Tax practice

Fewer taxpayers took advantage of the Internal Revenue Service's free electronic tax return filing service in 2007 than in previous years, according to a new audit report released by the Treasury Inspector General for Tax Administration.Moreover, the audit identified multiple calculation errors made by the commercial software of Free File Alliance firms.

The Internal Revenue Service outlined the steps it plans to take to close the approximately $290 billion tax gap by encouraging more people and businesses to voluntarily pay what they owe the government, but it still faces an uphill battle.

Representatives of private equity firms, hedge funds and other types of investment firms fought back against proposals to raise taxes on their incomes, telling the Senate Finance Committee that critics have misconceptions about their industry.

The National Society of Accountants is protesting an obscure new tax-reporting standard that it complains flew "under the radar" when it was stealthily inserted into an unrelated piece of Congressional legislation.

The Internal Revenue Service named Linda Stiff as the replacement for outgoing Acting Commissioner Kevin M. Brown.

The Internal Revenue Service has granted relief to some homeowners struggling to rebuild after Hurricane Katrina devastated the Gulf area in August 2005 so they can continue to qualify for a low-income housing credit.

Following on the heels of his former boss, Internal Revenue Service Acting Commissioner Kevin M. Brown plans to leave the IRS in mid-September to become chief operating officer of the American Red Cross.

After the release of a stinging report criticizing the Internal Revenue Service for shutting down the TeleFile program, leading members of the Senate Finance Committee lashed out at the IRS's decision.

Accounting firm BDO Seidman saw its revenue increase $31 million to $589 million in the fiscal year ended June 30, 2007.

Members of Congress have been calling for raising taxes on the profits of private equity firms and hedge funds, along with taxing the incomes of their top managers at the same rate as managers of corporations.

A former tax return preparer has been sentenced to 151 months in prison for participating in a tax fraud scheme to hide income and assets in bogus trusts, according to the U.S. Justice Department.

TIGTA Questions IRS's Questionable Refund ProgramWASHINGTON, D.C. - A new Treasury Inspector General for Tax Administration audit has found that changes in the Internal Revenue Service's Questionable Refund Program, along with a significant technological failure, dramatically decreased the effectiveness of the program for the 2006 filing season.

U.S. Treasury Secretary Henry Paulson plans to convene a conference in the coming week that could lead to an overhaul of the corporate tax system and a cut in corporate taxes.

Have you heard the joke about the sales tax audit? No one has.There is nothing funny about a sales tax audit.

Summertime brings with it the "high season" for clients who are seriously considering purchasing vacation homes, or switching from one vacation home to another.The majority are looking to take advantage of certain tax breaks to help them carry the property. For others, tax savings are an added bonus to validate their decision. In either case, tax advisors often get a hurried call to explain the options.

IRS National Taxpayer Advocate Nina E. Olson delivered a report to Congress on her main priorities for the coming fiscal year, and at the top of the list is improving taxpayer services.

The House Ways and Means Committee voted along mainly party lines to repeal the ability of the Internal Revenue Service to enter into private debt collection contracts, with a vote of 23 to 18 on the Democratic-backed bill.Under current law, the IRS can use private debt collection companies to find and contact taxpayers who owe outstanding tax liabilities and arrange payment. The companies can keep up to 25 percent of the amount collected, and the IRS can retain another 25 percent for additional enforcement activities. The Tax Collection Responsibility Act of 2007 would repeal that authority, which critics fear could lead to abusive tax collection practices.

Former construction worker and Coast Guard employee Rhiannon O’Donnabhain is suing the Internal Revenue Service after she was disallowed from deducting $25,000 in medical expenses for her sex change operation.The IRS claims the operation was cosmetic surgery and not a medical necessity. In another case in 2005, the IRS Chief Counsel made a similar determination. However, the United States Tax Court has not ruled on any similar cases, and its decision could set a precedent.

The National Association of Tax Professionals and the IRS are warning about the latest trend in e-mail scams: fake messages purportedly from the IRS "Fraud Department" threatening taxpayers with a "tax avoidance investigation."

The United States Tax Court has decided that wages earned in Antarctica are still subject to taxation.