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Tax

IRS Extensions Create Financial Burden for U.S.

The Treasury Inspector General for Tax Administration (TIGTA) has released a report showing that the current extension program for federal income tax returns is costing the country millions and perhaps billions of dollars. Not only that, the current program creates a feeling of ill will toward the government by taxpayers who comply with the laws by paying their taxes on time.The TIGTA report points out inequities in the current rules for tax return extensions and makes recommendations for improvement.
Tax

More Than 8.5 Million Tax Returns Are On Extension

Last spring, more than 8.5 million taxpayers took advantage of the automatic extension available for filing income tax returns after the April 15 due date. Friday is August 15, and the time has arrived to file those tax returns. Here are some last minute reminders and recommendations for getting the job done on time.In the flurry of finishing the preparation of your federal income tax return, don't forget your state.
Community News

BDO Seidman's Clients Try to Rescue Accounting Firms

Last month, the Chicago-based U.S. Court of Appeals for the Seventh Circuit ruled that accounting firms cannot hide behind the cloak of client privilege and must disclose information to the Internal Revenue Service about participation in certain types tax shelters that are considered to be abusive.
Tax

IRS Not Chasing Tax Miscreants

A report issued last week by the U.S. Treasury Inspector General for Tax Administration claims that the Internal Revenue has failed to follow through on collection efforts relating to business taxpayers that are breaking tax laws.The report describes 1,841 cases of tax fraud wherein businesses are either failing to withhold taxes from employees or are guilty of filing frivolous returns. Of those cases, only 233 were entered into an IRS database of taxpayers who file frivolous returns.The report also referred to at least 165 taxpayers files that been lost.
Tax

Taxpayers Can Track Advanced Child Tax Credit Checks on IRS Web Site

With the final set of advance child tax credit checks being mailed today, the IRS reminds taxpayers they can use IRS.gov to get information about the amount or status of their checks. People who filed after April 15 — for example, those with extensions — will get any advance payment they are entitled to receive after the IRS processes their 2002 return.About 7.9 million checks totaling $4.8 billion are being sent today, marking the third and final week of the initial mail out of 24 million checks totaling about $14 billion.
Tax

Schwarzenegger Releases Tax Return

Did you see the "Today Show" on Friday? NBC's Matt Lauer was interviewing California gubernatorial candidate Arnold Schwarzenegger and asked him if he was prepared to release his tax returns as part of a public disclosure.
Tax

U.S. Banks Scrutinized for Tax Avoidance

According to a report in Thursday's Wall Street Journal, the SEC has discovered that at least 10 major U.S. banks are responsible for sheltering hundreds of millions of dollars from federal and state income taxes through private investment funds that paid tax-exempt dividends. So far the SEC has indicated that more than $17 billion was held in these funds in recent years, the purpose of the funds being solely to shelter income from taxation.The SEC is pointing to Big Four firm KPMG as being responsible for setting up 10 of 11 such funds.
Tax

IRS Teams up With States to Find Tax Cheats

Making the most of their limited resources to achieve a common goal, the Internal Revenue Service is turning to states to help ferret out tax dodgers, with California the first to enter into a federal-state partnership.The IRS’s new program takes advantage of the state’s resources to track down tax cheats, who are usually avoiding paying their state taxes as well, so both sides benefit. "Historically, the IRS has been outgunned," tax specialist Philip Wolman of Los Angeles law firm Buchalter, Nemer, Fields & Younger told the Los Angeles Times.
Tax

IRS Announces Plan for EIC Pre-Certification Program

On Tuesday, the Internal Revenue Service published its official plan to pre-certify recipients of the Earned Income Credit. After a 30-day public comment period, the IRS has finalized its program, incorporating many suggestions for improvement and ease of implementation.Originally the IRS announced it would send pre-certification notices to 45,000 individuals representing the most at-risk candidates for the EIC.
Technology

Another Blow is Struck Against Internet Taxes

The Senate Commerce Committee voted last week to make the ban on Internet access taxes permanent. This vote came close on the heels of action in the House of Representatives the previous week where the House Judiciary Committee also voted to make the ban permanent.Under the Senate version of the bill, nine states currently imposing taxes on access fees will have to end that taxation within three years.
Tax

