Tax practice

The Treasury Department and the Internal Revenue Service issued guidance on new pension-funding rules included in the Pension Protection Act of 2006.

The Internal Revenue Service has issued changes to the 2007 instructions for Form 1040 and Form 1040NR because of the Tax Technical Corrections Act of 2007.

GAO Comptroller General David Walker, who has spent the last three years on a "Fiscal Wake-Up Tour," again reiterated his agency's warning that the country is on an "imprudent and unsustainable fiscal path," while stressing the need for bi-partisan cooperation and the courage to make tough choices for the longer term. Walker, who has traveled to some 25 states on his tour, said simulations by the GAO and the Congressional Budget Office show that despite a three-year decline in the budget deficit, the U.S. faces "large and growing structural deficits driven primarily by rising health care costs and known demographic trends." The auditor general pointed out that the first wave of Baby Boomers has already filed for early Social Security retirement benefits -- and will be eligible for Medicare in just three years. Walker said rapidly rising health care costs are not simply a federal budget problem, but rather the No. 1 challenge to the U.S. and that the problem calls "for us as a nation to fundamentally rethink how we define, deliver, and finance health care in both the public and the private sectors." Walker said "While Congress and the administration are focused on the need for a short-term fiscal stimulus, our long-term challenge increases the importance of careful design of any stimulus package. It should be timely, targeted and temporary, while at the same time creating a capable and credible commission to make recommendations to the next Congress and the next president for action on our longer-range and looming fiscal imbalance."

The Senate Finance Committee held hearings on the nomination of Douglas Shulman to be commissioner of the Internal Revenue Service.

Congress can't seem to agree on what to do about an economic stimulus package, which could mire the effort to produce an effective package in time to do some good.

A prominent Senate Democrat said that he would add rebates for senior citizens who depend on Social Security to the economic stimulus package, along with an extension of unemployment benefits.

The House voted by a 385 to 35 margin to pass the economic stimulus package agreed to by President Bush and House leaders.

The California Society of CPAs and the California CPA Education Foundation launched a Financial Leadership Forum to provide education, training and other resources for CPAs and business and finance executives.

There may be 2-D bar codes in the future of paper-filed returns, if recommendations from the Government Accountability Office are followed.In its end-of-year report on last year’s tax season, the GAO said that the Internal Revenue Service exceeded the previous year’s performance by most measures. However, it noted a number of opportunities to realize additional savings and increase tax compliance, with the barcoding of paper returns among them.

In the last few days before Congress adjourned for 2007, a number of tax law changes finally made it through the two chambers and on to President Bush. The president has either already signed or indicated his willingness to sign each piece of legislation. Several of the provisions enacted will have an impact on 2007 tax returns.Even with this flurry of activity, a number of pieces of legislation, including most of the energy-related tax proposals, an agriculture bill with tax provisions, military tax relief, and the extension of expiring provisions, as well as a fairly extensive list of offsetting revenue raisers, got left off the table and will be addressed again in 2008. The following is a summary of each of the tax laws enacted, the principal provisions, and the impact, if any, on 2007 tax returns.

Congressional leaders have struck a $150 billion deal on an economic stimulus plan that would give most taxpayers rebate checks of $600 to $1,200.

New York Governor Eliot Spitzer's proposed budget contains a provision that would tax marijuana at a rate of $3.50 per gram and controlled substances like cocaine at $200 per gram.

The Internal Revenue Service is running out of storage space for the copies of documents it stores on cases closed by its Office of Appeals, according to a report by the Treasury Department's Inspector General.

President Bush encouraged Congress to pass the economic stimulus package he agreed to with House leaders without adding extra provisions.

Michael Oxley, the former chairman of the House Financial Services Committee who co-sponsored the Sarbanes-Oxley Act of 2002, has joined the International Advisory Council of APCO Worldwide, a consultancy that specializes in corporate communications.

The Senate Finance Committee held hearings to discuss an economic stimulus package and hear testimony from the Congressional Budget Office about the available options.

S corporations are the nation's most common corporate tax designations.

The stimulus package that President Bush and Congress are hammering out could be enough to jumpstart the economy, but don't count on it.

Section 7803(c)(2)(B)(ii)(III) requires the National Taxpayer Advocate to identify at least 20 of the most serious problems encountered by taxpayers. This year’s report to Congress describes 26 problem areas and provides status updates on three other issues.

President Bush called for an economic stimulus plan that includes tax breaks for individuals and businesses.