Tax news September 2007

A&A

New employer ID numbers now available instantly online

Taxpayers can now request an Employer Identification Number (EIN) through a Web-based system that instantly processes requests and generates identification numbers in real time, the Internal Revenue Service has announced. "This new and improved online application will reduce the time it takes taxpayers to get an EIN," said Richard Morgante, Commissioner of the IRS Wage & Investment Division.
Tax

CCH projects 2008 tax rates, standard deduction, and other key tax figures

The indexing of many features of the tax code will bring some relief to taxpayers next year, according to CCH.
Tax

Businesses applaud elimination of cross-border withholding tax

Canada and the United States have signed a new treaty designed to reduce barriers to cross-border activities. The treaty eliminates the withholding tax on cross-border interest payments made by borrowers in one country to lenders in the other, and updates tax rules on pensions for workers who cross the U.S. - Canada border, according to Treasury Secretary Henry M. Paulson, Jr.The new treaty is seen as providing the most benefit to Canadian companies that borrow from U.S. banks. Many U.S.
Tax

I'm an auditor, darn it, not an investigator, right?

Recent professional guidance, such as SAS 99, Consideration of Fraud in a Financial Statement Audit, and Public Company Accounting Oversight Board (PCAOB) Auditing Standard 2, has brought more attention to the auditor's responsibility to uncover the warning signs of fraud, but there is still some ambiguity about where the auditor's responsibility ends and the fraud examiner's begins.
Tax

IRS and HUD announce Webcast about a variety of tax incentives

The Internal Revenue Service and Department of Housing and Urban Development are sponsoring a free Web cast on October 11, 2-4 p.m. EST, to provide an overview of tax incentives for Renewal Communities and Empowerment Zones and updates on changes to these incentives. A panel of IRS experts will address employment credits, work opportunity tax credits, commercial revitalization deductions, increased Section 179 deductions, and other incentives worth billions of dollars.Register by October 5, 2007 at OCRTaxCredit@hud.gov.
Tax

IRS reaches out to foreclosure victims with resource site

The Internal Revenue Service has unveiled a new section of IRS.gov for people who have lost their homes due to foreclosure.
Tax

Taxpayers showing losses on Schedule C are in the spotlight

The Treasury Inspector General for Tax Administration (TIGTA) has issued a report presenting the results of a review to determine what actions the Internal Revenue Service is taking to address noncompliant, high-income Small Business/Self-Employed (SB/SE) Division taxpayers who claim business losses using a U.S. Individual Income Tax Return (Form 1040) Profit or Loss From Business (Schedule C) for activities considered to be not-for-profit.
Tax

Judge denies IRS request for tax accrual work papers

Companies with audited GAAP financial statements should take note that the U.S. District Court in Rhode Island, in a case that has attracted national attention, ruled that certain sensitive "tax accrual work papers" are protected from disclosure by the work-product privilege and, accordingly, are not subject to discovery requests from the IRS. Several important lessons can be learned from Textron:Companies should take steps to make sure that all written tax analyses of troubling tax positions are prepared internally or by an attorney to be eligible for the work-product privilege.
Tax

Choosing among tax breaks for college costs

There is a vast array of tax breaks available for college students and their parents. How do you choose which one or ones to use and whose tax return to use it on? Here are some tips to help you figure this out.Lifetime Learning Credit: The Lifetime Learning Credit is available to any student enrolled in college-level courses, including graduate school as well as individual classes taken to improve skills. The credit applies to tuition and fees.
Tax

House passes legislation prohibiting patents on tax planning methods

The House of Representatives passed major reforms last week in the form of amending the Patent Reform Act. Hailed as the most significant change to the U.S. patent system in 50 years, the bill still faces an uphill climb as the Senate is working on its own version of patent legislation, and President Bush is seen as being lukewarm on the bill.Of most interest to accountants is one provision of the bill that prohibits patents on tax planning methods.
Education & Careers

Test your tax skills with this year's ABA Law Student Tax Challenge

The American Bar Association (ABA) Section of Taxation Young Lawyers Forum has released its 2007 Tax Challenge question. An alternative to traditional moot court competitions, the Law Student Tax Challenge asks two-person teams of students to solve a cutting-edge and complex business problem that might arise in everyday tax practice.
Tax

Mismatched numbers undermine IRS ability to close tax gap

A report issued by the Treasury Inspector General for Tax Administration (TIGTA) indicates that the IRS receives millions of income and wage statements each year that contain mismatched names and identification numbers.
Tax

IRS corrects Section 179 inflation adjusted amounts

The IRS has issued Revenue Procedure 2007-60 which corrects inflation adjusted amounts applying to taxpayers who elect to expense certain depreciable assets under Section 179 of the Internal Revenue Code. Previous law entitled taxpayers to take a current year expense deduction for the cost of Section 179 property up to $100,000, and that $100,000 had to be reduced (but not below zero) by the amount by which the cost of Section 179 property acquired in the current year exceeded $400,000.
Tax

"Show Me" state's taxpayers fascinated with seeing how their tax money is spent

The Missouri Accountability Portal launched by Gov. Blunt by executive order on July 10, 2007 has generated great public interest. The governor's office reports that since its inception, there have been over one million visits to the site. Over 21,000 visits per day have been recorded on the website that allows taxpayers to track government expenditures by broad categories such as budget category, vendor and contract.One of the first comprehensive state expenditure databases in the country, MAP is being updated on a daily basis.
Tax

IRS issues guidance on poker tournament winnings

Starting next year, casinos and card rooms must withhold 25 percent of winnings over $5,000 for anticipated tax payments.The IRS released a new procedure this week, which will apply to payments made on or after March 4, 2008. The $5,000 figure applies to a gambler's profit, Part Time Poker News explained. "If you entered a tournament with a buy-in of $10,000 and cashed for $12,000, you'd be fine with a net win of $2,000.
Tax

House Ways and Means addresses AMT and tax code simplification

On Thursday, the House Committee on Ways and Means held a hearing on fair and equitable tax policy for America’s working families. The panel focused on the current structure of our tax code and the fairness and effectiveness of the Bush tax cuts, the alternative minimum tax (AMT) and the tax treatment of hedge funds and partners in private equity firms. Ways and Means Committee Chairman Charles B.
Tax

Minority- and women-owned businesses join forces to oppose tax increase

A consortium of minority and women business leaders in the private equity, real estate, and investment management industries has announced the formation of the Access to Capital Coalition (ACC) to oppose efforts in Congress to change tax laws in a way that would adversely affect minority and women entrepreneurs.
Tax

Food and beverage employers should note rule changes for 45B credit

The IRS has issued an announcement to employers that they should be aware of two changes to the credit for the portion of employer Social Security paid with respect to employee cash tips known as the 45B Credit. These changes are the result of recently enacted legislation.The law now requires employers to determine their credit using the minimum wage in effect on January 1, 2007, even if the minimum wage increases.
Tax

Taxpayer finds bribing IRS agent doesn't pay

Forty-nine-year-old Jeffrey N. Darr, of Piasa, IL, thought he could get out of paying his tax bill by being extra nice to an IRS agent. He owed the IRS less than $9,000 in employee taxes and other liabilities. Now he's facing up to 15 years in a federal prison and up to $500,000 in fines.Attorneys for Darr argued that he is the victim of an entrapment scheme, claiming an IRS agent came to his home and told him he could either pay money to her or pay his tax bill to the IRS. Darr agreed to pay the agent $5,000, but when he went to his bank, he could only get a loan for $3,000.