Tax news September 2008

Tax

Churches vs. the IRS: Showdown on Pulpit Freedom Sunday

Last Sunday, parishioners in churches across the country may have been wondering if their hymns would be replaced by the theme song from "The Good, The Bad, and The Ugly," as their pastors pushed for an IRS showdown. They called it Pulpit Freedom Sunday. Backed by the Arizona-based Alliance Defense Fund, 33 pastors in 22 states deliberately violated the IRS regulation that says churches and other not-for-profits cannot substantially participate in politics by endorsing or opposing a candidate.
Tax

IRS private collection service still iffy

Another in a series of reports by the Treasury Inspector General for Tax Administration (TIGTA) underscores continuing and significant problems with use by the Internal Revenue Service (IRS) of private debt collectors, the leader of the union representing IRS employees said today. "TIGTA's most recent report, dealing with contractor and IRS implementation of procedures covering the private collection of federal taxes, highlights serious issues with the taxpayer complaint and concern process," said President Colleen M.
Tax

House turns back on Senate extenders bill and AMT patch

After a brief debate on Sunday, leaders of the House of Representatives indicated that they would not take up the Senate bill approved last week by a vote of 93 to 2 extending expiring tax breaks for individuals and businesses and a temporary "patch" for the alternative minimum tax (AMT), before the end of the year. The two houses of Congress are deadlocked over tax policy, with fiscal conservatives in the House requiring revenue offsets for the approximately $60 billion in extensions and the AMT "patch" under their "paygo" rules.
Tax

Tax strategy: Prepay unemployment tax and save later

Sometimes, the money spent now can save valuable tax dollars in the near future. It may even defy conventional logic. Case in point: Generally, companies are required to pay tax into a state unemployment insurance fund. The pay-in amount is usually determined by the ratio of payroll to the reserve in the company's account.Strategy: Advocate making voluntary contributions this year. By taking this proactive approach, the employer increases the reserve amount in the account.
Education & Careers

Senator proposes new tax form for universities

Colleges and universities may need to use a new tax form as part of a broad examination of how universities manage their money.Senator Charles Grassley (R-IA) has asked the IRS and Treasury officials to create a form specifically for colleges and universities rather than using Form 990 which is designed for all tax-exempt organizations.The new form would require information about student populations, finances, executive compensation, and endowments.
Technology

Intuit eliminates separate federal e-file fees for TurboTax Software

Intuit Inc. has announced that it has eliminated the separate charge for federal electronic filing in its TurboTax packaged software products, the nation's leading tax preparation software. This decision more closely aligns the federal TurboTax desktop pricing structure with TurboTax Online where e-file is included with purchase. "Eliminating separate fees for filing individual federal tax returns is the right thing for American taxpayers," said Kiran Patel, senior vice president and general manager of Intuit's Consumer Tax Division.
Tax

Senate approves one year fix to AMT; extends tax credits for individuals and businesses

The U.S. Senate Tuesday voted to approve a one-year AMT Patch, and extend expired and expiring tax credits for individuals and businesses. The Senate bill will also extend energy tax breaks. The measure will return to the House this week where legislators will reconsider the requirements for revenue offsets in the alternative minimum tax (AMT) and extenders bills already passed in the House. The Senate bill does not contain any revenue measures to offset the expected cost of the AMT patch and calls for only partial offsets to the costs of other tax credit extensions.
Tax

Nicolas Cage challenges IRS and gets a lower tax bite

He fought the IRS and won, sort of. Now he only owes two-thirds of a million dollars, still enough to make most grown men cry. Actor Nicolas Cage is yet another celebrity caught in the glare of the IRS spotlight as the tax agency focuses on high income earners. Forbes.com reported last spring that Cage was notified by the IRS that he and his company, Saturn Productions of Los Angeles, might be in trouble. The issue? Improper deductions and underreported income.
Tax

Did Rangel the rulemaker wangle the rules?

The tax woes of New York Congressman, Charles B. Rangel (Democrat, 15th district) differ, depending on who does the telling. The IRS says he failed to report rental income of more than $75,000 over a period of 20 years. Rangel – the Chairman of the House Ways and Means Committee* and chief tax-writer in Congress – says he didn't know that the money he received for the use of his luxury condo in the Dominican Republic was taxable income. And his attorney says Rangel is just learning of all these errors. The facts of the case continue to roll out almost daily.
Tax

IRS asks Intuit, others to expand Free File program

Recently we reported that the Treasury Inspector General for Tax Administration (TIGTA) discovered that, while the majority of taxpayers who request refund anticipation loans as rapid payment of tax refunds would qualify for free tax preparation through the IRS's Free File service, most of those taxpayers were unaware of the service ("IRS encouraged to market free tax services to RAL recipients").TIGTA recommended that the IRS improve its marketing and be more aggressive in trying to reach taxpayers who qualify for
Tax

