Tax news

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.
Tax

Toyota Asked For It, They Got It

The Internal Revenue Service has given the green light to Toyota owners to take a $2,000 above-the-line tax deduction as a prize for purchasing a 2001, 2002, or 2003 Toyota Prius.The Prius is a gas-powered vehicle with an electric motor - a hybrid car that is the first to qualify for a new tax deduction for fuel efficient, lower emission cars.The deduction is a one-time deduction, treated as an adjustment to income so those taxpayers driven to purchase the Prius do not have to itemize deductions to take advantage of the $2,000.The
Tax

Support Grows For a Tax Relief Package For Investors

Capitol Hill is abuzz with talk of a tax relief package for investors. President Bush has said his Administration is considering a variety of possible tax breaks that would give the stock market a boost and speed the pace of U.S. growth before the November congressional elections.
Technology

Computers Containing Tax Data Disappear

An audit released this week points to the Internal Revenue Service as having lost an unspecified number of computers that contain private taxpayer information such as Social Security numbers and bank account information.The audit, performed by the Treasury Department's tax inspector general, determined that of the 6,600 laptop and desktop computers owned by the IRS and loaned to volunteer participants in the agency's Volunteer Income Tax Assistance and Tax Counseling for the Eld
Tax

IRS Calls Halt to K-1 Matching Program

Earlier this summer the Internal Revenue Service announced the launch of a new program to encourage compliance in the area of reporting amounts on partner, shareholder, and beneficiary K-1 forms. New computer software allows the IRS to match K-1 forms filed by partnerships, S corporations, and estates and trusts with the tax returns on which the numbers should be reported. Under the IRS's matching program, notices are sent to taxpayers requesting an explanation of any discrepancies that are found.
Tax

Warren Buffett Takes On the IRS

Warren Buffett, the colorful chairman and CFO of investment firm Berkshire Hathaway, Inc., has filed a lawsuit against the Internal Revenue Service claiming the agency incorrectly denied his company deductions of $16.3 million.The IRS has rebuked the claim, stating that Berkshire Hathaway used at least part of the funds to make investments in other companies, and that the tax code reduces deductions for amounts used to invest in dividend-producing resources.In the lawsuit, Berkshire Hathaway claims that
Tax

Tax Talk Today Addresses Retirement Options

The latest installment of Tax Talk Today, a monthly Webcast co-sponsored by the Internal Revenue Service, featured valuable information about retirement options and related tax incentives.Tuesday's session, "Advising Clients on Retirement Plans," discussed advantages of tax-favored plans and addressed the various options for retirement plans, including SEP-IRAs, 401(k)s, SIMPLE-IRAs, defined benefit plans, money purchase plans, and profit-sharing plans. Panel members discussed the complexity associated with the plans and the paperwork burden.
Tax

IRS Releases New Addresses For 2003 - Reminder

Due to a reassignment of workloads, the Internal Revenue Service has once again changed mailing addresses at some of the tax processing centers. The new addresses were announced in early August, just one week before the agency's second largest filing deadline, August 15.
Tax

IRS Dumps Dell for HP

The Internal Revenue Service has decided to change computer suppliers from Dell Computer Corp. to Hewlett-Packard Co., and has signed a $35 million contract with HP to seal the deal."HP understands the complex technology requirements of agencies like the IRS and looks forward to helping them achieve efficiencies new technologies can bring," said Jim Weynand, vice president and general manager of HP Public Sector Organization.
Tax

Health Tax Credit Signed Into Law

On August 6, President Bush signed the Trade Act of 2002 (H.R. 3009), which includes a provision for a tax credit for health insurance costs incurred by people who have been displaced from their jobs as a result of a trade-related circumstance.The bill allows for a refundable tax credit equal to 65 percent of the amount paid for health insurance coverage for the worker and qualifying family members for eligible months that begin within the tax year.
Tax

Congressmen Urge Bush to Drop Proposed Tax Regulation

Early in 2001, the Internal Revenue Service issued a proposed regulation (REG 126100-00), "Guidance on Reporting of Deposit Interest Paid to Nonresident Aliens," that would require U.S. banks to make annual reports of all payments of interest made to non-resident aliens. The purported reasons for the regulation are to discourage U.S.
Tax

Don't Forget Next Week's Tax Filing Deadline

More than five million taxpayers chose to use the automatic extension to extend the due date of their tax return from April 15 to August 15, 2002. These taxpayers have until midnight August 15 to get their tax returns postmarked or filed electronically or face a late filing penalty. The late filing penalty imposed by the Internal Revenue Service is 5% per month of the unpaid tax up to a maximum of 25%.
Community News

IRS Chairman Rossotti Honored by NSA

The National Society of Accountants (NSA) has presented Internal Revenue Service Commissioner Charles O. Rossotti an award for dedicated public service. NSA Federal Taxation Chairman William Stevenson described Mr. Rossotti as "our hero," and said that the IRS Commissioner "tried to do the impossible, that is, to change and reform the IRS."In comments to Mr. Rossotti, NSA President Steven Desdier said that "The U.S.
Tax

Senator Bond Urges IRS to Give More Correct Answers

Senator Christopher "Kit" Bond (R-MO) has been voicing outrage for years over what he feels is inferior service by the Internal Revenue Service's Electronic Tax Law Assistance (ETLA) program. The online program provides small business owners with answers to tax questions.The latest issue about which Senator Bond is vocalizing has to do with a study released by the Treasury Inspector General for Tax Administration (TIGTA) regarding the ability to measure the quality of answers provided by the ETLA.
Tax

$1 Billion Tax Break For Military Families Proposed

Senate Finance Committee Chairman Max Baucus, D-Mont., on July 29 introduced a bill, the Foreign and Armed Services Tax Fairness Bill (Sen 2816), which would afford tax relief for military personnel. The bill would provide nearly $1 billion in tax breaks over 10 years, according to an estimate offered by Sen. Max Cleland, D-Ga., Chairman of the Senate Armed Services Subcommittee on Personnel.Baucus said in a floor statement that the measure was intended to correct inequities in tax treatment of military personnel and to provide incentives for them to continue military careers.
Technology

Free E-File Service Will Benefit 60% of Taxpayers

The federal government has unveiled a plan whereby as many as 60 percent of taxpayers will be able to file their tax returns electronically for free next spring.
Tax

House Approves Deduction For Long-Term Care Insurance

By a vote of 362-61, the House of Representatives has approved a measure to provide an above-the-line tax deduction for long-term health care expenses, such as nursing home costs.
Tax

Tax Evader Traficant Expelled From Congress

On July 24, the House of Representatives voted 420-1 to oust James Traficant (D-OH). Mr. Traficant has been asked repeatedly by other members of Congress to resign in light of his April convictions on federal charges of bribery, racketeering, and tax evasion, but the colorful Congressman held his ground to the bitter end. Last week, the House Committee on Standards of Official Conduct found him guilty of nine charges of ethics violations and recommended the vote for expulsion. Only Representative Gary Condit (D-CA) voted against Mr.
Tax

House to Vote on Tax Simplification Bill

One of Congress's leading advocates of tax reduction and simplification, Rob Portman (R-OH), has introduced into the House of Representatives the Tax Simplification Act of 2002, a new tax act designed to make the tax code simpler for both families and businesses. Featured in the act are several tax changes that have gained popularity over the years:Complete repeal of the Alternative Minimum Tax (AMT) for both individuals and businesses.

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