Tax news October 2007

Tax

Red Sox win has tax-related ripple effect

Boston Red Sox fan and owner of Boston's Jordan's Furniture store, Eliot Tatelman, has struck a home run in the eyes of his customers, although his insurance company has been left holding the ball. Tatelman ran a promotion last spring offering customers the right to full refunds of sofas, dining tables, beds, or mattresses purchased between March 7 and April 16 if the Red Sox won the World Series.To make good on his promise, Tatleman will send millions of dollars in refunds to his happy customers.
Tax

New taxes, deduction limitations to replace AMT revenue

The House Ways and Means Committee estimates that the cost of permanent repeal of the Alternative Minimum Tax (AMT) will be $795 billion over ten years, and while there is widespread agreement that the AMT should be repealed, few in Congress believe that it will be possible to make up for the lost revenue through cuts in spending.
Tax

IRS offers tax relief to California wildfire victims

The Internal Revenue Service has extended relief to California wildfire victims by extending tax return filing and payment deadlines.Taxpayers in the Presidential Disaster Area – consisting of Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura counties – will have until Jan. 31, 2008, to file returns, pay taxes, and perform other time-sensitive acts that have a deadline that falls between October 21, 2007 and January 31, 2008. This includes the federal withholding tax return, Form 941, normally due Oct.
Tax

Rangel proposes business tax changes, LIFO repeal

Business tax changes in the legislation introduced on October 24th by House Ways Committee Chairman Charles Rangel (D-NY) are designed to be revenue neutral as required by House rules, and the provision to reduce the top corporate income tax rate from 35 to 30.5 percent is offset in the bill by the repeal of the last-in, first-out (LIFO) method of accounting for inventory and changes in or the elimination of other tax breaks.Although the Senate attempted unsuccessfully to repeal the use of LIFO by oil companies in 2005 in an effort to respond to critics of the government's treatment of the
Tax

No repeal of AMT this year - one-year fix proposed

Tax legislation introduced by House Ways and Means Chairman Charles Rangel on Thursday provides a one-year extension of current Alternative Minimum Tax (AMT) relief for 2007, with a permanent repeal beyond that, but passage of the complete bill in either 2007 or 2008 is considered unlikely. Failure to enact a temporary fix will cause 21 million more taxpayers to "fall into" the AMT, Treasury Secretary Henry Paulson told Congress in a letter earlier in the week.
Tax

IRS announces 2008 inflation adjustments

By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, are being adjusted for 2008.
Tax

2008 Pension plan limitations announced

The Internal Revenue Service has announced cost of living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2008.Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. It also requires that the Commissioner annually adjust these limits for cost of living increases.Many of the pension plan limitations will change for 2008 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment.
Tax

O.J., Dionne, Sinbad among top tax scofflaws

California Revenue & Taxation Code Section 19195 directs the Franchise Tax Board to publish an annual list of the top 250 taxpayers with liened state income tax delinquencies greater than $100,000. Each taxpayer is given an opportunity to voluntarily settle their liability with the state before their name appears on the public list.According to the California Franchise Tax Board, O.J.
Tax

7 ways you can help your clients hit the tax jackpot

Year-end tax planning for individuals is more about skill than luck. Need proof? Here are seven ways clients can slash their personal tax bills in 2007.1. Dodge the 'big, bad' AMTOriginally, the alternative minimum tax (AMT) was intended to hit only the wealthiest taxpayers.
Tax

Social Security raises wage ceiling, increases benefits

Effective January 1, 2008, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $102,000 from $97,500. Of the estimated 164 million workers who will pay Social Security taxes in 2008, nearly 12 million will pay higher taxes as a result of the increase in the taxable maximum.The Social Security Administration also announced that monthly Social Security and Supplemental Security Income benefits for more than 54 million Americans will increase 2.3 percent in 2008.
Tax

