Tax practice

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."

The Internal Revenue Service will issue guidance clarifying the 20 percent penalty for executives divesting a deferred compensation arrangement.

At the beach earlier this week, my sister found herself on the receiving end of a delivery from a seagull -- much to her horror at the moment, and the amusement of everyone I've told the story to since.

The Internal Revenue Service's headquarters in Washington will likely remain closed for at least the next 30 days due to flooding and electrical outages.

The Senate Finance Committee approved legislation that would empower the Internal Revenue Service to hit sex traffickers with major fines and lengthy prison sentences for failing to file employment paperwork and withhold taxes for the women and girls under their command.

Torrential rain in the Washington area has lead the Internal Revenue Service to close down its main offices through the rest of the week.

State tax revenues for all 50 states totaled $146.6 billion in the first quarter of 2006, up 6.8 percent from the same period in 2005, according to t he Nelson A. Rockefeller Institute of Government.

While the Internal Revenue Service's reward program for turning in tax cheats does a good job bringing in money, it's still in need of some revamping, a ccording to a report from the Treasury Inspector General for Tax Administration.

The Internal Revenue Service has filled three open positions in its Criminal Investigation, International and Tax Exempt and Government Entities divisions.

The Internal Revenue Service has been given the go-ahead to continue a new private debt collection program with the trio of companies it originally awarded contracts to in March.

The chairman of the House Ways & Means Committee has introduced a new bill to permanently raise the estate tax exemption level to $5 million in 2010.