Tax news August 2007

Tax

Congress considers changing mortgage interest deduction

Rep. John Dingell (D-MI) has plans to introduce legislation that would remove mortgage interest deductions for certain homeowners, citing a need to penalize taxpayers who consume too much energy.Dingell is drafting an energy-saving bill that is expected to include higher federal gasoline taxes and other provisions for discouraging people from adding carbon emissions to the atmosphere. Among the provisions expected to appear in the bill is the removal of the mortgage interest deduction for homeowners with houses of more than 3,000 square feet of interior space.
Tax

Is your data safe? Survey reveals scandal of snooping IT staff

Results of a recent study reveal the hidden scandal of IT staff snooping at the confidential information of other employees.
Technology

Scam alert: The IRS is NOT offering cash for participation in a survey

The Internal Revenue Service has issued a consumer alert regarding a new, two-step e-mail scam that falsely promises recipients they will receive $80 for participating in an online customer satisfaction survey.In the scam, an unsuspecting taxpayer receives an unsolicited e-mail that appears to come from the IRS. The e-mail contains a URL linking to an online "Member Satisfaction Survey.""We have seen many e-mail scams using the IRS name," IRS Deputy Commissioner for Operations Support Linda Stiff said. "The IRS does not initiate contact with taxpayers through e-mail.
Tax

Testimony ends in tax deductible sex change case

Lawyers on both sides of the law presented their final arguments in the case of Rhiannon O'Donnabhain against the Commissioner of the IRS, where the issue is the authority to take a tax deduction for medical costs relating to a sex change operation.Presenting her case in the U.S. Tax Court in Boston, O'Donnabhain is suing the Internal Revenue Service in the aftermath of having a $25,000 tax deduction for medical expenses relating to the operation disallowed. O'Donnabhain had surgery to remove male genitals and augment breasts.
Tax

Advise a client to turn down an inheritance? Well, maybe...

Surprisingly, you may want to advise a client to refuse an inheritance. Example: A client who expects to receive assets from an elderly parent might prefer that the funds go directly to his or her children.Strategy: Have the client use a "qualified disclaimer." Assuming it contains the necessary legal paperwork, the inheritance bypasses the client's estate. Thus, the family can lower its overall estate tax bill.
Tax

Mid-sized corporations reminded of September 17 e-file deadline

As the Sept. 17 deadline approaches for calendar year filers of corporate returns who filed for extensions, the IRS urges certain corporate filers to be aware of their obligation to file electronically."We have seen significant increases in the number of electronically filed corporate returns," said LMSB Commissioner Deborah M. Nolan. "Many large and mid-size corporations are required to e-file, but many more corporations are e-filing voluntarily.
Tax

<b>Election Watch</b>: Three candidates pledge tax transparency with order for Google government

Sen. Barack Obama (D-IL), Sen. Sam Brownback (R-KS) and Rep.
Tax

Reminder: It's not too late to claim 2006 phone tax credit

The IRS wants taxpayers to know that telephone customers can still request this year's one-time excise tax refund and has published this statement which can be forwarded to anyone you feel might benefit from the information. Most phone customers, including most cell-phone users, qualify for the refund. The refund covers the three-percent tax paid on long-distance and bundled service. It can add $30 to $60 - or even more - onto a taxpayer's refund.
Tax

Bonds' homer ball creates tax controversy

Even before San Francisco Giants slugger Barry Bonds hit his record-breaking 756th home run, the analysts were lining up, giving their opinions about how much the ball would be worth and how and when the value of the ball would be taxed.
Tax

Hoosier pays huge tax bill in coins and $1 bills

If you're not from Indiana, you might not have heard of the large property tax increases that were assessed this year in some of the counties. Cary Malchow, a homeowner in Muncie, Indiana is one taxpayer who was affected by the increase, and he decided to make a statement with his tax payment.In an unusual form of protest, Malchow didn't refuse to pay his bill. Instead, he chose to pay the bill in person, in cash. Lots of cash.
Tax

