Tax news February 2009

Tax

IRS releases information to help employers claim COBRA coverage credit

The Internal Revenue Service has released detailed information that will help employers claim credit for the COBRA medical premiums they pay for their former employees.The IRS unveiled new information on the IRS Web site that includes an extensive set of questions and answers for employers.
Tax

IRS offers tips for people taking early retirement plan distributions

If you took an early distribution from your retirement plan, here are some things the IRS wants you to know: Payments you receive from your Individual Retirement Arrangement before you reach age 59 ½ are generally considered early or premature distributions. Early distributions are usually subject to an additional 10 percent tax. Early distributions must also be reported to the IRS. Distributions you rollover to another IRA or qualified retirement plan are not subject to the additional 10 percent tax.
Tax

UBS is pressured to turn over Swiss tax shelter client names

Last week, the Securities and Exchange Commission filed an enforcement action against global financial services firm UBS AG, charging the firm with acting as an unregistered broker-dealer and investment adviser.The SEC's complaint, filed in the U.S. District Court for the District of Columbia, alleged that UBS's conduct facilitated the ability of certain U.S. clients to maintain undisclosed accounts in Switzerland and other foreign countries, which enabled those clients to avoid paying taxes related to the assets in those accounts.
Practice Management

President's budget calls for "significant" tax increases, makes stimulus cuts permanent

The President's budget plan which he sent to Congress on February 26 gives "a pretty good feel for where the Obama administration will try to go in terms of tax policy," said Clint Stretch, managing principal of tax policy at Deloitte Tax in Washington DC, speaking to the media on a conference call Thursday. The proposed budget calls for a "significant" tax increase on businesses, and higher taxes for individuals earning more that $250,000.
Tax

"Tax avoidance" teacher unable to avoid years in prison

Students who paid Daniel Doyle Benham for classes may want their money back. In fact, they may want to use it to pay their overdue taxes. Benham, of Twin Lake, Michigan, taught seminars on how to avoid paying taxes – or he did until the Justice Department filed an injunction against him, forcing him to stop. Authorities say Benham failed to file tax returns on $450,000 of income in 2000-2003. The money was earned working for auto dealerships in Muskegon and Traverse City, and also from fees he received for presenting seminars on taxes and bankruptcy.
Tax

Home buyers can claim 2009 tax credit on 2008 tax returns

The Internal Revenue Service has announced that taxpayers who qualify for the first-time homebuyer credit and purchase a home during 2009 prior to December 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year. Qualifying taxpayers who buy a home this year before December 1 can receive a tax credit of up to $8,000 or $4,000 if they are married filing separately. "For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting anothe
Tax

Former BDO Seidman partner pleads guilty in multi-million dollar tax shelter scheme

Michael Kerekes, a former principal and attorney at BDO Seidman, pleaded guilty to a tax shelter scheme that prosecutors allege helped wealthy investors stay wealthy by avoiding $200 million in taxes. The Chicago Tribune reported that Kerekes, who lives in Santa Monica, CA, said he knew what he was doing was against the law during the plea in Manhattan federal court. He is cooperating with an ongoing investigation of tax work performed by his former employer.
Tax

IRS produces new 2009 withholding tables

The Internal Revenue Service has released new withholding tables that will result in more take-home pay this spring for millions of American workers.The new tables incorporate the new Making Work Pay credit, one of the key tax provisions included in the American Recovery and Reinvestment Act of 2009 that became law earlier this week."For most taxpayers, the additional credit will automatically start showing up in their paychecks this spring," said IRS Commissioner Doug Shulman.
Tax

AICPA tax expert reacts to the Stimulus Bill

With all the nay-saying about the American Recovery and Reinvestment Act, at least one AICPA tax expert finds it … well, stimulating. Tom Ochsenschlager is still reading through the nearly 1,100 pages, but he sees some items for individuals and for business which he predicts will have real power to boost the economy. And, he adds, there are also reasons for CPAs to be optimistic about new business coming their way because of the bill. The list of items in the spending plan is long, and by now, well publicized.
Tax

Long and winding path to tax relief for Madoff victims

Victims of the alleged Ponzi scheme operated by Bernard Madoff may recoup some of their investment by claiming the fraud loss as an offset to ordinary income in the year of discovery and through amended returns in previous years. But with the Internal Revenue Service (IRS) not expected to issue guidance before April 15th of this year, and court rulings that are based often on individual circumstances, Madoff victims should not expect relief any time soon.
Tax

