Tax practice

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.

National Taxpayer Advocate Nina E. Olson has delivered a report to Congress outlining the priority issues her office will tackle in the coming fiscal year.

Prosecutors are looking into Deutsche Bank's role in providing a lesser-known questionably tax shelter sold through a Silicon Valley firm, according to published reports.

Three weeks into the clean-up effort following the massive flooding at its Washington headquarters, the Internal Revenue Service said that the office -- which houses some 2,700 workers -- won't reopen until early 2007.

During his administration's mid-year congressional review, President Bush said that high tax revenues were responsible for helping the government reduce the budget deficit faster than originally anticipated.

The U.S. Department of the Treasury announced two initiatives aimed at simplifying the way small businesses, individual taxpayers and tax preparers file and pay their federal taxes. The initiatives include:* Enhanced batch provider software for tax pros: New software will allow preparers to make large numbers of payments on behalf of clients with a single mouse-click by using the Electronic Federal Tax Payment System. Improvements include electronic registration and enrollment, real-time payment and enrollment data, real-time file transmission and replication, and enhanced report generation. The software can be downloaded at www.eftps.gov, under "What's New."

The founder of Colorado-based Octane International Ltd., whose primary business was raising money for the development of an alternative fuel additive called "vapor phase combustion," is facing indictment by a federal grand jury. William Orr, 54, of Parker, Colo., was charged with 10 counts of mail fraud, four counts of wire fraud, and two counts of making false statements. He also faces five counts of tax evasion and six counts of failure to file tax returns.Orr allegedly made a variety of untested claims regarding the additive, receiving nearly $560,000 from 43 investors between 1998 and 2004. He also successfully lobbied members of Congress and other employees of the federal government, obtaining a $3.6 million earmark to be used for further testing of the additive - $2 million of which was dispersed.

While practitioners are still scrambling to make sense out of the recent tax reconciliation legislation, significant changes in tax legislation are already in effect for 2006 - changes that may have a huge impact on the tax pro's 2007 tax filing season. And since it's an election year, tax pros will have to keep a close watch on any additional legislation that makes it into law impacting 2007 filings.How the practitioner community prepares for those changes now will make a big difference in the success of that filing season, which is really just a few months away.

The fact that the new regulations under Code Section 199, released on May 24, 2006, are the final regulations should not be interpreted as an indication that the Treasury and the Internal Revenue Service will not be looking at Code Sec. 199 for a while.For one thing, the final regulations were accompanied by temporary and proposed regulations covering specific issues, and a statement that none of the regulations, final or proposed, address the changes made to Code Sec. 199 by the newly-enacted Tax Increase Prevention and Reconciliation Act of 2005. As predicted by the Treasury in originally opposing the adoption of Code Sec. 199, this is becoming one of those all-too-common code sections where even lengthy guidance is never enough and the questions keep coming.

The energy industry hopes that anticipated public guidance regarding Section 45 of the Internal Revenue Code will provide significant clarity on tax credit issues for projects producing electricity from open-loop biomass projects."Currently, there's a logjam when it comes to doing deals involving open-loop biomass projects as the industry does not have clear guidance on various issues," said David S. Lowman Jr., a tax partner in the Energy Practice Group at Hunton & Williams LLP in Richmond, Va., who works with clients on issues related to various energy tax credits.

The Internal Revenue Service announced regulatory revisions that the agency hopes will remove impediments to e-filing for corporations and shareholders."This is a win-win situation for businesses, shareholders and the IRS," said Commissioner Mark W. Everson. "Businesses and shareholders will be relieved of excessive reporting obligations that really no longer made sense, while the IRS will still receive the information it needs for compliance. As a bonus, a number of roadblocks to IRS e-file also will be removed."