Practice management

TAX COURT RULES FOR EMBEZZLER'S HUBBYWASHINGTON, D.C. - The U.S. Tax Court has ruled in favor of a taxpayer, David Billings, who asked to be relieved from liability for the tax owed on money that his wife embezzled from her employer without his knowledge.

Maximizing contributions to retirement savings plans is a priority with which few people would disagree. When money is needed for life's more immediate necessities or deemed necessities, however, retirement savings for that "distant future" may get squeezed out - at least temporarily.But even during those times when every dollar of salary may be called upon to satisfy an immediate need (or if salary itself is in short supply), tax-preferred retirement savings do not necessarily need to grind to a halt. Through gifts from one family member to another, or through moving regular savings into retirement savings, tax-preferred retirement savings opportunities need not be lost.

Many accounting firms are well-managed. In fact, some are over-managed and under-led.There are numerous conferences and courses devoted to managing an accounting practice. The American Institute of CPAs, several state societies, most regional associations and several consultants sponsor such programs. Much attention is paid to management and very little to leadership.

The Internal Revenue Service is not doing enough to control system administrator accounts on its computers, putting taxpayer information at risk, according to a new report.

New proposed Internal Revenue Service regulations to determine the value of a taxable estate may create a series of traps for unwary executors and tax preparers, according to the American Institute of CPAs.Moreover, the regulations lead to the situation where an estate must be held open for a number of years to determine the amount of the deduction for a contingent obligation.

The Securities and Exchange Commission voted with the Board of Governors of the Federal Reserve System to implement the bank broker provisions of the Gramm-Leach-Bliley Act of 1999.

The Internal Revenue Service is finally reaching out to former homeowners who have suffered foreclosure and now are being hit with taxes on any money they were forgiven on their mortgages.

The Treasury Department's watchdog group thinks it smells a rat when it comes to reports of Schedule C losses on tax returns, and it's urging changes in the Tax Code to establish "bright-line" rules for determining when an activity is a legitimate business.

Democratic presidential candidate Sen. Barack Obama, D.-Ill., outlined his tax proposals in a speech at the Tax Policy Center in Washington, highlighted by a proposal for a tax cut of between $80 billion and $85 billion, coupled with increases in the capital gains tax.

The Securities and Exchange Commission's Enforcement Division came under fire in a report that criticized the division's oversight of its caseload.

Forensic accounting is hot for a number of reasons. The most obvious is that as a specialty it has become very lucrative. So much so, I know of firms that have stopped during traditional tax and accounting work. Also, accounting and auditing standards are increasingly delineating new obligations with regard to practitioners’ duty to protect against fraud.

Sen. Chuck Grassley, R-Iowa, ranking member of the Committee on Finance, along with two committee members, is urging the Treasury Department and Internal Revenue Service to take action to ensure that families who lose their homes to foreclosure face more reasonable, accurate tax bills for their home loan debt forgiveness. "Working families who lose their homes are getting hit with huge tax bills," Grassley said. "Some of those bills are unfairly high and even inaccurate. The IRS needs to take steps to ensure the accuracy of the bill in the first place. Then the IRS should offer the taxpayer every opportunity to negotiate the size of the bill and a fair payment plan. The agency has plenty of authority to treat taxpayers reasonably in these situations. It needs to use that authority to serve taxpayers." Grassley and fellow GOP Finance Committee members Sens. Gordon Smith of Oregon and Pat Roberts of Kansas, wrote to the Treasury to urge these changes. "While the Congress considers the president's proposal for relief Americans shouldn't have to wait to get the relief that is needed right now," they wrote. "We strongly urge the Treasury Department to take immediate steps to encourage working families that face the difficulties that the President outlined in his (Aug. 31) speech to submit (and have the Internal Revenue Service accept) offers in compromise that will either eliminate or reduce the taxes that they owe due to cancelled mortgage debt on a primary residence."

Female business owners are increasingly more educated and more willing to take risks, according to a newly released survey.

Senate Finance Committee Chairman Max Baucus, D-Mont., has proposed a series of measures intended to provide tax relief and disaster assistance to farmers and ranchers as part of a revamped farm bill.

Congress held hearings last week on a grab-bag of tax topics, including carried interest, the effect of the Bush administration tax cuts, and the rapidly expanding reach of the alternative minimum tax, but neither of the other two issues is the ticking time bomb that the AMT presents.

The Internal Revenue Service is not doing enough to match incorrect or missing identification numbers on income and wage statements with existing tax accounts, potentially costing the U.S. Treasury billions in lost revenue, charged a Treasury Department watchdog.

Computer Sciences Corp. said it would restate its fiscal 2007 results after examining the impact of FASB Interpretation No. 48, or FIN 48, and discovering accounting errors for fiscal 1997 through 2007.

Of the roughly one hundred thousand cases a year that go before the Internal Revenue Service Appeals Division, more than 80 percent get resolved without going to litigation. That by itself is a good reason for tax professionals to utilize the appeals process, according to Sarah Ingram, chief at the IRS Appeals unit."We see large taxpayers, small taxpayers, individuals. We see large-dollar figures, any topic under the sun," she said. "Almost half of those cases come from the Collection Division, including either collection due process or offers-in-compromise kinds of activities."

IRS APPOINTS NEW COMMISSIONER

With the Tax Code constantly in a state of flux with new tax laws, not to mention delayed effective dates on tax provisions, sunsetting provisions, and phase-ins and phase-outs, every year offers some new wrinkles for tax professionals to worry about.The 2007 tax year is no exception.