Tax news

Tax

IRS Readies Tax Break for Hybrid Car Buyers

Original purchasers of one of the new hybrid gas-electric automobiles now entering the market will qualify for a tax break. The amount of the break is being determined now by the Internal Revenue Service under a process spelled out in recently-issued Revenue Procedure 2002-42.One manufacturer, Toyota, claims 90% of the world market for hybrid vehicles. It says it sold 1,834 Prius models in the U.S. during April 2002. But another manufacturer, Honda, was first to market.
Tax

House Votes 'Yea' on Marriage Penalty Acceleration

The House of Representatives has voted overwhelmingly to support an acceleration of the elimination of the marriage penalty from the standard deduction.With a vote of 409-1 - only Representative Alan Mollohan (D-WV) voted against the measure - the House voted to begin eliminating the marriage penalty in 2003 instead of 2005 as originally scheduled.
Tax

Federal Income Tax Tips for the Class of 2002

Students graduating this year will find the tax laws ease some of their post-graduation expenses. Here is a run-down published by CNNMoney of laws likely to affect the class of 2002:Student loans. You can get a higher starting salary and still qualify to write off up to $2,500 in interest paid on college loans this year.
Tax

Treasury Takes Aim at 'Unpatriotic' Tax-Dodgers

On May 17, 2002, the Treasury Department released a preliminary report on the growing number of U.S. companies that have announced plans to reincorporate outside the country, e.g., in Bermuda, through a paper parent company.
Tax

IRS Wants to Collect Payroll Tax on Stock Options

The IRS is about to make history if it is successful with its plan to make incentive stock options (ISOs) and employee stock purchase plans (ESPPs) vulnerable to Social Security, Medicare, and other payroll taxes.
Tax

IRS Report Card: Grades Are Improving

Three years ago, the watchdog Federal Performance Project gave the Internal Revenue Service a passing - but not stellar - grade of a "C" average. On May 15, 2002, the Project announced that the IRS' grade has improved to a "B minus."The Federal Performance Project, which provides an independent management assessment of federal agencies, is a collaboration between Government Executive magazine and George Washington University’s public administration department.
Tax

New Deadline for IRS Form 1042-S Approaches

Earlier this spring The Internal Revenue Service announced that for this year only it is extending the due date of Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, from March 15 to May 15. All forms 1042-S formerly due on March 15, 2002 are due May 15, 2002.
Tax

Accounting Firms Face Penalties Under Tax-Shelter Bill

Senators Max Baucus and Charles Grassley, senior members of the Senate Finance Committee, have introduced tough new tax legislation known as the "Tax Shelter Transparency Act" that would impose penalties on promoters of tax shelters, mainly law and accounting firms.Types of Tax SheltersThe legislation separates transactions into three types: reportable listed transactions, reportable avoidance transactions and a catch-all category for other transactions.Reportable listed transacti
Tax

Missouri Stops Sending Refund Checks to Taxpayers

Facing an unexpected budget crunch, Missouri officials have stopped mailing refund checks to taxpayers who are owed refunds from their 2001 income tax returns. Nearly two-thirds of refunds checks had already been mailed when the state realized how large its budget deficit is. With a fiscal year-end approaching on June 30, the state is $200 to $250 million in the hole. Approximately $167 million in refunds are being held back to help patch that hole.The state will be required to begin paying interest at 6% on refunds not processed by August 15.
Tax

IRS Offers Financial Grants to Professionals For Low Income Tax Assistance

Organizations providing low-cost or no-cost representation to people involved in tax disputes can apply for grants worth up to $100,000 for the 2003 grant cycle, according to the Internal Revenue Service. Grants are also available for programs that inform taxpayers for whom English is a second language of their tax rights and responsibilities."Our matching grant program encourages the creation and growth of low-income taxpayer clinics across the nation," said IRS Commissioner Charles O. Rossotti.
Tax

