Tax news

Tax

IRS Vows to Catch Big Fish With New Technique

Introducing a major shift in audit strategy, the Internal Revenue Service on Thursday announced plans to implement a new statistical technique designed to identify taxpayers who fail to report their entire income.The target group is taxpayers with income of over $100,000, which is a major change in focus for the IRS.
Tax

House to Vote on New Education Bill

The U.S. House of Representatives is expected to schedule a vote, perhaps as early as this week, on H.R. 5193, tentatively called the Back to School Tax Relief Act of 2002. The bill, introduced by Rep.
Tax

Consumer Groups Object to IRS E-File Program

Last month the IRS unveiled a new plan to offer links to online tax software vendors on its Web site. In return for the links, each of the vendors promise to provide free tax preparation services for at least 10% of taxpayers.
Tax

Missouri Tax Amnesty Program Now in Progress

Missouri taxpayers have a small window of opportunity to come clean with the state taxing authorities while avoiding interest and penalties on back taxes. The Missouri Tax Amnesty Program, which went into effect last month, provides Missouri taxpayers with the right to file overdue state tax returns with no extra charge for interest and penalties. Tax returns filed under the amnesty program must be postmarked by midnight, October 31, 2002.To be eligible for amnesty, taxes must have been due on or before December 31, 2001.
Tax

Tax Talk Today Webcast to Tackle the Estate and Gift Tax

Talk Tax TodayWebcast Highlights New Laws, News Forms and New Places to File. Tax Talk Today will assist tax professionals and their clients in better understanding changes to the estate and gift tax rule. The new Webcast, "Estate and Gift Tax Update," airs live from 2-3 p.m. EST on Tuesday September 10. In 2000, the IRS received 123,500 estate tax returns and examined 6 percent of these. With tax law changes increasing exclusions in 2002, practitioners will need to know where the IRS will be focusing audits.
Tax

WTO Wins Right to $4 Billion in Sanctions Against U.S.

The World Trade Organization (WTO) ruled last Friday that the European Union (EU) has the right to impose trade sanctions amounting to $4.043 billion on the U.S. to make up for tax breaks given to U.S. corporations that export products to European countries.The issue at task is a situation that occurs when a U.S.
Tax

Senate to Probe Tax Aspects of Accounting Settlements

Senate Finance Committee Chairman Max Baucus said his committee is reviewing rules that permit companies to take tax-deductions for settlements related to the recent wave of accounting scandals. Sen. Baucus is responding to a Wall Street Journal article that explained how huge tax breaks are softening the financial blow of the settlements. The Journal reported that government lawyers don't usually worry about whether or not a settlement is tax-deductible.
Tax

Talking Tax Forms Transform Tax Prep For The Blind

One doesn't often get a chance to apply the terms "innovative" and "cutting-edge" to the Internal Revenue Service, an agency that is regularly struggling to upgrade its computer and telephone answering systems to keep up with the demand for services.But those terms fit the bill this week as the IRS announces plans
Tax

Tax Executives Oppose Law That CEOs Sign Tax Returns

Tax Executives Institute (TEI) has written to the Senate Finance Committee to express its opposition to S.1971. Consistent with Section 1001 of the Sarbanes-Oxley Act, S.1971 would require corporate Chief Executive Officers to sign corporate tax returns.
Technology

IRS Awards $3.7 Million Software Contract

The Internal Revenue Service has awarded a $3.7 million contract to software consultant and reseller Aelita Software, based in Columbus, OH. The software company will oversee the upgrade of the IRS's approximately 4,000 servers and 130,000 users.Included in the upgrade is a plan to move the IRS from Microsoft Windows NT to Windows 2000 and from Microsoft Exchange 5.5 to Exchange 2000.
Tax

IRS Taps More Companies' Files For Credit Card Probe

The Internal Revenue Service filed petitions against forty companies in an attempt to widen its credit card probe. The Service is after individuals who are making purchases with credit cards linked to offshore accounts in an attempt to evade taxes. None of the companies have done anything wrong.
Tax

