Tax practice

In a review of Internal Revenue Service efforts to determine whether charitable and non-profit organizations are being used to divert funds to support terrorist activities, the Treasury Inspector General for Tax Administration suggested a number of steps the Criminal Investigation Division could take to improve counterterrorism efforts.

CCH SFS BUYS INTELLITAX

On Thursday, Congress passed a waiver of the minimum distribution rule for 2009, but not for 2008, for employer-provided qualified retirement plans and individual retirement accounts and annuities in H.R. 7327, the Worker, Retiree, and Employer Recovery Act of 2008. President Bush is expected to quickly sign it.The Treasury Department is studying whether to provide relief with regard to 2008 minimum distributions.

The Internal Revenue Service announced that the interest rates for the calendar quarter beginning Jan. 1, 2009, will drop by one percentage point. The new rates, as laid out in Revenue Ruling 2008-54 will be: -- 5 percent for overpayments (4 percent in the case of a corporation);-- 5 percent for underpayments;-- 7 percent for large corporate underpayments; and,-- 2.5 percent for the portion of a corporate overpayment exceeding $10,000.Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis, based on the federal short-term rate. The most recent rates were computed from the federal short-term rate during October 2008 to take effect Nov. 1, 2008, based on daily compounding.

A completely revised Form 990 will require an overhaul of internal policies and procedures for most tax-exempt organizations, according to Joyce Underwood, director of nonprofit taxation at BDO Seidman's Institute for Nonprofit Excellence.

Once again this year, the headline for the Alternative Minimum Tax is another one-year fix with no permanent solution. The Emergency Economic Stabilization Act of 2008 raised the AMT exemption amount for 2008 to $69,950 for joint filers and $46,200 for single filers. This represents another inflation-adjusted extension of the exemption amount designed to preserve the status quo and keep an additional 21 million taxpayers from being subject to the AMT in 2008. And, once again, without further action, the AMT exemption amount reverts to its pre-2001 level in 2009 unless further congressional action is taken.

The Internal Revenue Service should strengthen its approach to evaluating a pilot project for matching federal and state taxpayer information before it extends the tax compliance project to 45 states next year, recommended a new report from the Government Accountability Office.

IRS Commissioner Douglas Shulman said the agency would begin ramping up enforcement against tax abuses such as the avoidance of withholding taxes, especially on dividends.

Sen. Charles Grassley, R-Iowa, has written to congressional leaders criticizing a provision in the automobile industry bailout bill that provides government guarantees to mass transit agencies that have taken advantage of an outlawed tax shelter.

The United States and Liechtenstein have signed an agreement to exchange tax information, including details on the holdings of citizens who are sheltering money in the foreign bank accounts, but only when the U.S. already knows the names of the tax evaders.

Two California residents have been indicted for filing over $2 million in false tax refund claims using the names and Social Security numbers of dead people, with help from a CPA.

A group of Democratic representatives from the House Ways and Means Committee wrote a sternly worded letter to Treasury Secretary Henry Paulson warning him against expanding a controversial IRS Notice that allows banks to write off the tax losses of other banks they acquire.

The fourth of six defendants in a $60 million tax fraud conspiracy case has been sentenced to more than 17 years in prison for his role.

Tax advocacy group Citizens for Tax Justice has released a report urging President-elect Barack Obama to avoid cutting the federal estate tax.

Disaster Relief Resource Center for Tax Professionals

President-elect Barack Obama has quietly dropped his original proposal for a windfall profits tax on oil companies, according to a spokesperson.

The U.S. reportedly plans to sign an agreement with the government of Liechtenstein that will help put a stop to the use of the small European principality as a tax haven.

A federal grand jury in New York has indicted four people in a scheme to claim false income tax refunds using the identities of clients of two New York City agencies.

December's a perfect time for accountants to check their lists twice to make sure they have all their bases covered before busy season starts cranking.

As President-elect Barack Obama continues to name members of his cabinet who will have to quickly deal with pressing national and economic security issues, people are beginning to wonder if he will be able to fulfill the promises he made in his campaign.