IRS Provides Options for Additional 1st Year Depreciation

If you are looking for the Dynamic Intuition: A Strategy for Business Success in the 21st Century story, click here. Sorry for the mistake.Rev. Proc. 2002-33 released by the Internal Revenue Service (IRS) this week provides more options for taxpayers.
Tax

IRS Seeks Volunteers for Taxpayer Advocacy Panel

The Treasury Department announced on April 29, 2002 that the Taxpayer Advocacy Panel (TAP) is being expanded from 10 to all 50 states, and the Internal Revenue Service (IRS) is inviting civic-minded individuals to apply for positions on the volunteer panel. The TAP program works directly with the National Taxpayer Advocate's Office.
Tax

IRS Reports Record-Breaking Tax Season

A downturn in the economy coupled with new tax breaks resulted in some interesting records set by the IRS this spring. More refunds were processed during this tax filing season than ever before, and the refunds were larger than they were in the past. As of April 19, the IRS had processed approximately 77 million refunds. The average refund was $1,937, up 13 percent from last year.
Tax

Supreme Court to Settle Tip Taxation Controversy

The U.S. Supreme Court heard arguments Monday in a case that could change the way the Internal Revenue Service assesses Social Security taxes on tip income. This far-reaching case could affect restaurants, casinos, barber and beauty shops, hotels, and any other businesses where employees regularly receive tips from customers.The case, United States v.
Tax

Alert: Beware of Phony IRS Forms and Bank Letters

The Office of the Comptroller of the Currency (OCC) has issued an alert to banks, asking them to warn their customers about a new fraud scheme that uses fictitious IRS forms and bank correspondence.Under the scheme, bank customers receive a letter outlining the procedures that need to be followed to protect the recipient from unnecessary withholding taxes on their bank accounts and other financial dealings.
Tax

House Passes Permanent Tax Cut Bill

The House on April 18 approved a measure that would make permanent the tax-cut provisions contained in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) (P.L. 107-16) by a vote of 229 to 198. The bill's fate in the Senate is uncertain, since Senate Majority Leader Thomas A. Daschle, D-S.D. refuses to bring it up for a vote.The legislation, which will cost $372 billion during the next 10 years, was substituted as an amendment to the Fairness for Foster Care Families Bill of 2001 (HR 586) to speed its passage.
Tax

Congress Probes Taxes and Accounting for Stock Options

On April 18, 2002, the Senate Finance Committee heard testimony on the tax and accounting treatment of executive stock option compensation. Chairman Max Baucus said the objective of the hearing was to fully explore the issues that surfaced in the wake of Enron, even though some may fall under the jurisdiction of other committees.A key issue is whether the treatment of stock options is best handled as an accounting question or through the tax code. Senator Carl Levin argued that Congress has the responsibility for adopting a tax code.
Tax

Slavery Tax Credit Scam Generates Actual Tax Refunds

In 1993, Essence magazine published an article in which it described the Civil War plan under which freed slaves were entitled to receive 40 acres and a mule from the government. Congress passed a bill that authorized the grant, and some former slaves actually received the 40 acres and a mule before the bill was ultimately vetoed.
A&A

Small Corporations Say Good-bye to Schedules L and M

The IRS announced last week that beginning with tax year 2002, companies with less than $250,000 in gross receipts and less than $250,000 in assets can bypass filling out the Schedules L, M-1, and M-2 on their corporate income tax returns. Corporations who file Form 1120-A and who are under the $250,000 threshold no longer have to prepare Parts III and IV of their 1120-A.The immediate result of this ruling will be a significant reduction in record-keeping and paperwork for small businesses. Many small businesses will no longer need to struggle to learn accounting rules.
Tax

Treasury Kicks Off New Tax Simplification Program

On April 15, 2002, Treasury Secretary Paul O'Neill announced the issuance by the Treasury Department of the first in a series of proposals to simplify the U.S. tax code. "Our tax code is so complicated," he said, "we've made it nearly impossible for even the Internal Revenue Service to understand."PrioritiesTopics of highest priority involve the tax treatment of families and children. Subsequent proposals will focus on the simplification of tax laws related to businesses.

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