Practice management

There have been three fundamental, evolutionary changes in the corporate tax function over the past 20 years with respect to its mission, its alignment with corporate strategy, and its influence on organizational behavior and resource allocation.The first, in the 1980s, focused on using technology applications to improve the efficiency and effectiveness of tax preparation, with cost reduction acting as the driver for improving business processes. The second, in the 1990s, involved value creation and developing holistic approaches to sustain tax minimization, which proved that the corporate tax function could positively affect the bottom line through effective tax planning.

Schedule M-3 is part of the effort by the Internal Revenue Service to get a better handle on abusive tax shelters and other aggressive tax techniques by getting sufficient detail on book/tax differences that it can guide IRS auditors to transactions in need of further examination.The IRS is sufficiently confident in its ability to track book/tax differences on Schedule M-3 that earlier this year it removed book/tax differences as a criteria required for reportable transactions. While the former Schedule M-1 required only 10 lines of information, Schedule M-3 expands that to 90 lines of information, with an emphasis on making a distinction between temporary and permanent book/tax differences.

The Internal Revenue Service announced that long-distance telephone customers will be able to seek refunds ranging from $30 to $60 on their 2006 tax refunds.

In an August letter, the Internal Revenue Service said that the NAACP did not violate its tax-exempt status when the civil rights group's chairman gave a speech criticizing President Bush.

The Government Accountability Office is urging the Internal Revenue Service to require more comprehensive reporting of data relating to donor-advised funds, in an effort to address tax compliance challenges.In its report, the GAO outlined a series of steps for the IRS in data collection regarding tax-exempt donor-advised funds including suggesting that the Service collect Form 990 data for, and provide guidance on calculating payout rates for donor-advised funds and supporting organizations, as well as urging Congress to provide the IRS with the authority to protect taxpayer identification numbers from public disclosure. The GAO also recommended that the IRS require more thorough reporting of supporting organizations' ID numbers of and report the TINs of recipients of large loans.In contrast to private foundations, donor-advised funds and supporting organizations give donors less control over how donations will be used, but provide more favorable tax deductions, lower administration costs, less oversight from the IRS and fewer reporting requirements.

Like most everyone else, Congress will return from its summer vacation in the coming week.

When I was child and invited to a birthday party, I almost always left with a bag of goodies, usually candy, maybe a lollipop, some chocolate bars, sour balls, and probably a piece of licorice.

The Platt Consulting Group, operated by principals Michael and Kelly Platt, founders of online news portal AccountingWeb, have acquired monthly newsletter Inside Public Accounting from Atlanta-based publisher Hudson Sawyer.Terms were not disclosed.

In consideration of the continuing impact of Hurricane Katrina, the Internal Revenue Service has further postponed filing and payment requirements for businesses until Oct. 16, 2006, which is the same deadline established earlier for certain individual income tax return filers.The postponement now applies to individual, corporation, partnership, estate, trust, S corporation, generation-skipping, employment and certain excise tax returns with original or extended due dates that fall on or after Aug. 29, 2005, but before Oct. 16, 2006.

Larry R. Levitan, a longtime partner at Andersen Consulting and the inaugural chairman of the Internal Revenue Service's Oversight Board, died at his home here after a battle with cancer. He was 65.After his graduation from college, Levitan spent the ensuing 34 years with Andersen Consulting and consulted on telecommunications and utilities issues.

The Internal Revenue Service announced that a draft of Form 8888, "Direct Deposit of Refund," a new form for taxpayers who opt to split their refunds among accounts, is now available for public comment.

By now, readers of this space are well aware of my skepticism about the efficiency of any program that is government-run. No matter how well-intentioned, they never turn out quite the way they're presented to those charged with initial approval.

The Taxpayer Advocacy Panel has sent the Internal Revenue Service recommendations for easing taxpayer burdens in five areas.

After spending most of 2006 talking to users and revamping its QuickBooks ProAdvisor Program, Intuit is looking to add another 15,000 accountants and small business consultants to the program over the course of the next year.

The trio of private debt collection agencies the Internal Revenue Service selected for a pilot program will soon be able to come knocking.

The Treasury Department and the Internal Revenue Service have issued proposed regulations clarifying the treatment of expenditures incurred in selling, acquiring, producing or improving tangible assets.

Many CPAs picture the selling cycle as something like this: Have a meeting where you identify a need, write a proposal, sit down with the prospect and walk out with the business.I call it the two-call close, and it's often more of a fantasy than a formula.

IRS ISSUES SPRING '06 SOI BULLETIN: The Internal Revenue Service announced the release of its Spring 2006 issue of the Statistics of Income Bulletin. For the first time, the bulletin takes a detailed look at individual non-cash charitable contributions. The bulletin also includes information about high-income individual income tax returns for the 2003 tax year, S corporation returns for 2003, split-interest trusts for the 2004 filing year, controlled foreign corporations for the 2002 tax year, and the accumulation and distribution of IRAs for both the 2001 and 2002 tax years.For Tax Year 2003, individuals reported non-cash donations valued at $36.9 billion. Of these donations, corporate stock was the largest type, with 37.2 percent of the total value deducted. The average value of these stock donations was $79,279 per return. The largest number of donations reported was for clothing, representing 48 percent of all donations. Foundations were earmarked as the recipients of more than 30 percent of donations. Also, in the 2002 tax year, individual income taxpayers contributed approximately $42.3 billion to IRAs, representing an 18 percent increase over 2001 contributions. More than $204 billion flowed into IRAs during 2002 as rollovers, up from $187 billion in 2001 and most coming from employer-sponsored plans, such as 401(k) plans. Another $3.3 billion was converted from traditional IRAs into Roth IRAs.

The National Taxpayer Advocate, the watchdog of the Internal Revenue Service, has singled out offers in compromise and refund anticipation loans for special focus in her menu of tax issues to address during the coming year.The "areas of emphasis" detailed in her mid-year report to Congress are critical to the IRS fulfilling its mission to U.S. taxpayers, according to NTA Nina Olson. Other areas she tagged for focus are:

Warning: Tax strategies are now being carved out as private property, patented through the U.S. Patent Office.The practice started with a trickle in 1998, and is now becoming a steady stream threatening to overflow its banks. How does this development affect the tax practitioner? Will a practitioner be subject to a patent infringement suit for using a particular technique that has been "making the rounds?" Should practitioners begin applying for patents on strategies that they have discovered in solving a particularly thorny problem for a client?