Tax news June 2009

A&A

How to lose $7 billion in taxpayer money without really trying

How did the IRS manage to pay out $7 billion in improper child tax credits in the tax years, 2004-2007? That's the question that the Treasury Inspector General for Tax Administration (TIGTA) wanted to answer.
Tax

The King of Ponzi schemes goes to jail

Allen Stanford is a 59 year-old Texas billionaire - worth about $2.2 billion according to Forbes - with homes in Texas, Florida, St. Croix, and Antigua. He's a golf and cricket promoter. He's a dual citizen of the United States and the nation of Antigua and Barbuda, and he's the first person knighted by Antigua and Barbuda (in 2006). And... he's currently sitting in a Houston jail. Last Thursday, June 18, he surrendered to the FBI and on Friday, he was in court in Richmond, Virginia to face criminal charges in a sealed 21-count indictment.
Tax

"Salt of the Earth" accountant finds prostitution doesn't pay

Last year, Phoenix police shut down a large prostitution ring involving more than 100 prostitutes, some of whom still lived at home with their parents. So far, the participant facing the harshest penalty is the group's accountant, 57-year-old Peter Shifman.When he was arrested last August, Shifman's home and vehicle were also seized. Neighbors in his quiet rural community were stunned, refusing at first to believe the charges.
Tax

Contrary to reports, DOJ will continue probe of UBS Swiss bank account holders

Earlier this year we reported that the Securities and Exchange Commission had filed an enforcement action against UBS AG, claiming that UBS aided U.S. citizens in the avoidance of taxes by maintaining secret bank accounts in Switzerland and other foreign countries. UBS agreed to turn over the names of nearly 300 of its Swiss bank account clients, but balked at the U.S. government request to turn over the names of another 52,000 U.S. bank customers.
Tax

Accountant charged with threatening life of prosecutor

Manhattan District Attorney Robert M.
Technology

Technology required: Making 7216 easily manageable

By Barry J. Friedman, CPAFuture-thinking firms are taking advantage of the latest and greatest technologies to elevate efficiency at all levels of operation. From automating tax document preparation to delivery of financial statements via portals, technology is at the heart of a well-run and profitable practice. But what about beyond core tax and accounting workflow? Technology certainly has a place in relation to compliance—for example with Internal Revenue Code Section 7216. Disclosure and Use mandates set forth in 7216 are complex and demand significant time investment.
Tax

Filing errors spur TIGTA to recommend changes to Form 1040

The Internal Revenue Service (IRS) could reduce the number of errors made by individual taxpayers by clarifying instructions on and improving the layout of Form 1040, concludes a new report publicly released by the Treasury Inspector General for Tax Administration (TIGTA).Each year, the IRS sends out more than seven million math error notices informing taxpayers of changes that were made to their tax returns as a result of mathematical or clerical errors made by such taxpayers.TIGTA's review found that more than 2.3 million of those errors could have resulted from unclear or inadequate f
Tax

TIGTA and IRS disagree about need to inform elderly about withholding options

The Internal Revenue Service (IRS) should increase its efforts to educate elderly taxpayers about potential exemptions from withholding tax on certain retirement payments in order to reduce unnecessary tax return filings, according to a new report publicly released by the Treasury Inspector General for Tax Administration (TIGTA).While the IRS's public Web site instructs taxpayers on how to determine whether to file a Federal tax return and if income tax withholding is necessary, printed publications, such as the instructions for f
Tax

Business Tax Index ranks state tax systems

In April, 2009, the Small Business & Entrepreneurship Council (SBE Council) published the "Business Tax Index 2009: Best to Worst State Tax Systems for Entrepreneurship and Small Business," which ranks the 50 states and District of Columbia according to the costs of their tax systems for entrepreneurship and small business.
Tax

Streamlined sales tax might be the answer to state budgetary woes

The Streamlined Sales Tax Project is moving back into the spotlight with some states visibly hurting for tax dollars and a Congress that seems friendlier toward raising taxes.The project began in 2000 with a group of people who were dedicated to reducing complexity in multi-state tax issues and harnessing the potential of online sales as a source of tax revenue. The current law, established by the U.S. Supreme Court in Quill Corp. v.
Tax

