Tax news June 2008

Tax

Online giant Amazon facing growing tax woes

The tax hurdles Amazon is experiencing in New York are spreading to other states. For the past few months, the online giant has been challenging the constitutionality of a new law in New York requiring online retailers, or e-tailers, to collect and pay taxes on sales made to New Yorkers even if they have no concrete, physical presence in the state. Federal law dictates that states cannot collect sales taxes from a company without a brick and mortar presence.But new troubles may be brewing.
Tax

Sometimes it pays to fight the tax authorities

When the Science Applications International Corporation (SAIC) filed its 1999 tax return, it made a huge mistake based on a misreading of the tax law. That mistake led them to overpay their state taxes by millions of dollars. Combined with other amounts they had paid (about $4.9 million) they still got a refund of over $685,000. Here's where the mistake occurred. SAIC, a California- based company also had offices in Maryland. In 1999 they sold stock, in Network Solutions, Inc, which they had held for investment, resulting in a gain of $716 million.
Tax

IRS raises standard mileage rate for remainder of 2008

The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008. This is an increase of eight (8) cents from the 50.5 cent rate in effect for the first six months of 2008, as set forth in Rev. Proc.
Tax

IRS provides guidance on withholding of supplemental wages

The IRS has issued guidance on how an employer determines the amount of income required to be withheld for tax purposes relative to payments of supplemental wages paid under nine differing circumstances. Employers determine withholding on payments of supplemental wages under either an aggregate method or an optional flat rate method.
Tax

Glitches delay payments from IRS

Hundreds of thousands of taxpayers have been waiting longer than expected for their payments from the IRS.Delays affected those who had fees for e-filing or tax preparation deducted from their refund or who obtained a refund anticipation loan. Those taxpayers will be mailed a paper check, even if they opted for direct deposit, the News-Leader of Springfield, MO reported. Teresa and Steve Smith of Northville, IL, for example, expected a $2,100 stimulus payment to be directly deposited into their bank account by May 9.
Tax

Some wait for IRS checks; one taxpayer gets two

Tax preparers are warning taxpayers: If you get more than one stimulus check, it's no windfall. You'll get caught if you try to cash it.A Chicago-based technical writer, who did not give her name, told MarketWatch that she opened her mailbox to find a $600 stimulus check - after she had already deposited a $600 stimulus check.The problem appears to be isolated. MarketWatch reported that it found just one tax preparer who said a client received two payments.
Tax

IRS ordered to comply with TRAC records request

A U.S. District judge in the state of Washington has ordered that the Internal Revenue Service is to turn over tax data to Transactional Records Access Clearinghouse (TRAC) researcher and co-director Susan Long. Long has been in and out of court with the IRS for decades. TRAC uses data from the IRS (and other federal agencies) to produce reports about staffing, spending, and enforcement activities.
Tax

Additional relief granted to owners of houses destroyed by Hurricane Katrina

If Hurricane Katrina destroyed your primary residence, The Internal Revenue Service (IRS) has again extended the time you have to sell the lot that the house stood on and enjoy more favorable tax benefits.Normally, federal law gives owners of homes that are destroyed two years to sell the lot that remains and still be able to qualify for tax advantages. But beyond two years, the sale of these properties is considered the sale of vacant land and larger tax implications apply, according to The Times-Picayune.This month, the IRS extended the deadline by 16 months.
Tax

Regulation cutoff will not affect most IRS rules

A Treasury Department spokesperson has said that the White House memorandum issued on May 9 directing agency heads to propose new regulations by June 1 and finalize these regulations by November 1, 2008 will not apply to the Internal Revenue Service (IRS), CCH reports.
Tax

IRS employee charged with illegally accessing celebrity tax records

An Internal Revenue Service tax examiner has been charged with snooping into the tax records of nearly 200 actors, celebrities, professional athletes, and even his next-door neighbor.John Snyder, of the Covington, KY IRS processing center, allegedly looked up personal information on actors Kevin Bacon, Alec Baldwin, Sally Field, Vanna White, and the late Eddie Albert.
Tax

IRS improves Online Payment Agreement application

The Internal Revenue Service has introduced several new features to the interactive Online Payment Agreement application which will make it easier for taxpayers and their authorized representatives to make changes to existing installment agreements.The system will now permit:Individuals to revise their payment due dates and/or amounts on existing agreements.
Tax

For most states, stimulus payments will mean added revenue

The economic stimulus payments that taxpayers have received will not be considered taxable income by the Internal Revenue Service but some of this money may end up in the coffers of individual states, which are free to decide how to treat the payments. Few will tax the money directly as income - currently, only Alabama is considering this option - but most anticipate additional revenue from sales or excise taxes, or indirectly, in some states, from a decrease in a deduction.
Tax

IRS employee charged with illegally accessing celebrity tax records

An Internal Revenue Service tax examiner has been charged with snooping into the tax records of nearly 200 actors, celebrities, professional athletes, and even his next-door neighbor.John Snyder, of the Covington, KY IRS processing center, allegedly looked up personal information on actors Kevin Bacon, Alec Baldwin, Sally Field, Vanna White, and the late Eddie Albert.
Tax

IRS announces drop in interest rates

The Internal Revenue Service has announced that interest rates for the calendar quarter beginning July 1, 2008, will drop by one percentage point. The new rates will be: Five percent for overpayments [four percent in the case of a corporation]; Five percent for underpayments; Seven percent for large corporate underpayments; and Two and one-half (2.5) 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

Celebrity Watch: Snipes, out on bail, continues his fight

Actor Wesley Snipes is fighting the government again, but this time over a bill of nearly $260,000 to cover the costs of prosecuting him on tax evasion charges.According to the Ocala Star-Banner, federal prosecutors in May asked U.S. Magistrate Judge Gary R. Jones to order Snipes to pay $257,687 for the cost of prosecuting the case. Snipes's lawyers, in a motion filed May 28, argued that the costs should not be allowed.His lawyers noted that Snipes was acquitted of some of the charges, and the bill wrongly included costs associated with them.

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