Employers May be Entitled to a Refund of FICA Taxes Paid on Severance

Kathryn A. English, Esq. and Holly S. McCann, Esq.A decision issued in April 2002 by the U.S. Court of Federal Claims may enable employers to obtain a refund of social security or "FICA" taxes paid on certain kinds of severance payments. In CSX Corporation, Inc. v. United States, the court rejected the Internal Revenue Service's interpretation of what constitutes supplemental unemployment compensation benefits that are exempt from FICA.
Tax

Accenture Facing Big Changes

Three big changes are in the works for Accenture, the consultancy formerly known as Andersen Consulting. The first change came in the form of a recent announcement that Accenture has sold its venture and investment portfolio. The sale to CIBC World Markets, the investment and merchant banking arm of Canadian Imperial Bank of Commerce, allows for Accenture to maintain a 5% stake in the portfolio.
Tax

September 11 Victims, Spouses Receive Tax Break

In the past year, Congress and the Internal Revenue Service have issued many tax rulings that are designed to ease the tax and administrative burdens on families of victims of the September 11, 2001 terrorist attacks. The latest of those rulings was issued last week.Typically taxpayers who sell a personal residence within two years of a previous such sale are barred from taking the tax exclusion that applies to the gain on the sale.
Tax

Bankruptcy Filings Hit All-Time Record

New bankruptcies filed during the second quarter of 2002 and for the past 12 months set all time records, according to data released by the Administrative Office of the U.S. Courts. The 1,505,306 new cases is the first time filings have totaled over 1.5 million in a 12-month period. Filings increased 8.6 percent from a total 1,386,606 bankruptcy cases filed in the 12-month period ending June 30, 2001. The previous highest total of filings for any 12-month period was in the 12-month period ending Dec.
Tax

Tax Form 1040 Schedule E Will Change

The IRS is ready to make significant changes to the income tax form Schedule E, Supplemental Income and Loss, in an effort to ease the process of matching information from Schedules K-1 to taxpayers' income tax returns. Earlier this summer the IRS launched a massive K-1 matching program in an attempt to match income between taxpayers and pass-through entities.Pass-through entities include partnerships, S corporations, estates, and trusts.
Tax

IRS Gets Approval for 'John Doe' Summons

A federal district judge in Miami has approved a request by the Internal Revenue Service to obtain access to records of owners of MasterCard credit cards in 30 countries. The countries named in the summons request include Liechtenstein, Switzerland, and several Caribbean nations including Cayman Islands and Bermuda. The IRS suspects U.S. citizens are using the offshore credit cards as a means of diverting income from U.S. taxation.
Tax

Iowa Man Leaves Tax Legacy to His Neighbors

Dewey Byar of West Burlington, Iowa died without heirs - at least the kind that grow on family trees. Instead, the bachelor farmer willed his estate to his neighbors so that they will benefit for many years to come.Mr. Byar left almost his entire estate, which was auctioned last weekend, to an investment trust, the proceeds from which will go toward lowering the property tax bills in Des Moines County.
Tax

Treasury Closes Life Insurance Loophole

Wealthy taxpayers who want to avoid paying exorbitantly high estate taxes of up to 50% have taken solace in recent years with a tax scheme that enabled them to purchase certain life insurance policies which get passed on to heirs tax free. Those days are over.The way the scheme worked, up until last Saturday's Treasury Department notice (Notice 2002-59), a taxpayer would purchase a life insurance policy for a high price, when the actual value of the policy is significantly lower.
Tax

Use Those Capital Losses by Taking Advantage of The 18% Deemed Sale Election

By Tony Cardinalli, CPAThe Dow Jones Industrial Average has seen 20% of its value decline in 2002. Many investors were avoiding the dreaded phone call to their brokers instructing them to sell off their positions before things got worse. Their losses were causing them to lose sleep at night. It happened. They called. An original tax strategy herein will provide some additional damage control. Countless taxpayers will carry forward those stock market losses into the future because of the $3,000 limitation rule.

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