Two More Plead Guilty in HealthSouth Case, IRS Joins Probe

And then there were 14. Two more former HealthSouth officials agreed this week to plead guilty to conspiracy charges as part of what investigators say is a $2.5 billion accounting fraud. Richard Botts, 45, former senior vice president in the tax department, and Will Hicks, 39, former vice president of investments, join 12 of their former colleagues who formerly pled guilty in the case — including the only five people to serve as the company’s chief financial officer.
Tax

Offshore Amnesty Program Reports Success Despite Bad Press

The Offshore Voluntary Compliance Initiative (OVCI) is reporting strong results. The program, designed by the U.S. Treasury Department to encourage wealthy individuals to pay taxes on income hidden in offshore banks, received some unwarranted bad press this week when two U.S. Senators misread a Treasury report and questioned the success of the effort.Earlier this year the IRS announced that more than 1,200 people had responded to the initiative, offering to report offshore income and pay the taxes, thus avoiding potential civil fraud charges and criminal prosecution.
Tax

House Considers Tax Break For Businesses

House Ways and Means Committee Chairman Bill Thomas (R-CA) has introduced a bill that would provide at least $120 billion in tax relief for businesses over the next 10 years.Congress is under pressure from the World Trade Organization to discontinue a U.S. export credit that provides a subsidy to U.S. manufacturers who sell their goods abroad. Finding a means to replace the advantages provided by the export credit is the impetus for the proposed business tax relief legislation.Representative Thomas's bill, H.R.
Tax

More Delays in IRS Modernization Program

The Internal Revenue Service announced last week that a major milestone in the agency's massive modernization project will not be met. The first phase of the Customer Account Data Engine (CADE), a database that will eventually hold tax records of all of the nation's taxpayers, was scheduled to go online in August, 2003, after an earlier postponement from December, 2001.
Tax

GAO Tells IRS to Shape Up Regarding Excise Tax Management

The General Accounting Office has completed its review of the Internal Revenue Service's management of excise tax collection and distribution, and the news is not good for the IRS. Several problems exist with the excise tax program, and the GAO has offered recommendations for solving those problems.The federal government assesses excise taxes on various services, collects those taxes, then transfers the money to appropriate trust funds. Each year nearly $70 billion is collected in federal excise taxes.
Technology

IRS Makes Paying Taxes Online Easier

The Internal Revenue Services continues to try to find ways to meet its mandated goal of getting 80% of American taxpayers filing tax returns electronically by 2007. The latest stimulus to that plan includes improvements on the IRS's electronic tax payment Web site.The Web site, EFTPS-OnLine, or Electronic Federal Tax Payment System, gives taxpayers a location on the Internet where they can make tax payments and review their payment history.
Community News

Privacy Advocates Cry 'Foul' Over IRS Tactics

In the same week that the IRS has won a court ruling demanding that a CPA firm turn over tax shelter client information, the Service has come under fire for its own practices that seemingly compromise taxpayer privacy.Washington, D.C.-based Insight Magazine has published an investigative report chronicling the details of an IRS-H&R Block co-marketing effort from a couple of years ago that has left many
Tax

Child Tax Rebate On Its Way

The first wave of checks representing the Child Tax Rebate, a result of the Jobs and Growth Tax Relief Reconciliation Act of 2003, is on its way. Altogether, approximately 25 million checks will be mailed in this rebate program.The tax rebate checks, which represent an advance payment on tax benefits that will be available on next spring's income tax returns, will be mailed in three batches. The first batch goes out this week in Friday's mail.
Community News

Tax Advisers Lose Another Layer of Client-Adviser Privilege

In the continuing battle between tax advisers and the IRS regarding turning over taxpayer records of those involved in tax shelters, it seems the advisers are losing. A federal appeals court ruled yesterday that BDO Seidman must turn over the names of clients who purchased certain tax shelters from the firm.BDO has been embroiled in a privacy-based legal battle with the IRS for over a year.
Tax

Congress Tries Last Minute Push to Expand Child Tax Credit

The Senate is offering a compromise, and Democrats promise negative publicity, but House Republicans appear to be holding out for an expanded Child Tax Credit that seems unlikely to make it into law this summer.The U.S. House and Senate have been at odds over efforts to further expand the recently expanded Child Tax Credit so that it includes low-income families who would receive the credit as a tax refund whether or not they paid tax to offset the credit.

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