Tax news November 2007

Tax

Class action suit filed against Intuit, H&R Block, and other tax software companies

In a case of unchecked government outsourcing, the law firms Feldman Shepherd Wohlgelernter Tanner & Weinstock and Cooley & Handy, this week filed a class action suit against a group of income tax software companies that are part of a cartel known as the Free File Alliance LLC. The suit, brought by Philadelphia resident Stacie Byers, alleges that cartel members including H&R Block and Intuit unlawfully charged millions of U.S. taxpayers excessive e-filing fees. Damages are estimated in the billions of dollars."This amounts to a tax on e-filing tax returns.
A&A

Nonpublic companies get FIN 48 reprieve from FASB

At a recent board meeting, the Financial Accounting Standards Board voted to defer the effective date of FIN 48 for all non-public entities to periods beginning after December 15, 2007. The FASB instructed the staff to develop an FASB Staff Position which will have a 30-day comment period once it is released. This action is a welcome response to a recent letter issued by the Private Company Financial Reporting Committee (PCFRC) that recommended that FASB delay the effective date of FASB FIN No.
Tax

ERPA designation scheduled for early 2009 launch

In late September 2007, the IRS issued final Circular 230 rules introducing the Enrolled Retirement Plan Agent, the first IRS designation permitting such agents limited practice before the IRS. The ERPA program will mirror the Enrolled Agent program. To obtain the ERPA designation, individuals will be required to pass an examination covering retirement plan matters, apply for enrollment with the Service, and satisfy renewal and continuing education requirements. They will have to demonstrate competency and adhere to professional and ethical standards of conduct.
Tax

Retirement group testifies on automatic IRA legislation

On Thursday, November 8, 2007, Mark Iwry and David C. John, representing The Retirement Security Project (RSP), testified before the House Education and Labor Committee's Subcommittee on Health, Employment, Labor & Pensions, in support of the Automatic IRA proposal to dramatically expand retirement saving. The Automatic IRA Act of 2007 (H.R. 2167), introduced in the House by Reps. Richard E. Neal (D-MA) and Phil English (R-PA), makes it easy for employees not covered by a 401(k) or other employer plan to save in IRAs through automatic payroll deposit.
Tax

AICPA supports uniform state withholding bill

The American Institute of Certified Public Accountants has endorsed legislation that would create a uniform national standard for state withholding of nonresident income tax, claiming that the legislation would be especially helpful to small businesses, as well as larger businesses.The bill, H.R.
Tax

Ways and Means AMT fix expected to die in Senate

Last week, the House Ways and Means Committee authored legislation that would protect millions of taxpayers from paying the Alternative Minimum Tax for 2007. The bill is to be funded by raising taxes in other areas so that the net effect of the legislation will be revenue neutral.
Tax

IRS teams with states to share employment tax information

Officials from the Internal Revenue Service and more than two dozen state workforce agencies have announced they have entered into agreements to share the results of employment tax examinations.The agreements, part of the Questionable Employment Tax Practice (QETP) initiative, provide a centralized, uniform means for the IRS and state employment officials to exchange data, thereby leveraging resources and encouraging businesses to comply with federal and state employment tax requirements.So far, 29 states have entered into individual information-sharing agreements with the IRS.
Tax

Supreme Court to determine state taxability of muni bonds

The United States Supreme Court is listening to arguments regarding the issue of whether interest earned on municipal bonds issued in one state should be exempt from income tax in another state.Current law in most states is that earnings on municipal bonds are tax-free in the home-state, but earnings on munis purchased out-of-state are subject to taxation in the home state.
Technology

New Internet Tax Freedom Act becomes law

To no one's surprise, President Bush signed the oddly named Internet Tax Freedom Act Amendments Acts of 2007 last week, extending the moratorium on Internet access taxes for another seven years. This moratorium has been going on since 1998 and will be 16 years old when those who are in favor of the access taxes once again try to blow out its candles.The vote in Congress was unanimous in favor of the moratorium.
Tax

Ways and Means passes AMT fix, Treasury not pleased

By a vote of 22-13, the House Ways and Means Committee passed legislation that would provide a patch to the Alternative Minimum Tax for the 2007 tax year. The Temporary Tax Relief Act of 2007 provides an offset to the funds that would be generated by the AMT by raising revenue in a number of areas.The TTRA would set AMT exemption amounts at $42,350 for single and head of household taxpayers, down from $42,500 in 2006, and $66,250 for married taxpayers filing jointly and surviving widow(er)s (and half that amount for married taxpayers filing separately), up from $62,550 in 2006.
Tax

Scammers hit those who would help wildfire victims

The Internal Revenue Service has warned taxpayers to be on the lookout for a new e-mail scam that appears to be a solicitation from the IRS and the U.S. government for charitable contributions to victims of the recent Southern California wildfires.In an effort to appear legitimate, the bogus e-mails include text from an actual speech about the wildfires by a member of the California Assembly.The scam e-mail urges recipients to click on a link, which then opens what appears to be the IRS Web site but which is, in fact, a fake.