Amazon fights back on sales tax legislation, ends North Carolina affiliate program

Early this year, online retail giant Amazon.com lost its battle to fight the sales tax imposed by the State of New York when a New York state judge dismissed Amazon.com's lawsuit alleging the company had no requirement to pay sales tax in New York due to a lack of physical presence.
Tax

Political and economic climate improving for Streamlined Sales Tax Project

A bill that would implement the Streamlined Sales Tax Project (SSTP) nationwide may be reintroduced in Congress later this year. Detailed provisions of the bill are still being worked on by interested groups. "Passage of a federal bill is becoming more likely because of political and technological developments," says Daniel Schibley, JD, Senior State Tax Analyst at CCH, who spoke with AccountingWEB. "States have an economic incentive for supporting the bill, and the fact that Democrats are in the majority in Congress improves the chances of passage.
Tax

IRS calls on Congress to repeal "burdensome" cell phone tax rules

Just days after announcing a new attempt to get a handle on taxing the business portion of cell phone use by suggesting a flat 75% business/25% personal division of expenses on cell phones used as business phones for purposes of determining tax deductible expenses, IRS Commissioner Doug Shulman has suddenly changed gears and is asking Congress to repeal the designation of cell phones as listed property.In a published statement, Shulman wrote:This month, the Internal Revenue Service asked for comments on ways to simplify com
Tax

Personal calls on your employer's cell phone? New tax rules may soon apply

Editor's Note: In the days since this article was written, the IRS has reversed its position on taxation of personal use of a business cell phone and has asked Congress for permission to stop treating cellular phones as listed property.
Tax

The case for regulating unlicensed tax preparers

In the last two years alone, the IRS has uncovered and investigated more than 600 cases of tax preparer fraud. Of those, 356 have been convicted. Of course, most tax preparers are honest and capable. But with nothing to stop individuals and companies from marketing themselves as tax preparers... aren't the public just sitting ducks for the unscrupulous few?
Tax

The case for not regulating unlicensed tax preparers

It's true that anyone can hang out a shingle calling him or herself a tax preparer - in most states - and get paid for it, with no specific tax training or education whatsoever. It's also true that the IRS has no way of knowing how many individuals or companies are operating as paid tax preparers, and how many of them are qualified.
Tax

Ex-CEO of BDO Seidman, 6 others indicted in tax shelter case

The former head of BDO Seidman LLP and six others face conspiracy and tax evasion charges relating to an alleged tax-shelter fraud that created $7 billion in fake losses for wealthy clients.Prosecutors contend the defendants were involved in a scheme to defraud the IRS from 1994 to 2004 through the "design, marketing and implementation of fraudulent tax shelters." The conspiracy and tax evasion counts carry maximum prison terms of five years, Bloomberg reported.The 27-count indictment charges Denis Field, the former CEO and chairman of BDO; tax lawyer Paul M.
Tax

IRS may regulate tax return preparers

Internal Revenue Service (IRS) Commissioner Douglas Shulman told members of an oversight subcommittee of the U.S. House of Representatives Ways and Means Committee last week that by the end of the year he would submit to the Treasury Secretary and the President a "comprehensive set of recommendations" that may include new regulations for tax return preparers. These recommendations would be designed to increase compliance and ensure ethical standards.
Tax

IRS clerical error... or Senatorial scofflaw? Kerry campaign has tax woes

When Senator John Kerry (D-MA) ran for president in 2004, naturally he had a significant staff helping him. The IRS has taken the position that in the process of hiring and employing these people... the Kerry campaign overlooked one minor detail: They failed to pay payroll taxes on campaign staff. That's why earlier this year in the District of Columbia, the tax agency filed a lien against the campaign in the amount of $819,848. The lien is standard procedure when a tax liability goes unpaid, and is intended as a claim on property to make sure the IRS can collect the debt.
A&A

Businesses have until August 17 to take advantage of certain tax credits

Businesses planning to claim the newly-expanded work opportunity tax credit (WOTC) for eligible unemployed veterans and unskilled younger workers hired during the first part of 2009 have until August 17 to request the certification required for these workers, according to the Internal Revenue Service.

Pages