Administrative

Tax

IRS Rebuts Those Making Frivolous Arguments on Paying Taxes

The Internal Revenue Service this week issued guidance describing and rebutting frivolous arguments taxpayers should avoid when filing their tax returns.“Every filing season, thousands of taxpayers hear groundless theories suggesting that they don’t have to pay taxes or file returns,” said IRS Commissioner Mark W. Everson. “We want people to know the truth about these frivolous arguments: they don’t work.”IRS Notice 2005-30 describes 23 frivolous arguments that taxpayers should avoid when filing their returns.
A&A

Small Accounting Firms Shop for 'Safe' Companies

Smaller accounting firms are scrutinizing potential clients like never before.Accounting firms of all sizes and their clients are approaching each other far differently than they did in the pre-Enron business environment. Firms are looking for “safer” companies, and higher-risk companies are searching long and hard to find the right firms, the American City Business Journal Wire Service reported."The client-acceptance standards clearly have been raised, certainly by Grant Thornton, and, I believe, by all the firms," said Richard D.
Tax

Tax Season Stress Busters…Part One

Here are some ideas to help ease the stress of tax season from the members of AccountingWEB.com. Have a Friday Dessert Contest - Have spouses children bake desserts for the staff such as cookies, brownies and other finger foods each week and give a bouquet of flowers each week to the contest winner.  

Companies Rarely Get Back Bonuses from Ex-CEOs

Large companies almost never get back the bonuses they paid to CEOs who used questionable methods to earn them, a new survey says.The New York Times reported that 414 companies restated earnings in 2004 alone, but a review of the restatements shows that large corporations rarely get bonus money back from executives, even when the bonuses were based on numbers that were questionable, inflated or inaccurate.For example, William A.
Tax

Consumer Information Stolen From Another Data Broker

Names, addresses, driver's license records and Social Security numbers of about 30,000 consumers may have landed in the hands of criminals.LexisNexis, a major compiler of public consumer information, said the theft occurred at its subsidiary, Seisint, the New York Times reported. The announcement comes on the heels of other security breaches. Data broker ChoicePoint said records of about 145,000 consumers were accidentally sold to criminals.
Technology

Tips to Guard Against Identity Theft Vulnerability

The average victim of identity theft spends about $4,800 and 30 hours to rectify effects of the crime, according to a recent Federal Trade Commission (FTC) study. Identity theft is the fastest growing crime in the U.S., and has spurred new legislation requiring businesses and even consumers to destroy certain documents before throwing them away.
A&A

Corporate Taxes Shrinking, Panel Investigating

Corporate tax collections are down, a sign that companies are making use of sophisticated tax planning, stock options and other tools to reduce their tax burden, the Wall Street Journal reported.Another factor cited by a leading tax expert at a forum on Tuesday is that the global economy is outpacing an income tax that was set up for the industrial age."The corporate tax base is under attack from many directions," Douglas Shackelford, professor at University of North Carolina's Kenan-Flagler Business School, said in prepared remarks before the Federal Advisory Panel on Tax Reform.The
Tax

Abusive Tax Scheme Halted in Nationwide Sweep

Washington DC - The Justice Department this week sued Nicholas P. Magalhaes, of Altamonte Springs, Florida, formerly of Smithtown, New York, to bar his alleged promotion of an abusive tax shelter for employers. The government’s complaint, which was filed in the U.S. District Court for the Eastern District of New York, contends that Magalhaes and his businesses -- Asset Accumulation, Inc., Pinnacle Wealth Group, L.L.C., Strategic Ventures, Inc., and Pinnacle Wealth Concepts, Ltd. -- sell what they purport to be voluntary employees’ beneficiary association (VEBA) plans to employers.
A&A

Be Wary of Unlicensed Tax Preparers

Taxpayers beware-unlicensed tax preparers can mean big trouble, leading to hefty fines and jail time for those who file fraudulent returns, the San Antonio Express-News reported.With half of the 8.9 million signed returns filed in Texas last year coming from unlicensed tax preparers, the potential for fraud is huge. It is critical to check the background of the person preparing individual returns, the IRS cautions. Certified public accountants and other IRS-licensed tax preparers must pass a test and meet certification requirements.
Tax

IRS Seeks New Issues for the Industry Issue Resolution Program

The Internal Revenue Service is encouraging business taxpayers, associations and other interested parties to submit tax issues for the Industry Issue Resolution (IIR) Program. The submission of business tax issues where the tax treatment is uncertain, frequently disputed, or burdensome must be received by March 31, 2005. The objective of the IIR program is to resolve business tax issues common to significant numbers of taxpayers through new and improved guidance.