CCH projects 2009 tax indexing amounts

Taxpayers will benefit next year from the indexing of many features of the tax code, according to CCH, a Wolters Kluwer business and provider of tax, accounting, and audit information, software, and services, which has released estimated income ranges for each 2009 tax bracket.Indexing for inflation has become a settled part of our tax system, according to George Jones, JD, CCH senior federal tax analyst."While some tax cuts in recent years are only temporary, and are scheduled to be followed by increases down the line, indexing works year after year, and it's likely to be a part of the
Tax

TIGTA auditors go undercover to determine reliability of unlicensed tax preparers

A growing number of U.S. taxpayers are relying on tax preparers to file their returns. For the 2007 tax year, that meant 83 million returns, or more than half of all taxpayers. What troubles the Treasury Inspector General for Tax Administration (TIGTA) is, there is no federal standard regulating this profession. No specific training or education is required and only two states – California and Oregon demand that tax preparers be licensed and have continuing education. That's why legislation has been proposed in Congress that will provide oversight of tax preparers.
Tax

American workers urge Congress for renewal of expired R & D credit

Troubled that the U.S. Congress has still not renewed the research and development (R&D) tax credit that expired last December, more than 3,400 American R&D workers from industries such as manufacturing, information technology, biotech, and healthcare representing 123 companies and 43 states have sent a letter to lawmakers urging them to reinstate the credit that drives billions of dollars in domestic economic activity.The workers, citing concerns that the lapsed R&D credit places their jobs at risk, called on Congress to work in a bipartisan manner to support this tax incentive.
Tax

Florida conspirators indicted for tax fraud

Five promoters of Florida-based tax defier organization, American Rights Litigators/Guiding Light of God Ministries (ARL), were charged with selling worthless "bills of exchange" and promoting other schemes to orchestrate tax fraud, according to an indictment which was unsealed last week, the Justice Department and Internal Revenue Service (IRS) announced. Defendants Eddie Ray Kahn, Stephen C. Hunter, Danny True, Jerry R. Williamson and Allan J. Tanguay, all of Florida, were indicted by a federal grand jury in Washington on Sept.
Tax

1031 exchangers earmark significant October 18 date

When a taxpayer exchanges (under Section 1031) their relinquished property after October 18th, they will have less than 180 days in which to close on the purchase of their replacement property - UNLESS the taxpayer obtains an extension for filing their income tax return. This is very important, because the deadline for completing the taxpayer's exchange is the earlier of 180 days from the closing of the relinquished property, or the due date of filing the tax return, including any extensions therein.
Tax

IRS rules would require NFL to disclose football player salaries

It's a simple concept. If you operate a tax exempt agency, you follow the established rules for nonprofits. One of the newer regulations governing nonprofits is that, in the interest of transparency, consistency, and full disclosure, nonprofits must reveal the salaries of their key personnel as well as business dealings between the agency's officers, trustees, and staff. An agency that feels it has ample reason to not reveal that information has the option of giving up its tax exempt status.
Tax

IRS encouraged to market free tax services to RAL recipients

The Treasury Inspector General for Tax Administration (TIGTA) has publicly released its review of the impact that Refund Anticipation Loans (RALs) have on taxpayers.The report, titled Many Taxpayers Who Obtain Refund Anticipation Loans Could Benefit From Free Tax Preparation Services, was based on a survey of 250 taxpayers whose Internal Revenue Service (IRS) records indicated they had received a RAL.
Tax

IRS exceeds military hiring goal

The Internal Revenue Service has announced that it has met its goal of hiring at least 1,000 military veterans this fiscal year, and the agency will continue to focus its recruitment efforts toward this important group.The IRS's goal was to hire at least 1,000 military veterans during the fiscal year. In fiscal year 2008, which ends September 30, the agency has hired 1,052 veterans."The men and women who served America in the military are highly capable and trained individuals ready to supply valuable skills needed by the IRS, or any employer for that matter.
Tax

Hurricane victims get tax relief from IRS

The Internal Revenue Service is providing tax relief to victims of Hurricane Gustav in affected areas of Louisiana.The IRS is postponing until Jan. 5, 2009 deadlines for taxpayers who reside or have a business in the disaster area. The postponement applies to return filing, tax payment and other time-sensitive acts otherwise due between Sept. 1, 2008 and Jan. 5, 2009. This includes:Individual estimated tax payments due Sept. 15, 2008.Corporate extended 1120 tax returns due Sept. 15, 2008.Individual extended 1040 tax returns due Oct.
Tax

ADP offers tips to stretch your payroll dollars

ADP Employer Services, a provider of HR, payroll, and benefits administration services, has announced its annual National Payroll Week campaign to help educate workers on how to maximize their paychecks. In today's economic climate, ADP and the American Payroll Association (APA) highlight small businesses as the engine behind job growth and demonstrate how pre-tax payroll deductions can help small business employees stretch their earnings. "According to the ADP Small Business Report, small businesses continue to outpace their larger counterparts in terms of job growth.

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