Tax practice

The Internal Revenue Service announced the selection of directors for its Government Entities and Employee Plans departments, as well as a new chief information officer. Michael Julianelle will take over as the director of Government Entities in mid-November, while Joseph H. Grant will serve as the director of Employee Plans beginning Oct. 1. Both organizations are part of the IRS’s Tax Exempt and Government Entities Division. As of Sept. 17, Richard A. Spires has taken over as the agency’s new chief information officer. Julianelle replaces Preston R. Butcher, who will retire at yearend but remain in the broader TE/GE division to work on special projects until then. Julianelle will oversee the operations of the three Government Entities offices -- Federal, State and Local Governments, Indian Tribal Governments and Tax Exempt Bonds. Julianelle has been director of EP examinations since 2004. Before that, he served as the international area director in the IRS’s Small Business/Self-Employed Division. Grant replaces Carol Gold, the employee plans director since November 1999, who has accepted a teaching position with the Federal Executive Institute in Charlottesville, Va. The division is responsible for administering the law affecting more than one million public and private retirement plans that have almost $12 trillion under management. Grant joined the IRS in August 2005, as of director of the EP rulings & agreements division. Before that, he was chief operating officer and a deputy executive director of the Pension Benefit Guaranty Corp. Spires, a private-sector information technology executive -- with software vendor Mantas Inc. and SRA International -- before joining the IRS in early 2004, will be responsible for virtually all aspects of the IRS’ information technology systems, including its mission-critical modernization program. Spires has had responsibility for more than 400 electronic systems within the IRS that support tax administration, as well as oversight of the projects within the Business Systems Modernization Program.

Comptroller General David Walker delivered testimony this week at the Senate Finance Committee’s hearing on “Our Business Tax System: Objectives, Deficiencies and Options for Reform.” Walker, who runs the Government Accountability Office, framed his testimony around the need for broader tax reform, telling the senators that the size of business tax revenues makes them very relevant to any plan for addressing the nation's long-term fiscal imbalance. In a report prepared by the GAO that accompanied Walker’s testimony, the office said that the design of the current system of business taxation is flawed. “It distorts investment decisions, hurting the performance of the economy,” the report said. “Its complexity imposes planning and record keeping costs, facilitates tax shelters and provides potential cover for those who want to cheat.” Walker said that some features of current business taxes channel investments into tax-favored activities and away from more productive activities, reducing the economic well-being of all Americans. Walker said principles that should guide the business tax reform debate include:

The U.S. government recorded record-high overall and corporate tax receipts on Sept. 15 -- a quarterly deadline for tax payments, the Treasury announced.

A church in Pasadena, Calif., says that the Internal Revenue Service has asked it to turn over all the documents and e-mails it created during the 2004 election year containing any references to political candidates.

After watching the country's largest home-mortgage loan giants cope with restatement fallout from accounting scandals for years, reports say that the U.S. Treasury might back away from its position to set limits on the portfolios of Fannie Mae and Freddie Mac.

SUIT FILED AGAINST PLANS TO REIMBURSE PHONE TAX: A class-action lawsuit has been filed challenging the Internal Revenue Service's plan to reimburse taxpayers for their past three years' worth of long-distance phone taxes.The lawsuit claims that small businesses and low-income taxpayers will be shortchanged, or completely excluded, from the refunds.

So many tax provisions these days are effective so far out into the future, practitioners can't quite figure out how to address them. File them away on a long-term calendar? Start preparing for them immediately? Ignore them?In dealing with the recently passed Pension Protection Act of 2006, where the majority of provisions are not effective until either 2008 or 2011, the answer varies considerably. This article offers some first-off-the-bat timelines to consider.

The Internal Revenue Service has announced five director-level appointments in its Large and Mid-Size Business Division, which serves corporations, Subchapter S corporations and partnerships with assets greater than $10 million.New directors were named for four of the LMSB's five industries, as well as for the LMSB's pre-filing and technical guidance unit. Among the changes:

The selection by an entity of its company structure, its fiscal year and its method of accounting are the three main mechanisms that a company can employ in performing substantial tax planning, according to Nicholas Crocetti, CPA, a partner in CBiz Accounting Tax & Advisory."The concept of an accounting method is much broader than what many people believe," he said. "Most companies employ a number of accounting methods. First, they have an overall method of accounting - for example, the cash method, accrual or some form of hybrid method. Additionally, companies need accounting methods for every timing item they encounter in their business, such as how to account for inventory, bad debts, vacation pay and self-insured medical expenses."

As part of the recently signed pension bill, the Treasury Department and the Internal Revenue Service will have to better define what constitutes "good" condition for donations of clothing or household items.The IRS can deny deductions for donated items such as furniture, appliances, linens or electronics if the items aren't in appropriate condition.

A representative from the Justice Department told a Senate panel that the agency is satisfied with the tactics used by prosecutors to pursue corporate criminals.

Using one of dozens of scenarios, undercover government auditors were mostly satisfied with the levels of assistance they received at several of the Internal Revenue Service's Taxpayer Assistance Centers.

The Internal Revenue Service announced a record settlement for a long-running a transfer pricing dispute with pharmaceutical giant Glaxo SmithKline Holdings Inc. and the company's subsidiaries.

As previously announced, the Internal Revenue Service will soon begin charging user fees for the residency certification letters commonly used to avoid foreign value added taxes.

After months of increasing reports of investigations by both the Securities and Exchange Commission and academics, Congress is now examining the sometimes-questionable timing of stock options granted to executives.

A report from the Treasury Inspector General for Tax Administration estimates that computer programming woes cost the country more than the $200- to $300-million range originally estimated by the Internal Revenue Service.

The reasoning might be sound in the latest recommendations brought forward by the Taxpayer Advocacy Panel , but huge questions remain over how any of the panel's latest handful of suggestions might actually be executed.

Pitney Bowes Inc., a manufacturer of postage meters, mailing systems and other equipment, agreed to a $1.1 billion tax settlement with the Internal Revenue Service.

IRS LAUNCHES ONLINE PAYMENT AGREEMENTS: Tax professionals will help launch a new system allowing many individuals who owe delinquent federal taxes to apply online for a payment agreement, the Internal Revenue Service announced.The IRS is implementing the new Online Payment Agreement application through national partnerships with the tax professional community. The application will eliminate the need to write or call the IRS toll-free number for assistance. The goal of the program is to provide an easier way for taxpayers to voluntarily resolve tax liabilities.

There have been three fundamental, evolutionary changes in the corporate tax function over the past 20 years with respect to its mission, its alignment with corporate strategy, and its influence on organizational behavior and resource allocation.The first, in the 1980s, focused on using technology applications to improve the efficiency and effectiveness of tax preparation, with cost reduction acting as the driver for improving business processes. The second, in the 1990s, involved value creation and developing holistic approaches to sustain tax minimization, which proved that the corporate tax function could positively affect the bottom line through effective tax planning.