Tax practice

$6.1B KATRINA RELIEF BILL HEADS TO PRESIDENT: Despite concerns over the rising deficit, both houses of Congress sent a $6.1 billion Katrina tax-relief bill to President Bush for his signature without a dissenting vote being cast.The House gave its approval on a 422-0 vote, and the Senate moved the legislation through without a roll call. At press time, the president was expected to sign it.

Internal Revenue Service Commissioner Mark W. Everson estimated that the current tax gap - the difference between taxes owed and collected - is $300 billion.That money is legitimately owed to the government and would do a lot of good ... if it could be collected.

As the fall season moves into high gear, a tax practitioner's thoughts should turn, at least in part, to year-end tax planning. Year's end provides a unique opportunity to evaluate how each client's tax liability is shaping up while there is still time to tweak transactions to maximize tax savings between the current and the upcoming year.Many year-end tax planning considerations and techniques should be repeated year after year. Deciding whether to accelerate deductions or defer income, as well as taking the time to consider all deduction opportunities before they slip away with the old year, are "ol' standards" that never change.

The Nelson A. Rockefeller Institute of Government issued a report detailing a 13.3 percent average increase in state tax revenues across the country. The report, "State Revenue Growth Continues in Most States," compared revenues from the second quarter of 2005 to the same period in 2004. The growth percentage was the fastest since 1991, when the public policy research arm of the State University of New York began tracking state revenues."The growth in overall collections from final settlements is generally stronger than states had anticipated," said senior policy analyst Nicholas Jenny, in a statement. "It's now getting back into the range of the growth in final settlements states experienced regularly from the mid-1990s through 2001. This favorable 'April surprise' has put many states in a budget surplus position."

Gov. Arnold Schwarzenegger vetoed several bills that would have strengthened the enforcement of business tax laws in California.

With the President's Advisory Panel on Federal Tax Reform due to report Nov. 1, we asked industry leaders, many who made Accounting Today's recently released 2005 Top 100 Most Influential People list, to tell us what sort of tax system they would create.

Two proposals for tax reform took definitive shape at the latest meeting of the President's Advisory Panel on Federal Tax Reform. The panel's final report is due Nov. 1.

The Tax Policy Center, a nonpartisan joint venture of the Urban Institute and Brookings Institution, has established a new Web page dedicated to the President's Advisory Panel on Federal Tax Reform, providing a number of links to relevant research and testimony.

The Government Accountability Office said that the Internal Revenue Service should work with federal agencies to make sure companies follow rules prohibiting tax deductions for fines and penalties paid in civil settlements.

The Internal Revenue Service launched a new Web-based information tool that will help private foundations comply with federal tax rules and requirements that occur throughout the lifecycle of their organization.

Gov. Phil Bredesen has told Nashville business leaders that he will not seek a state income tax if re-elected in 2006. Bredesen made the same promise before his first term, but had refused to extend the pledge as he campaigns for a second term.

The Internal Revenue Service has ordered 52 Cross Match digital fingerprinting systems from Cross Match Technologies, to use in conducting fingerprint-based background checks on employees and contractors.

With the President's Advisory Panel on Federal Tax Reform due to report Nov. 1, we asked industry leaders, many who made Accounting Today's recently released 2005 Top 100 Most Influential People list, to tell us what sort of tax system they would create.

Bolstered by higher sales and lower costs, consulting giant Accenture posted a 25 percent hike in fourth-quarter profits, to $229.1 million, versus the year-ago period.

Meeting for the first time since July, the President's Advisory Panel on Federal Tax Reform began focusing discussions on what recommendations will be included in its report, due on Nov. 1.

KPMG ANNOUNCES NEW TAX SERVICES HEADS: Moving on from its recent legal troubles, KPMG named vice chairs for its tax services and tax services operations.Shaun T. Kelly, 46, and Frederick S. "Rick" Smith, 49, will take over the respective tax leadership roles effective at the end of the fiscal year on Sept. 30. Tax services vice chair James Brasher will assume other significant duties within KPMG's organization, while operations vice chair John Chopack will retire in early 2006, as previously planned.

As the U.S. mobilizes on a number of fronts to assist in the recovery from Hurricane Katrina, the Internal Revenue Service has mobilized as well. The IRS has already released several information releases in response to Hurricane Katrina.There have already been disasters this year involving droughts, floods, tornadoes and other hurricanes. The IRS had released relief guidance earlier this year involving Hurricane Dennis and a tornado in Wyoming. It is seldom, however, that a disaster of the scope and national impact of Hurricane Katrina comes along.

Calling the proposal for a "return-free" filing system "flawed" and "dangerous to taxpayers," 14 groups have written the President's Advisory Panel on Tax Reform to urge that it be taken off the table in any final report.While the timetable for a final report has been delayed by Hurricane Katrina relief efforts, with the final two scheduled meetings postponed, the return-free concept is one of the proposals under consideration by the panel.

The Internal Revenue Service has accused former U.S. ambassador to Ireland Richard Egan of setting up a $62 million illegal tax shelter as soon as he moved to Dublin, a charge Egan denies.

A new study estimates that almost 30 percent of children potentially eligible for the child tax credit live in households with incomes too low to qualify for the entire $1,000 credit.