Tax practice

Tax scam promoters John J. Rizzo and his wife, Carol, were sentenced to 43 months and 24 months in prison, respectively, for their roles in a tax evasion scheme, the Department of Justice and Internal Revenue Service announced.

The House of Representatives has already passed three tax cuts and had the details of a fourth nearly pinned down, cutting taxes by $94.5 billion over the next five years.

The Internal Revenue Service issued proposed guidance on the disclosure or use of tax return information by tax return preparers.

Reports from inside the White House are that President Bush's administration may wait until 2007 to begin pushing a proposal to overhaul the tax code.

After checking with the state's attorney general, a Texas nepotism law will prevent the Kerr County tax assessor/collector, Paula Rector, from marrying one of the district's tax appraisers.

The Internal Revenue Service issued its 2006 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The Internal Revenue Service has issued a consumer alert about an Internet scam where taxpayers receive an e-mail informing them that they are owed a tax refund. The e-mail, which claims to be from the IRS, directs the consumer to a link that requests personal information, such as Social Security number and credit card information.

As most every tax practitioner in town makes their pitch on year-end tax planning to clients, research organization the Tax Foundation recently released a new report making an economic case against the federal deduction for charitable gifts.

Tax protestor Larken Rose of Hollywood, Pa., was sentenced to serve 15 months in prison for failing to file tax returns for the years 1998 to 2002, the Justice Department and Internal Revenue Service announced.

A new study from the Tax Foundation says that the federal tax deduction for charitable gifts is highly regressive and subsidizes many organizations that are questionably charitable.

* FREE FILE AND IRS EXTEND PARTNERSHIP: The Internal Revenue Service and the Free File Alliance have extended their partnership, a pact that provides free tax services and electronic filing to an eligible pool of 93 million taxpayers, and agreed to provide important new consumer protections.Free File debuted during the 2003 filing season as a strategy of providing free services to moderate- and low-income taxpayers. The alliance is a consortium of tax software vendors that set their own criteria for taxpayer eligibility for free use of their software. The agreement calls for services to be provided to 70 percent of the nation's taxpayers. The extended agreement includes the following consumer protections:

A federal judge ordered the Internal Revenue Service to pay Warren Buffett's investment company, Berkshire Hathaway Inc., more than $23 million in taxes and interest for disallowing certain deductions dating back to 1989.The IRS disallowed the original deductions after tracing $750 million in borrowed money that Berkshire used to purchase stock in several companies, including Coca-Cola Co., Time-Warner and Wells Fargo & Co. The IRS based its denial on a tax code passed by Congress that reduced deductions if borrowed money is directly attributable to the investment that pays a dividend.

Tax practice for CPAs is changing. Recent modifications to Circular 230, the U.S. Treasury Department regulations that govern practice before the Internal Revenue Service, have established several changes that leave CPAs with a new standard for the practice of taxation.The rationale for the revised regulations is part of an IRS effort to promote ethical tax practices and curb abusive tax avoidance programs promoted by some tax professionals. Some CPA and law firms were coming up with tax-motivated transactions for clients and then packaging those transactions to sell to other companies.

Advanced degrees are being obtained by a higher percentage of the middle- and upper-class population than ever before. Many of these students hold full-time jobs. The recent development of online universities has only served to fuel this trend. The ability of working students to take a business expense deduction for tuition expenses likewise has grown in importance.With MBAs being one of the hot degrees to have as of late, because of its apparent ticket to success in many different business settings, it's a small wonder that a recent Tax Court decision has attracted more than its share of attention. That case (Allemeier Jr., T.C. Memo. 2005-207) appears to have opened up the possibility that the expense for obtaining a larger number of MBA degrees can be written off as a trade or business expense.

A member of the President's Advisory Panel on Federal Tax Reform has been complaining loudly about the requirement that the panel always meet in public to discuss its plan, according to reports.

The recently passed Treasury appropriations bill for next year sets a budget of $10.7 billion for the Internal Revenue Service, with most of the agency's $434 million increase tabbed for enforcement efforts.

The House and Senate passed the Treasury appropriations bill for next year, allocating a budget of $10.7 billion for the Internal Revenue Service, a $434 million increase from 2005 that will mostly be directed to enforcement efforts.

As the Senate approved a measure with $60 billion in tax cuts, the House will consider its own measure containing $56.6 billion in cuts. Both plans are spread over the next five years.

Although President Bush's tax reform advisory group recommended against shifting the U.S. to a European-style value added tax or a national sales tax system, congressional advocates of consumption taxes haven't given up the fight.

The Senate will debate a tax bill that would cut taxes by about $61 billion over the next five years, and would include a $5 billion tax next year for the nation's biggest oil companies.