CFOs Must Still File Internal-Control Certifications, Despite SOX Extension

The chief executive officers (CEOs) and chief financial officers (CFOs) of certain midsize and foreign public companies must still execute and file certifications about their internal controls under Section 302 of the Sarbanes-Oxley Act, even though the Securities and Exchange Commission (SEC) last week gave them an extra year to comply with Section 404, says one of the country's largest corporate governance consulting units.
Tax

Supreme Court: Tax Court Must Reveal Documents

The Supreme Court on Monday struck down a U.S. Tax Court practice that shields vital documents from participants in cases before the tax court as well as the federal judges who hear tax court appeals, the New York Times reported.In an unusual move, the Supreme Court overturned rulings of two federal appeals courts, the Seventh Circuit in Chicago and the 11th Circuit in Atlanta.
A&A

AICPA Issues Report on Social Security Reform

The American Institute of Certified Public Accountants (AICPA) released this week a comprehensive analysis of the factors that should be considered for Social Security reform. The intent of this publication is to provide a tool that will aid in this important debate. The goal of the report is to provide unbiased facts on the degree of the Social Security program’s financial problem and the impacts on the economy and society.
A&A

GOP Proposes Big Tax Relief for U.S. Businesses

Senate debate continues today on a proposal to offer $4.2 billion in tax relief for U.S. businesses to lighten the burden of a higher minimum wage.The proposal, offered by Sen. Rick Santorum, R-Pa., calls for tax breaks and regulatory relief combined with raising the minimum wage by $1.10 to $6.25 per hour over 18 months, according to Dow Jones Newswires, quoting Senate aides.Santorum's plan counters a proposal by Sen.
Tax

Greenspan Calls for Simpler Tax Code

Calling the existing U.S. tax code overly complex with an "overlapping web of deductions and exemptions, " Federal Reserve Chairman Alan Greenspan suggested a consumption tax could spur more personal savings and economic growth.Greenspan spoke Thursday before an advisory panel on tax reform appointed by President Bush. He referred to the last tax code overhaul in 1986."Changes since the 1986 act have been largely incremental without the appropriate all-encompassing context that broad reform brings to the table," Greenspan told the group, according to The New York Times.
Tax

Are You or Your Clients Eligible For Any Of These Tax Credits?

Taxpayers should consider claiming tax credits for which they might be eligible when completing their federal income tax returns, advises the IRS. A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are refundable – taxes could be reduced to the point that a taxpayer would receive a refund rather than owing any taxes. Below are some of the credits taxpayers could be eligible to claim:Earned Income Tax Credit: This is a refundable credit for low-income working individuals and families. Income and family size determine the amount of the EITC.

Study on CEO Skill and Excessive Pay: A Breakdown in Corporate Governance?

What do Disney, AT&T, Exxon, and Verizon have in common? Based on economic performance and what they paid their CEOs from 1991 to 2002, a new academic study argues that all these firms were headed by CEOs who were paid too much. These firms, say three researchers who coauthored the study, are among a group of companies headed by CEOs whose pay is negatively related to job skill: The CEOs seem to be rewarded -- in most cases, quite amply -- for their bad performance.

SEC Grants One-Year Extension for SOX Compliance

The Commission has further extended the compliance dates for non-accelerated filers and foreign private issuers regarding amendments to its rules under the Securities Exchange Act of 1934 that were adopted on June 5, 2003, pursuant to Section 404 of the Sarbanes-Oxley Act. The amendments require a company to include in its annual reports a report by management on the company's internal control over financial reporting and an accompanying auditor's report. The Commission extended the original Section 404 compliance dates for all issuers in February 2004 (see Release No. 33-8392).
Tax

Wealthy Taxpayers Feeling the Pressure from IRS

The Internal Revenue Service is targeting wealthy executives and entrepreneurs to ferret out would-be tax dodgers.The IRS has not focused on individual tax returns of the well-to-do for years, the Wall Street Journal reported, but is becoming more aggressive after studying the results of a 2003 pilot program covering 24 big companies, which were not identified.Because of the tax problems the pilot program exposed, "we're moving toward a position where we routinely look at compensation of executives when we conduct our audits of corporations," IRS Commissioner Mark Everson told the newspa
Tax

Treasury, IRS Issue Guidance on Life, Annuity Insurance and Annuity Contracts

This week, the Treasury Department and the Internal Revenue Service (IRS) finalized a regulation that would limit the use of life insurance and annuity contracts as a way to avoid current taxation of investment earnings. The regulation, together with other guidance previously issued, will prevent taxpayers from turning otherwise taxable investments in hedge funds and other entities into tax-deferred or tax-free investments by purchasing the investments through a life insurance or annuity contract.

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