Bounty hunter Duane "Dog" Chapman hounded by the IRS

His accountant says it's all a matter of bad timing. Duane "Dog" Chapman is the owner of Dakine Bail Bonds in Honolulu, but is more well-known as the star of the A&E reality show, "Dog and the Bounty Hunter."According to tax liens filed at the Hawaii Bureau of Conveyances filed January 27, Chapman owes $2 million in unpaid taxes that go back as far as 2002. Not that he hasn't had his share of tax woes before...
Tax

Many taxpayers don't condone cheating

The IRS Oversight Board has released its 2008 Taxpayer Attitude Survey. The survey has been conducted annually by the Board since 2002 to gain an understanding of taxpayers' attitudes on tax issues.According to this year's survey, the vast majority of Americans find it unacceptable to cheat on one's income taxes. The survey indicates that 89 percent of those surveyed think it is "not at all" acceptable to cheat on their taxes – the highest level ever recorded for this question on the survey.
Tax

Did golf pro Jim Thorpe slice the IRS?

Three years of unpaid taxes, from 2002, 2003, and 2004... that's the bunker Jim Thorpe finds himself stuck in. Charges were filed in an Orlando, Florida federal court accusing Thorpe of failing to pay federal taxes – amounting to $1.6 million - on income of more than $5.2 million earned during that three year period.The U.S. Attorney's office in Orlando told reporters that in addition to the $1.6 million in taxes due, Thorpe is looking at a $3.2 million fine, and a possible seven year jail term, for failing to file income tax returns and three counts of failing to pay taxes.
Tax

What will a $575 billion spending spree buy?

The details will continue to roll out as analysts actually get a chance to read the 1,071 page bill was which voted on before anyone had a chance to read the whole thing. The bill, which was passed with a warning of urgency, will be signed in Denver by Barack Obama on February 17th.
Tax

Who gets what in the Stimulus Bill?

A lot of people get a little bit. Some, like certain home buyers or car buyers get more than a little. Some projects that do seem related to stimulating the economy get billions, and they may hold the power to create or protect jobs. And some programs that are not related to economic stimulus but do represent Democrat wish lists items are promoted and enhanced. The official name is the Recovery and Reinvestment Act of 2009, passed by a partisan vote on February 13th. The signing of the bill into law was delayed until Tuesday, February 17th for the holiday weekend.
Tax

Castroneves court requests denied, tax trial will begin in March

Brazilian racecar driver Helio Castroneves was in court again in early February and yet another hearing will take place on February 16th. In the latest courtroom drama, Castroneves and his codefendants were hoping to derail the government's tax evasion case against them. Unfortunately for them, the federal judge wasn't buying their arguments, and the March 2nd trial will proceed as planned. Castroneves is accused of carrying out various schemes designed to evade the taxes on $5,550,000 in fees he earned for racing and for the use of his name in endorsements in 1999-2002.
Tax

Did Al Franken pay the $70,000 back taxes he owes? He's not telling

With Congress in the hands of the Democrats, we're all still waiting a final count in the close Minnesota race for the U.S. Senate seat between incumbent Norm Coleman and his challenger, Al Franken. Franken is a comedian and political commentator who travels the country making speeches and earning speaker fees. Last spring as the Senate race started to heat up... so did the news that Franken had unpaid taxes in 17 states, plus other problems.
Tax

Where's my 1099? Deadline for 1099s changed to February 17

Many investors will receive their year-end tax statements later than in past years, but these forms are likely to be more accurate, according to the Internal Revenue Service. A new law, enacted last fall, changed the deadline from January 31 to February 15, when brokers, including brokerage firms, mutual fund companies, and barter exchanges, must furnish year-end Forms 1099-B to their customers.
Tax

For Daschle, it was a short drive from tax problems to political oblivion

The story is becoming sadly familiar. On January 2, 2009 Tom Daschle rushed to file amended tax returns for 2005, 2006, and 2007, and pay $128,203 in unpaid taxes plus $11,964 in interest. There was no mention of penalties. Why the rush? The 61-year-old former U.S. Senator from South Dakota was nominated to fill a post in the Obama cabinet, as the head of Health and Human Services as well as a newly created post, the head of the White House Office on Health Reform.
Tax

AMT patch is attached to Senate version of new stimulus bill

The Senate Finance Committee on January 27 approved its portion of an $825 billion economic stimulus bill, the American Recovery and Reinvestment Bill of 2009, and potentially boosted the total cost to nearly $900 billion after agreeing to include a one-year patch for the alternative minimum tax (AMT) for the 2009 tax year. Senator Max Baucus, (D-Mont), chairman of the committee, included the AMT patch in the face of Republican complaints that the package contains too much spending and not enough tax cuts, CCH reports. The final committee vote was 14 to 9.

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