Tax news

Tax

Congress Considering Elimination of State Taxes on Interstate Commerce

Last week, a subcommittee of the House Judiciary Committee advanced a bill to the full committee that included a clause that would enable certain corporations engaged in interstate commerce to avoid state and local taxes on income from such activities.The Subcommittee on Commercial and Administrative Law advanced H.R. 2526, the Internet Fairness Act of 2001, which is described as a bill to make permanent the moratorium on Internet access taxes.
Tax

One-Fourth of Citizens Say It's OK to Cheat on Their Taxes

A recent Reuters report indicated that the number of U.S. citizens filing false tax returns or simply not filing tax returns at all is increasing.Larry Levitan, Chairman of the IRS Oversight Board, made the same observation in his recent testimony before the House Committee on Government Reform.
Tax

IRS to Tackle New List of Industry Issues

The Internal Revenue Service's Industry Issue Resolution Program (IIR) will concentrate on seven significant issues in the immediate future, gathering and analyzing information relating to each issue and developing specific, uniform guidance on the issues.The seven issues were selected from a field of 38 issues that were submitted to the IRS from businesses, tax practitioners, and associations:Cable television depreciation.
Tax

IRS Names Names of Tax Shelter Participants

Last week the Internal Revenue Service filed suit against accounting firms KPMG and BDO Seidman claiming the firms withheld documents, including the names of participants, relating to tax shelters that the IRS is investigating.Referring to the documents already submitted by KPMG, the IRS proceeded to make public a list of prominent investors who are or were participants in some of the tax shelters that are under examination.
Tax

IRS Proposes to Tax Split-Dollar Life Insurance Plans

The Internal Revenue Service and the U.S. Treasury Department released proposed regulations this week that clarify the tax rules relating to split-dollar life insurance arrangements.A split-dollar life insurance plan is one in which premiums and/or benefits of the plan are split between two parties. The new proposed regulations seek to provide guidance for tax assessments relating to these types of plans.The application of the proposed rules depends on the ownership of the policy.
Tax

KPMG, BDO Seidman Under Fire From IRS

The Internal Revenue Service, with the help of the U.S. Department of Justice, filed suit against accounting firms KPMG and BDO Seidman on Tuesday, July 10, accusing both firms of withholding documents relating to tax shelters promoted and sold by the firms.
Technology

E-filing is Ushering in a New Era at The IRS

Tax Talk Today Webcast Urges Practitioners to Embrace E-filing The future of electronic filing is quickly becoming a reality, Tax Talk Today panelist Terry Lutes, Director, Electronic Tax Administration, IRS, informed tax professionals during a live monthly Webcast held at 2 pm ET today. The program, “Your e-Future Made Easy” focused on the changes to electronic filing that are rapidly unfolding, as well as those changes that have been recently implemented.
Tax

IRS Issues New Guide For Religious Organizations

The IRS has issued Publication 1828, "Tax Guide for Churches and Religious Organizations," which describes the favorable tax treatment granted to such organizations.
Tax

New IRS Program Will Encourage Taxpayers to Report Income

The IRS has unveiled a new program that uses computer software to match information reported on K-1 forms with information on taxpayers' 1040 forms. Taxpayers receive K-1 forms from partnerships, S-corporations, and trusts of which they are partners, shareholders, and beneficiaries. Income and losses from these types of entities are passed through to taxpayers on the K-1 forms.The IRS has never before had an efficient method of comparing the information reported on K-1 forms with the information on 1040s.
Tax

PwC Makes Cash Settlement With IRS

The Internal Revenue Service has announced an agreement with Big Four firm PricewaterhouseCoopers (PwC) over issues relating to tax shelter registration.
Tax

IRS Rules in Favor of Consumer-Driven Health Plans

In a decision that could change the benefit landscape of the nation's workplaces, the Internal Revenue Service ruled on Wednesday, June 26 that employers who participate in high-deductible health care insurance policies may create Health Reimbursement Arrangements (HRAs) with rollover rights for their employees.For an HRA to qualify for the rollover treatment, employers must provide employees with a high-deductible health insurance policy with lower premiums than the typical low-deductible health plan popular in the workplace today.
Tax