IRS issues guidance on transactions of interest

The Treasury Department and the Internal Revenue Service have issued two notices that identify as transactions of interest certain transactions involving "toggling" grantor trusts and certain transactions involving contributions of a successor member interest in a limited liability company.
Tax

AICPA weighs in on estate deduction proposed regulations

The American Institute of Certified Public Accountants (AICPA) has submitted comments on proposed regulations relating to the amount deductible from a decedent’s gross estate for claims against the estate under Internal Revenue Code (IRC) section 2053(a)(3). The proposed regulations will affect estates of decedents against whom there are claims outstanding at the time of their deaths.The AICPA is concerned that the proposed regulations will not accomplish their goal of reducing costs for both the estate and the IRS in administering IRC section 2053.
Tax

Treasury issues final regs covering corporate estimated taxes

The U.S. Treasury and the IRS have issued final regulations regarding rules for corporate estimated tax payments. The regulations are effective for companies with tax years beginning after September 6, 2007.The regulations provide an update to the proposed regulations for IRS Section 6655 that were issued in December, 2005. Several changes to the proposed regulations have been adopted.Some of the changes incorporated into the final regulations include:A recapture of tax is not considered to be a tax for purposes of calculating estimated taxes.
A&A

State and Federal Enterprise/Empowerment Zone tax breaks extended

Federal Work Opportunity Tax Credits (WOTCs) now cover 18 - 39 year-old employees hired by businesses located in Renewal Communities, Empowerment Zones, and rural renewal counties under legislation passed recently in Congress. Prior to passage of the new legislation, part of H.R. 2206: U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, the credits applied only to 18 - 24 year olds.
Tax

New deferred-compensation rules will not affect teachers until 2008

Moving to clear up confusion about a recent tax law change, the Internal Revenue Service today reassured teachers and other school employees that new deferred-compensation rules will not affect the way their pay is taxed during the upcoming school year.Recently, the IRS has received inquiries from teachers who had been told that they had to make certain decisions about their pay, this month, or risk severe penalties. At issue is a 2004 law change that applies to people who decide to defer compensation from one year to a future year.
Tax

Treasury, IRS issue new proposed cafeteria plan regulations

The Treasury Department and the IRS have issued new proposed regulations for employee benefit plans under Section 125 of the Internal Revenue Code. The plans, called "cafeteria plans," allow employees to make a choice between receiving taxable cash compensation or tax-free employee benefits, such as health care, dependent care, and other fringe benefits. The new proposed regulations generally preserve the rules of the existing proposed regulations, while adding clarifications relating to statutory changes and administrative guidance changes since the previous regulations were published.
Tax

IRS is looking for problems

The Internal Revenue Service is encouraging business taxpayers, associations and other interested parties to submit controversial or frequently disputed tax issues to the Industry Issue Resolution (IIR) Program.The purpose of the IIR program is to clarify and recommend guidance that resolves an issue and benefits both taxpayers and the IRS by reducing the time and expense of resolving the issue through case-by-case tax examinations.
Tax

Tax gap report describes future plans for IRS

The Treasury Department and the Internal Revenue Service have released an IRS report addressing the agency's implementation of the 2006 strategy to improve voluntary compliance with federal tax laws.
Tax

Sting operation nabs 61 IRS employees

Representatives from the office of the Treasury Inspector General for Tax Administration (TIGTA) posing as help desk technicians contacted a random sample of 102 IRS employees, including managers and a contractor, by telephone.
Tax

IRS to update corporate and partnership tax forms

The Internal Revenue Service has released for comment and discussion draft revisions to Form 1065, U.S. Return of Partnership Income, and Form 1120, U.S. Corporation Income Tax Return. The IRS plans to have the forms and related schedules ready for use for taxable years ending on or after Dec. 31, 2008. Comments are due from the public by Sept. 14, 2007. The changes to Forms 1065 and 1120 will provide the IRS with a more accurate understanding of these entities and their ownership structures.

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