Tax practice

During the month of November, a number of accountants will be getting a telephone call or an e-mail from clients all asking the same question. “What is the little-known tax break that makes investing In GPS-tracking technology more affordable than ever?” Be careful what you say if asked because that inquiring client already has the answer.

INDEXING WILL LOWER TAXES NEXT YEAR

The Small Business Tax Act amended Code Sec. 6694 to increase tax return preparer penalties, the types of returns to which the penalties apply, and the support required for the position taken on the return. The provision was to be effective for tax returns prepared after May 25, 2007.However, based on requests from the return preparation community, the Internal Revenue Service has provided transitional relief that generally applies the prior standards to returns and refund claims due before Jan. 1, 2008, estimated tax returns due on or before Jan. 15, 2008, and employment and excise tax returns due on or before Jan. 31, 2008. The transitional relief does not apply to willful or reckless conduct.

The Internal Revenue Service is sending out free copies of its CD-ROM, the Small Business Resource Guide, to help small business owners comply with federal tax laws, and it's ready to ship them in bulk.

A federal judge sentenced a man to a year and a day in jail for flying an airplane without a license and failing to file federal income tax returns four years in a row.

The House Ways and Means Committee has passed a bill by a margin of 22 to 13 that would keep the Alternative Minimum Tax from spreading to more than 23 million families, which the full House is expected to debate this week.

The Internal Revenue Service has softened its opposition to contingent fees charged by Circular 230 practitioners. Originally, the IRS proposed permitting a contingent fee only in connection with an IRS examination or the challenge of an original return, or an amended return filed before a notice of examination was received.Under the final rules, a tax practitioner will be allowed to charge a contingent fee for services rendered in connection with the IRS examination of, or challenge to, an original return, or an amended return or claim for refund or credit where it was filed within 120 days of the taxpayer receiving a written notice of the examination, or a written challenge to the original return.

Leaders of the congressional tax-writing committees told the Internal Revenue Service that they planned to make imminent changes in the alternative minimum tax, and that the IRS should start producing accurate tax forms for the 2007 filing season.

The Internal Revenue Service is looking to fill some vacancies on its Advisory Committee on Tax Exempt and Government Entities.

The House Ways and Means Committee began considering a bill that would give tax breaks to members of the military and their families, as well as volunteer firefighters and emergency workers.

No sooner was House Ways and Means Committee Chairman Charles Rangel's proposal for overhauling the alternative minimum tax released than it was pronounced "dead on arrival."

The House passed a bill extending the moratorium on Internet access taxes by seven years, putting the period on par with a recently passed Senate bill and sending the bill to President Bush for his signature.

The Internal Revenue Service said it is extending the filing deadlines for victims of the wildfires in Southern California.

The New York State Society of CPAs has offered its own solution for the problem of the expanding alternative minimum tax, as the issue continues to get debated in Washington.

The U.S. Senate has voted to extend a moratorium on state and local taxes for Internet access for seven years.

Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee, has introduced a bill aimed at repealing the alternative minimum tax and cutting the top corporate tax rate while raising taxes in other areas, including on the salaries of hedge fund and private equity fund managers.

The Internal Revenue Service intends to improve international tax administration in an effort to reduce the tax gap.

Employers are able to exclude the value of an employee's use of an employer-provided cell phone from the employee's gross income if the employee keeps careful records distinguishing business and personal calls, according to a recently released letter from an Internal Revenue Service official.

After repeated pleas from tax practitioners, lawyers and others, the Treasury Department and the Internal Revenue Service announced that they would extend the final deadline for compliance with new rules on nonqualified deferred-compensation plans for a year, until Dec. 31, 2008.The regulations, which provide guidance under Section 409A regarding the requirements for deferral elections and payment timing in deferred-comp plans, were in response to legislation enacted in 2004. Section 409A has been effective since Jan. 1, 2005, but the IRS did not release the final regulations until April of this year, with an original deadline of Dec. 31, 2007, which many felt was far too early, given the complexity of the plans and the amendments that companies may have to make to them.Over the summer, a number of practitioner groups, including a group of 92 separate law firms, contacted the Treasury and the IRS to press the case for more time.The IRS noted that it plans to follow up Notice 2007-86, which extends the deadline, with guidance regarding a correction program as soon as possible.

Treasury Secretary Henry Paulson said Congress should stop dithering on passing a fix for the Alternative Minimum Tax.