Senate Finance Committee Approves Trio of Tax Bills

The Senate Finance Committee recently approved a trio of bills that could affect a broad spectrum of tax work done by accounting firms today. The first bill (H.R.7) would provide tax breaks for charitable donations to help ease the tough times faced by many American charities due to the events of September 11th. These tax incentives would be partially funded by the other two bills, which include one on tax shelters (S.2498) and another on corporate inversions, a way to avoid taxes by reincorporating in an offshore tax haven (S.2119).
Tax

Treasury Announces Moratorium on Stock Option Withholding

On Tuesday, June 25, the Treasury Department announced that it would postpone indefinitely the collection of Social Security and Medicare tax on incentive stock options (ISOs) and employee stock purchase plans (ESPPs). Last November, the Internal Revenue Service issued guidelines for withholding tax on these two popular forms of compensation. Since that time, both the Senate and the House have made attempts at overturning the legislation.
Tax

New Ruling Regarding Gain, Loss on Short Sales of Stock

The Internal Revenue Service has released Revenue Ruling 2002-44 in which it sets out in detail the exact way in which gain and loss is to be realized in the case of a short sale of stock.The ruling provides two examples, one in which the taxpayer concludes the short sale with a loss, and the other in which the sale is concluded with a gain for the taxpayer.A short sale is one in which in which the taxpayer borrows stock certificates that are delivered to the buyer.
Tax

House Votes to Make Retirement-Related Tax Cuts Permanent

Members of the House of Representatives sent a strong message to the Senate last week regarding the desire to solidify tax breaks for our aging society.
Tax

Tax Snafu May Prove Costly in Massachusetts Gubernatorial Bid

When Mitt Romney left his home state of Massachusetts in 1999 to take over the presidency of the troubled Salt Lake Organizing Committee for the 2002 Olympics, he had no idea that filing his tax returns during that time might affect his future career. Although on the surface it appears that it was a temporary job, Democrats in Massachusetts are claiming that Mr.
Tax

IRS Gearing up For 2001 Random Audits

An article in last week's Wall Street Journal described the Internal Revenue Service plans to revive its random audit process for 2001 tax returns. The agency plans to examine approximately 50,000 returns, chosen randomly, in an effort to gauge taxpayer compliance and update the agency's own expectations.The random audits will take four forms, ranging from brief examinations by IRS staff and not involving any contact with taxpayers, to completely invasive line-by-line examinations of every amount listed on the tax return.
Tax

E&Y Questionable Tax Advice Exposed

An article in the Thursday, June 20 New York Times describes tax planning techniques offered by Big Five firm Ernst & Young to some of its wealthiest clients and quotes financial professionals who suggest that the tax tips may not be entirely on the up and up.A financial advisor who attended an Ernst & Young meeting at which these tax avoidance/deferral vehicles were described found his outrage at the way in which taxable transactions were being hidden from the Internal Revenue Service was keeping him up at night, so the unnamed source broke his confidentiality agreement with E&Y and
Tax

IRS to Expand Requests for Tax Accrual Workpapers

As part of its crackdown on abusive tax shelters, the Internal Revenue Service (IRS) has announced it will be making more requests for tax accrual workpapers. These requests may also extend to other financial audit workpapers that relate to the reserve for deferred tax liabilities and footnotes about contingent tax liabilities.
Tax

IRS Scrutinizes Rapid Climb in Tax-Book Differences

Results of a study released at the Internal Revenue Service's 2002 Research Conference last week confirm there was a marked uptick during the 1990s in differences between figures reported to investors and comparable figures used for tax purposes. Experts are still puzzling over the exact reasons for the trend. Highlights of key findings:The differences between book and tax income for the companies studied increased from $10 billion in 1991 to over $150 billion in 1998.

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