Tax practice

Over 90 tax professors have joined the tax sections of the American Bar Association and the New York State Bar Association in asking a senator to drop his attempt to block the confirmation of Eric Solomon for assistant Treasury secretary for Tax Policy.

A new report from the Treasury provides a detailed analysis of what effects proposals to permanently extend the tax cuts enacted in 2001 and 2003 might have on the country's economy.

States and cities could lose billions annually under a congressional bill that would require businesses to have employed at least one employee in a state for 21 days, or have leased or bought property, before having to pay the state's business taxes.

Reading about former California gubernatorial candidate George "Nick" Jesson, who recently finished pleading guilty to state and federal tax evasion charges, reminded me of conversation I'd had with a friend a couple of weeks back.

* BILLS INTRODUCED TO FORM NEW TAX REFORM COMMISSION: In the wake of a failed effort to push through a permanent repeal of the estate tax, two Republican congressman have introduced companion bills to form a new "Securing America's Future Economy Commission."The 15-member commission would have the ability to reform tax policy and entitlement benefit programs, and function similarly to the military base closing commission - with proposed legislative packages receiving an up-or-down vote from Congress. The president or the budget committee of either house of Congress would be able to submit alternatives.

In late May, the Internal Revenue Service produced interim guidance in the form of Notice 2006-9, describing the new credit for qualified hybrid vehicles. Spawned by the Energy Policy Act of 2005, the credit replaces the $2,000 clean-fuel vehicle deduction that was available in previous years.A hybrid vehicle is defined as a vehicle that must have both an internal combustion or heat engine and a rechargeable energy storage system. There are also emission requirements for the vehicles. Only new hybrid vehicles purchased on or after Jan. 1, 2006, qualify for the credit, which is based on a two-pronged system that incorporates calculations based on the weight and the estimated lifetime fuel savings of the vehicle.

Using cash in a like-kind exchange is similar to passing around the proverbial "hot potato" - you don't want to be the one holding the potato, i.e., the cash, at the end of the transaction. If you do so in a like-kind exchange, you are probably holding "boot" (non-qualifying property), which is taxable to the extent of any gain otherwise locked up in the relinquished property (i.e., the difference between its fair market value and basis).Sometimes, strategies that involve the use of cash to facilitate like-kind exchanges under Code Section 1031 begin to seem like shell games, in which labels matter a great deal. In the end, however, the only labels that have been successfully applied are those that have made sense within the basic framework of Section 1031.

For the next few months, the Internal Revenue Service's Statistics of Income Division will be testing a prototype SOI Table Wizard.The tool will allow users to create their own custom tables from SOI tabulated data in the 1999 and 2000 Corporate Source Books. If adopted, data from other forms could eventually be added, and the IRS is asking users to provide feedback on the new feature. The agency also warned that there are some limitations in the tables.

The ranking minority member of the Senate Finance Committee threatened to place a "hold" on President Bush's nomination for the top Treasury tax official, unless the department agrees to provide a comprehensive plan to close the tax gap by the end of September.

Some federal tax breaks for energy efficient hybrids will start shrinking this fall.

Avalara, a provider of Web-based sales tax compliance services for small-and-midsized businesses, announced that it has seen dramatic growth for the first half of 2006.

The Internal Revenue Service released final drafts of Schedules M-3 and Form 8916 for the 2006 tax year, as well as a new Form 8916-A, "Reconciliation of Cost of Goods Sold Reported on Schedule M-3."

In response to a bill that would ban Internet poker, the nonprofit Poker Players Alliance has released a study making a case for the online games to be legalized and taxed by the federal government.

The Internal Revenue Service announced the release of its spring 2006 issue of the Statistics of Income Bulletin. For the first time, the bulletin takes a detailed look at individual non-cash charitable contributions.

The Congressional Research Service, which provides nonpartisan public policy research, has released its review of the presidential advisory panel on tax reform's two major proposals.

The failure to get a revamped computer program online to screen for fraudulent 2006 tax returns will cost the federal government between $200 million and $300 million, the Internal Revenue Service has estimated.

A federal court has barred a Jackson Hewitt franchise from preparing federal income tax returns claiming an improper federal income tax exemption for casino proceeds paid to Native Americans.

Changes to the Internal Revenue Service's Offer in Comprise Program went into effect July 16 -- with the most noticeable difference being that taxpayers who submit lump sum offers to the agency must now make a 20 percent nonrefundable, up-front payment to the IRS.

The Internal Revenue Service has ruled that employer incentives encouraging their employees to purchase environmentally friendly hybrid cars, are considered taxable compensation.

The Senate Finance Committee pushed hard for answers from a tax policy nominee on when the Treasury Department will supply recommendations on an overhaul of the tax system, and how best to meaningfully improve the nation's tax compliance.