Tax practice

The Internal Revenue Service said that tuition paid for two children who have been diagnosed as having disabilities caused by medical conditions including dyslexia to attend school now qualify as medical care expenses deductible under Section 213(a). The children take part in the school's program of special education, which is designed to enable them to deal with their medical handicaps and move on to study at a mainstream school. However, Ltr. Rul. 200521003 points out that overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the special education provided.

Richard J. Morgante and Pamela G. Watson have been named to the top two posts in the Wage and Investment Division, the Internal Revenue Service unit that serves most individual taxpayers. Morgante, currently the division's deputy commissioner, will move up to W&I commissioner, and Watson, now the division's compliance director,will succeed him as W&I's second highest executive. Both appointments will take effect in early July. Morgante succeeds Henry Lamar, who is retiring after 34 years with the IRS, the last two as W&I commissioner."Rich and Pam make a strong team, and their leadership and experience will help us effectively serve taxpayers and enforce the law," said IRS Commissioner Mark W. Everson. Based in Atlanta, W&I has processing and customer service responsibility for virtually all taxpayers, processing approximately 175 million paper and electronic returns for individuals and businesses last year, answering 67.3 million automated and assistor calls, and serving over 7 million customers face-to-face.

FINANCE COMMITTEE TAKES AIM AT AMT: A bipartisan coalition of members of the U.S. Senate Finance Committee, including chairman Charles Grassley, R-Iowa; ranking member Max Baucus, D-Mont.; Ron Wyden, D-Ore.; and Jon Kyl, R-Ariz., have introduced legislation to repeal the alternative minimum tax.The Individual Alternative Minimum Tax Repeal Act of 2005 would amend the Internal Revenue Code to end the AMT beginning in the 2006 tax year.

The revised Circular 230 Rules of Practice Before the Internal Revenue Service are in full force starting June 20, 2005. The revised rules are a reaction to practitioner complicity in - or at least acquiescence to - abusive tax techniques within the period ranging roughly between 1996 and 2003.

Since its first meeting in February, the president's Advisory Panel on Federal Tax Reform has heard testimony and statements from more than 80 witnesses, and examined everything from the philosophical underpinnings and history of our current tax system, to the economic impact of potential tax systems.

In a victory for accounting firm BDO Seidman, a federal appeals court judge reversed a district court decision and ruled this week that a group of investors can't sue BDO Seidman over the sale of an illegal tax shelter, and instead must arbitrate their claim.

The President's Advisory Panel on Tax Reform will get an additional two months to complete its work.

The Senate Finance Committee has marked up the Energy Policy Tax Incentives Act of 2005, the title of the energy policy bill now before the full Senate.

CCH Tax and Accounting has added two major new stand-alone libraries in the Miller accounting and auditing series to its Accounting Research Manager.

The 2005 filing season was a good one for the Internal Revenue Service, according to the Treasury Inspector General for Tax Administration.

The IRS Oversight Board at its recent meeting raised concerns over the agency's plan to close some of its Taxpayer Assistance Centers this fall.

The Internal Revenue Service will co-sponsor a free Webcast next week focusing on collection issues, including partial-payment installment agreements and offers in compromise.

The Internal Revenue Service is reminding taxpayers that the agency isn't kidding around when it comes to frivolous cases aimed at delaying tax collections.

Interest rates for the third quarter will remain unchanged, the Internal Revenue Service said.

* Block, HSBC to Settle RAL Lawsuit: H&R Block and HSBC Taxpayer Financial Services Inc. reached a tentative agreement to settle a 1998 Chicago class-action lawsuit related to refund anticipation loans.

With the rising deficits and a series of tax reductions enacted in the first term of the Bush administration, many tax practitioners are starting to feel that the tax situation for their clients is never going to get much better than it is right now.

The Internal Revenue Service has been shifting its priorities from taxpayer service to enforcement and its management of the Business Systems Modernization program - an ongoing umbrella program of upgrades - from contractors to IRS staff.

As part of cost-cutting measures and a move toward online services, the Internal Revenue Service will no longer mail out its compilation of federal tax forms and instructions for tax professionals, known as Package X.

The National Society of Accountants has called on the Internal Revenue Service to grant Circular 230 practice privileges to public accountants in states that have practice rights similar to public accountants in New Jersey and Pennsylvania.

Due to a decline in use and increasing costs, the Internal Revenue Service is discontinuing its TeleFile program.