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Senate Bows to Pressure, Extends Child Care Credit to Low Income Families

The ink from President Bush's pen was hardly dry after signing the Jobs and Growth Tax Relief Reconciliation Act of 2003 when an uproar started over a large group of low income families who were excluded from the additional $400 child tax credit. A very vocal group in Congress argued that it was unfair to exclude those in the lowest tax bracket, who are not making enough money to pay any taxes, from the benefits of the child tax credit. Yesterday, the U.S. Senate agreed, and moved to expand the credit to 12 million families with incomes between $10,500 and $26,625.

IRS Moves to Reduce Retirement Savings Barriers

The Internal Revenue Service moved today to make it easier for retirement plans to stay within complex rules and to reduce barriers that discourage some businesses, particularly small businesses, from adopting such employee benefits.The IRS is streamlining its system of voluntary correction programs designed to help retirement plan sponsors and administrators retain the favorable tax status of their plans, including simplifying the fee structure for voluntary submissions.

Martha Stewart Indicted on Nine Federal Charges

The media had a field day with the combination of celebrity and scandal: "Kitchen Goddess Martha Stewart Finds Herself in Hot Water." The high profile "Domestic Diva" was indicted on federal securities fraud and obstruction of justice charges in an insider stock trading fiasco that has now spanned 16 months.

IRS Issues Fast Track Guidance to Help Taxpayers

Provided by CCHThe IRS has issued guidance to make permanent two programs that allow taxpayers and the IRS to reach agreement on tax disputes more quickly. The IRS has also announced a pilot program to expedite the resolution of Tax Exempt Bond disputes.The IRS has made permanent the Fast Track Mediation (FTM) program.

Colorado Gives Tax Delinquents Amnesty in June

With states facing record deficits — and most constitutionally unable to operate in the red — the State of Colorado is giving its tax delinquents the month of June to settle up with the government with no penalties and half the interest due. Colorado is facing a $1 billion budget shortfall for the third year.It’s been eighteen years since Colorado offered an amnesty program, and it is a good deal for both tax dodgers and the state. A person who owes $1,500 in taxes from 1995 would now owe the state $ 3,061.76 when figuring in penalties and interest.

GAO Finds Continued Weakness at IRS

The U.S. General Accounting Office (GAO) reported this week that while the Internal Revenue Service (IRS) has made “important” progress toward improving its security and implementing an information security program, weaknesses continue to pose a risk to taxpayer data.GAO’s report, "Progress Made, But Weaknesses at the Internal Revenue Service Continue to Pose Risks," states that the "confidentiality, integrity and availability of sensitive systems and taxpayer data" are at risk.

The Summer Tax Rebate - How Will it Work?

The Jobs and Growth Tax Relief Reconciliation Act of 2003 provides for an increase in the Child Tax Credit from $600 to $1,000 per qualifying child. President Bush has authorized a rebate program whereby millions of taxpayers will receive their additional $400 of Child Tax Credit in the form of a rebate check to be mailed this summer. Here is how the program will work.Who Qualifies?Taxpayers who claimed the Child Tax Credit on their 2002 income tax returns and who listed at least one dependent who will be under age 17 as of December 31, 2003 qualify for the rebate.

Politicians Take Sides in Ongoing Child Tax Credit Battle

President Bush has signed his $350 billion tax cut bill, but the arguments over what should and should not have been included in the bill rage on.

New Withholding Tables Now Available

The Internal Revenue Service today posted to its Web site new tables for employers to use in figuring how much federal income tax to withhold from workers’ wages.The tables posted today contain the percentage method formulas used by payroll programmers. By week’s end, the wage bracket method tables should be on the site.

New Tax Legislation Marketing Tool Now Available

On Wednesday May 28, President Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act of 2003, which contains a myriad of tax changes for both individuals and businesses. To help arm you with the tools you need for timely client and staff communications, AccountingWEB is preparing a summary of this law - written for the non-tax professional - for you to offer to your clients, prospects and staff.

Tax Freedom Day Arrived Early This Year

Tax Freedom Day, the day on which Americans start working for themselves instead of the various government entities, fell comparatively early this year, on April 19. On average, if you were to turn all of your earnings over to the federal, state, and local government until your tax obligations were met, it would have taken you the first 109 days of 2003 to stop paying taxes.The not-for-profit Tax Foundation calculates Tax Freedom Day each year. Tax Freedom Day peaked in the 1990s, reaching an all-time late date of April 30 in 2000, a leap year.

Hunger Strike Ends for Tax Protester

Texas tax protester Gene Chapman ended his 40-day hunger strike on Saturday after deciding he could better further his cause by embarking on a cross-country trek to Washington D.C., teaching people his ideas about freedom from taxation along the way.Dressed much of the time in an Indian garment much like that worn by Mahatma Gandhi, Mr. Chapman lost 55 pounds during his fast, all the while waiting for a satisfactory response from the IRS to one question: "Where is my tax liability in the law?""I want to pay any tax I owe," Mr.

Key Components of The New Tax Legislation

The Jobs and Growth Tax Relief Reconciliation Act of 2003 contains some splashy big tax cuts that will keep payroll accountants busy this summer, as well as a new rebate plan and tax incentives for small businesses. Key components of the new law include:Acceleration of reductions in the marginal tax rates as originally provided by the Economic Growth and Tax Relief Reconciliation Act of 2001.

IRS Backs Off Plan For EIC Pre-Certification

Less than a month after announcing a new plan to require proof of eligibility for certain recipients of the Earned Income Credit (EIC), the Internal Revenue Service has stated it will postpone the plan for at least 30 days. The IRS plans to schedule a public comment period before moving forward with the pre-certification program.The EIC is an assistance program for low-income working people. Taxpayers are eligible for the EIC if they have income beneath a certain threshold. Low-income taxpayers with children qualify for a greater credit.

House and Senate Ready to Vote on Tax Plan

House and Senate Republican leaders reached agreement on a tax plan Wednesday afternoon. Now the plan heads to the floors of both legislative chambers for a full vote.The bill, which is expected to cut taxes by $350 billion over a 10-year period, faces a close vote in the Senate where Vice President Dick Cheney is expected to be called upon to break a 50-50 tie.

Jackson Hewitt Goes to Battle Over Refund Anticipation Loans

Cendant Corporation, parent company of national tax preparation service Jackson Hewitt, has hired a high-powered law firm to help fight a bill that is making its way through the Minnesota legislature.

Seven State Sales & Use Tax Exemptions You Should Know About

by Babs VerbrickBusinesses across the United States save several billion dollars annually thanks to individual state enacted sales and use tax exemptions. The majority of states offer various sales and use tax exemptions centered around the manufacturing and agriculture industries as well as for non-profit organizations. But, there are many other little-known exemptions that could mean big savings for your business or your clients.

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).

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.

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.


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