Practice management

Senate Finance Committee Chairman Charles Grassley, R-Iowa, announced a plan to cut taxes by nearly $70 billion by 2010.

Accounting firms tend to embrace one of three types of governance systems - the benign dictator, the republic or the democracy. Many of my clients often ask me these questions:* Which one is the best?

* REFORM PANEL RULES OUT NATIONAL SALES TAX: The President's Advisory Panel on Federal Tax Reform ruled out a proposed national retail sales tax, and said that it would instead suggest changes to the current Internal Revenue Code framework, such as slashing benefits for mortgages and health care. The nine-member panel said that curbing benefits would help achieve the panel's original goal of simplifying the current tax code, while at the same time funding the cost of repealing the controversial alternative minimum tax.While agreeing that a national retail tax would boost revenue, the panel said that a hybrid tax would raise issues of "simplicity and fairness."

States have taken two different paths in response to falling revenue from corporate tax collections.On the one hand, some states have focused on lowering corporate taxes or at least changing them to make themselves more attractive for investment. At least five states have debated bills to reduce corporate tax rates in 2005, while dozens of others have introduced bills that shift corporate taxes away from the property and employees of corporations, and onto the customers of corporations.

Several provisions of the American Jobs Creation Act of 2004 have required tax advisors to be very proactive with their clients to consult with them about the impact of the statutory changes, as well as subsequent regulatory developments.Among the more significant areas requiring immediate attention have been the new domestic manufacturing deduction, the brief window for repatriation of dividends, the tax shelter reporting and disclosure rules, and the new requirements with respect to nonqualified deferred compensation.

The President's Advisory Panel on Federal Tax Reform submitted two proposals to the Treasury Department after months of work -- the first pushing for major simplification of the current income tax system and a second recommending changes for businesses that lead to an indirect tax on consumption.

I've been rattling off a canned two-line description of the restrictions put on the work of the President's Advisory Panel on Tax Reform for so many months now, that I've stopped recognizing the restrictions for what they are.

The Internal Revenue Service announced a limited opportunity for taxpayers to come forward and settle an array of transactions that the IRS considers abusive.

A federal judge ordered the Internal Revenue Service to pay Warren Buffett's investment company, Berkshire Hathaway Inc., more than $23 million in taxes and interest for disallowing certain deductions dating back to 1989.

The Internal Revenue Service announced relief for taxpayers affected by Hurricane Wilma.

With the President's Advisory Panel on Federal Tax Reform due to report Nov. 1, we asked industry leaders, many who made Accounting Today's recently released 2005 Top 100 Most Influential People list, to tell us what sort of tax system they would create.

The Internal Revenue Service and the Free File Alliance have extended their partnership, a pact that provides free tax services and electronic filing to an eligible pool of 93 million taxpayers, and providing important new consumer protections.

The Treasury Department has made three new appointments to the Office of Tax Policy.Michael J. Desmond was named tax legislative counsel, Harry J. "Hal" Hicks III was named international tax counsel and Robert H. Dilworth was named senior advisor.

The Internal Revenue Service is seeking 84,290 taxpayers whose income tax refund checks could not be delivered in 2005. Checks totaling approximately $73 million can be reissued as soon as taxpayers correct or update their addresses with the IRS.In some cases, a taxpayer has more than one check waiting. The average amount owed to each taxpayer is $871.

Professional services are organic - they have lifecycles and stages that are distinctly their own. Marketing your offerings to the maximum effect should include efforts to extend the lifecycle of your offerings. Infuse your services with innovation to keep them living - and giving - longer.The typical accounting offering starts out in an embryonic stage, in which your objective is simply to attract an early adopter. Properly managed, the offering matures to what I call the "diamond-in-the-rough" stage. It's the realization that there's plenty of unrealized potential ... and plenty you need to do to uncover it. At this point, if you do it right, you're beginning to pick up traction.

$6.1B KATRINA RELIEF BILL HEADS TO PRESIDENT: Despite concerns over the rising deficit, both houses of Congress sent a $6.1 billion Katrina tax-relief bill to President Bush for his signature without a dissenting vote being cast.The House gave its approval on a 422-0 vote, and the Senate moved the legislation through without a roll call. At press time, the president was expected to sign it.

Internal Revenue Service Commissioner Mark W. Everson estimated that the current tax gap - the difference between taxes owed and collected - is $300 billion.That money is legitimately owed to the government and would do a lot of good ... if it could be collected.

As the fall season moves into high gear, a tax practitioner's thoughts should turn, at least in part, to year-end tax planning. Year's end provides a unique opportunity to evaluate how each client's tax liability is shaping up while there is still time to tweak transactions to maximize tax savings between the current and the upcoming year.Many year-end tax planning considerations and techniques should be repeated year after year. Deciding whether to accelerate deductions or defer income, as well as taking the time to consider all deduction opportunities before they slip away with the old year, are "ol' standards" that never change.

The Nelson A. Rockefeller Institute of Government issued a report detailing a 13.3 percent average increase in state tax revenues across the country. The report, "State Revenue Growth Continues in Most States," compared revenues from the second quarter of 2005 to the same period in 2004. The growth percentage was the fastest since 1991, when the public policy research arm of the State University of New York began tracking state revenues."The growth in overall collections from final settlements is generally stronger than states had anticipated," said senior policy analyst Nicholas Jenny, in a statement. "It's now getting back into the range of the growth in final settlements states experienced regularly from the mid-1990s through 2001. This favorable 'April surprise' has put many states in a budget surplus position."

Gov. Arnold Schwarzenegger vetoed several bills that would have strengthened the enforcement of business tax laws in California.