Tax news

Tax

Tax Cut Effects on Corporate Dividend Policies Uncertain

As both houses of Congress and the White House begin work on finalizing a huge 10-year tax cut that includes changes to incomes taxes on dividends, companies are adopting a wait-and-see approach when it comes to changing their policies on issuing dividends."At this point we've had no specific directions as to what impact this will have," Chris Preuss, Washington spokesman for General Motors Corp., was quoted in the Washington Post (“Firms Cautious on Prospect of Dividend Tax Change,” May 16, 2003).
Tax

Senate Prohibits Tax Refunds on False Earnings

Last Thursday the Senate voted unanimously for an amendment to the tax-cut bill that would prohibit companies from seeking tax refunds on inflated earnings. The measure, which was introduced by Sen. Charles Grassley (R-IA), comes at a time when a number of high-profile companies are in the process of filing or collecting tax refunds on billions of dollars of earnings that were falsely overstated.
Tax

IRS Clarifies Certain Medical Deductions

The Internal Revenue Service has released two revenue rulings that serve to clarify the definition of certain medical expenses that are allowable as an itemized deduction under Internal Revenue Code section 213.The IRS allows as itemized deductions certain medical expenses that exceed 7.5% of a taxpayer's adjusted gross income. Section 213 prevents the deduction of nonprescription drugs as well as cosmetic surgery.
Tax

Aggressive Tax Spending Leads to Fewer Restatements

Companies that engage their audit firm for significant tax consulting services are less prone to revising their financial statements, an American Accounting Association study has found. "Companies that spend a large amount on tax services from their audit firm typically had fewer restatements than those who spent small amounts or zero," the study said.
Tax

Intuit Will Drop Anti-Piracy Feature

Tax software maker Intuit has announced plans to drop its controversial anti-piracy feature that frustrated many taxpayers during the past tax filing season.The anti-piracy feature, referred to by Intuit as "product activation," installed a permanent memory-resident feature on users' computers and prevented users from producing a tax return with the TurboTax software on more than one computer.Intuit added the feature to its 2002 tax software with the hope that it would increase sales of the tax program.
Tax

Senate Votes 'Yea' on $350 Billion Tax Cut Bill

Late Thursday night the U.S.
Tax

Cash-Strapped States Consider Corporate Sponsorship

Walden Woods for sale? If a proposal currently under consideration in the Massachusetts legislature gains support, the Commonwealth would join the growing list of states and localities looking to offset huge deficits by giving corporate America the chance to sponsor parks, landmarks and buildings.A number of mayors across the country have considered the idea of putting some of their treasurers out for bid, but Massachusetts would be the first state to pass such a law.
Tax

Six Nabbed in Attempt to Foil IRS

Five employees of Florida's Hollywood Greyhound Track and a track customer were arrested and indicted last week for their part in attempting to scam the Internal Revenue Service out of hundreds of thousands of dollars.The five employees - Wilson D. Addison, Thaer M. Ayoub, Scott S. Fischer, David R. Harvey, and Cindi M. Smith - were tellers at the greyhound track located in Hallandale Beach, Florida.
Tax

US Faces EU Sanctions For Tax Breaks

The United States has until October 1 to change tax break laws given to selected U.S. corporations or face a possible $4 billion sanction by the European Union (EU). Last week the World Trade Organization (WTO) gave the European Commission the go-head to impose the sanctions if the US fails to comply with international trade treaties.The EU is asking for the end to illegal export subsidies. At the heart of the dispute is a system of tax breaks for major companies known as the foreign sales corporations (FSC) program.
Tax

Americans Oppose Estate or 'Death' Tax

Estate tax, death tax or inheritance tax — call it what you will — Americans oppose any tax on what parents leave their children, whether it be farms, businesses and property. That's the conclusion of a recent poll, conducted by two organizations - one with a Democratic slant and one with a Republican slant - and sponsored by Women Impacting Public Policy. The study further shows that politicians who favor retaining the tax may be looking for other work come election time.
Tax