Tax comparison: Best states for business

The Tax Foundation has released its 2008 State Business Tax Climate Index. The Index ranks how "business friendly" the 50 state tax systems are, providing a roadmap for state lawmakers concerned with keeping their states tax competitive.Keeping a state competitive in today's global market can be difficult, but there is one factor lawmakers have direct control over: the quality of state tax systems.
Tax

IRS warns taxpayers about certain trust arrangements

The Internal Revenue Service and the Treasury Department have cautioned taxpayers about participating in certain trust arrangements being sold to professional corporations and other small businesses as welfare benefit funds. They have identified some of the arrangements as listed transactions.There are many legitimate welfare benefit funds that provide benefits, such as health insurance and life insurance, to employees and retirees.
Tax

IRS authorizes alternative signature methods for EROs

The IRS has issued Notice 2007-79 which sets forth rules that allow Electronic Return Originators (EROs) to sign forms by rubber stamp, mechanical device (such as signature pen), or computer software program. Forms included in this directive include: Form 8453, U.S.
A&A

Tax pitfalls you could face as a small business owner

AccountingWEB is pleased to offer a presentation of Small Business Trends Radio. This is an hour-long broadcast that can be downloaded as a podcast or played on your computer.Starting your own small business can be an exciting venture. However, there are several things that many do not think about in advance that could put them out of business before they have barely begun. And attempting to handle some of these problems on your own may ultimately lead to negative results.Michael Rozbruch, CEO of Tax Resolution Services will assist you in steering clear of these costly pitfalls.
Tax

IRS offers relief for late S corporation elections

Businesses that are eligible to elect S corporation tax treatment now have a simpler process for requesting relief for late elections under a change announced this week by the Internal Revenue Service.Revenue Procedure 2007-62 allows small businesses that missed filing Form 2553, Election by a Small Business Corporation, before filing their first Form 1120S, U.S. Income Tax Return for an S Corporation, to file both forms simultaneously.
Tax

States benefit, or not, from federal spending

Some states feast at the expense of others, according to the Tax Foundation's latest annual analysis of federal taxing and spending patterns.Using newly released Fiscal Year 2005 spending data from the Census Bureau's annual Consolidated Federal Funds Report, the Tax Foundation compared the federal tax burden in each state with the amount of federal spending in each state.
Practice Management

Personal liability for sales tax - not just for corporate officers anymore!

Are you a "responsible party" party when it concerns the collection and remittance of your company's sales tax? Most corporate accounting and finance people would respond to this question by saying "I don't know" or "I'm not an officer of the company, so how can I be personally liable?" If you answered "I don't know" you may want to find out for sure. If you believe that only corporate officers can be personally liable, guess again.
Tax

Record number of corporations jump on the e-file bandwagon

The Internal Revenue Service has announced that more than 800,000 of the nation's small businesses and large corporations have filed their tax returns electronically so far this year, a 60 percent increase from last year. Even though they have no electronic filing requirement, more than 780,000 small businesses have opted to e-file their tax returns this year, up more than 50 percent from last year.Many large corporations are voluntarily e-filing as well. The more than 42,000 large corporations that e-filed far exceeded the approximately 22,000 that were required to file by the Sept.
Tax

IRS delays implementation of transportation debit/smart cards

The IRS has issued Notice 2007-76, the purpose of which is to delay the effective date of Revenue Ruling 2006-57. Revenue Ruling 2006-57 provides guidance to employers on the use of smartcards, debit or credit cards, or other electronic media which can be used by employees to pay for qualified transportation fringe benefits under Internal Revenue Code Sections 132(a)(5) and 132(f).
Tax

Texas legislature passes revised "margin" franchise tax

Sweeping changes in the tax base and the tax rate of the Texas franchise tax passed by the state legislature in 2006 and modified in 2007 are scheduled to go into effect for reports originally due on or after January 1, 2008, extending coverage to an estimated 200,000 entities doing business in Texas, including partnerships.

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