf of middle- and low-income people.
Tax

IRS provides transitional penalty relief for preparers

The Internal Revenue Service and Treasury Department have released Notice 2007-54, providing guidance and transitional relief for the return preparer penalty provisions amended by the Small Business and Work Opportunity Act of 2007.

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