House Passes Its Version of Tax Cut Bill

On Friday, the House of Representatives passed a 10-year $550 billion tax cut plan that is guaranteed to generate controversy once the tax planners from the House and Senate face off and attempt to create a bill that both chambers can endorse.The House bill passed with a 222-203 vote falling almost entirely along party lines. Only four Democrats crossed over to support the legislation and three Republicans voted against it.
Tax

Oversight Board Gives IRS a Mixed Review

On May 7, the Treasury Department’s Internal Revenue Service (IRS) Oversight Board presented its annual report to a House Appropriations subcommittee. The report comes at the midway point in the IRS’s 10-year modernization program. While the board stated that substantial progress has been made in the last five years, the board also noted that the IRS is failing to meet key goals, in part because of inadequate funding.
Tax

IRS May Turn Over Collections to Private Agencies

If the U.S. Senate has its way, the Internal Revenue Service may be able to use private collection agencies to help recover the approximately $13 billion in unpaid taxes that is lingering in the hands of the nation's taxpayers.The tax cut bill that is due to be voted on in the Senate next week contains a provision enabling the IRS to seek outside help with collections.
Tax

Military Families Targeted by Latest Tax Scams

The latest trickery employed by pranksters who try to use the Internal Revenue Service as a means for legitimizing tax scams has placed families of those serving in the U.S. military on high alert.Two scams targeted at military families have surfaced this week, according to Mark Everson, newly appointed commissioner of the IRS.In one scam, families are contacted by telephone and told they are speaking with a representative from the IRS.
Tax

Guidance Issued on Use of Fair Market Value Method of Interest Allocation

The Treasury Department and the Internal Revenue Service issued a revenue procedure providing guidance to taxpayers that elect to apportion their interest expense on the basis of the fair market value of their assets. "Today’s release provides much-needed guidance to taxpayers on the information and documentation that may be provided to support a fair market value election for interest allocation purposes," stated Assistant Secretary for Tax Policy Pamela Olson.
Tax

Senate Republicans Reach Agreement on Dividend Tax Controversy

President Bush's tax bill has met more than a few snags as it makes its way through Congress, not the least controversial of which is the attempt to do away with the income tax on dividend income. Now it appears that a possible stalemate over this issue has been circumvented.In his State of the Union address this year President Bush stressed the importance of ending the income tax on dividends. "It is fair to tax a company's profits.
Tax

IRS Sets New Tax Filing Season Records

The Internal Revenue Service announced that its recently completed tax season was a solid success, with new records being set in several key areas, including e-filing, home computer use, web usage and refunds.The IRS saw significant jumps involving e-filing and its Web site. E-filing topped 51 million for the first time. Home computer e-filing surged nearly 27 percent with the help of the new Free File program.
Tax

OMB Director Daniels Resigns . . . to Run For Indiana Governor?

U.S. Office of Management and Budget (OMB) Director Mitchell E. Daniels Jr., announced yesterday that he will step down from his post within the next 30 days. He is expected to soon launch a bid for governor of his home state of Indiana.Nicknamed "the Blade" by President Bush for his budget-cutting penchant, Daniels was popular with the President and Republicans, but mocked by Democrats who clashed constantly with the diminutive, spirited budget director. Sen.
Tax

Enron And Others Restate Income, Look For Big Tax Refunds

Big companies that made news in recent years for inflating income in order to meet Wall Street demands are in the news again. This time the companies are making headlines for what some feel is a nervy gesture of claiming federal income tax refunds after restating their income to true levels.Enron is in the process of filing for tax credits after paying taxes on billions of dollars they reported on tax returns but didn't actually earn.
Tax

White House May Compromise on Repeal of Dividend Tax

In what plays like a move to jumpstart a stalled tax cut bill, Treasury Secretary John Snow has praised the House Ways & Means Committee's proposal to cut federal income tax on dividends to a flat 15% along with a similar cut on taxes on capital gain income. The proposed plan "is a big step in the right direction," said Secretary Snow. "It's a lot better than current law."House Ways & Means Committee Chairman Bill Thomas introduced the proposal last week to nods of approval from House Speaker Dennis Hastert, and even White House Press Secretary Ari Fleischer. Mr.

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