Tax practice

The passage of H.R. 3, the Safe, Accountable, Flexible and Efficient Transportation Act of 2005, will effectively destroy the Internal Revenue Service's offer-in-compromise program, according to the American Association of Attorney-CPAs.

As part of cost-cutting measures, the Internal Revenue Service is forging ahead with plans to close some of its Taxpayer Assistance Centers, which provide walk-in service for taxpayers on tax law, tax return preparation and account inquiry resolution via face-to-face meetings with IRS employees.

The Internal Revenue Service is accepting applications for an annual grant program for matching funds to develop, expand or continue low income taxpayer clinics.

The Internal Revenue Service's Advisory Committee on Tax Exempt and Government Entities will hold a public meeting next month during which it will present its recommendations to the IRS Commissioner and senior leadership of the agency's tax exempt and government entities division.

While the Internal Revenue Service has made progress in improving taxpayer service, tax law enforcement and Business Systems Modernization areas, serious ongoing issues have kept the latter two areas on the Government Accountability Office's high-risk list, the watchdog agency said.

The Treasury Department and the IRS issued new rules related to Flexible Spending Arrangements -- which allow employees to pays for uncovered or unreimbursed medical costs with pre-tax funds -- in an effort to ease the year-end spending rush prompted by the current FSA deadline.

In response to requests from tax practitioners and professional organizations for clarification, the Internal Revenue Service and the Treasury Department issued revisions to the new Circular 230 standards -- rules related to written tax advice issued last December.

Tax and legal publisher BNA Inc. has appointed long-time executive Darren McKewen as group publisher of tax and accounting at Tax Management Inc.

Jackson Hewitt Tax Service said that its network of offices prepared 3.3 million tax returns for fiscal 2005, up 5.9 percent over last year.

TAX CUTS SAVED BUSH, CHENEY $110K: President George W. Bush and Vice President Dick Cheney saved a combined $110,182 in taxes last year under the income tax cuts passed by their administration, according to an analysis of the 2004 tax returns released by the White House.President and Mrs. Bush reported total income of $784,219 on their tax return and paid $207,307 in income tax - $28,846 (12 percent) less than they would have under the pre-Bush tax law, according to a report by Citizens for Tax Justice, a Washington-based research and advocacy organization.

A spinoff or other distribution by a company of subsidiary stock is not always tax free, due to the anti-Morris Trust rules under Code Sec. 355(e).The code requires that a distributing parent corporation recognize gain on an otherwise tax-free spinoff of its controlled subsidiary's stock, if this is done "as part of a plan (or series of related transactions)" to have one or more persons acquire a 50 percent or greater interest in either the parent or the controlled corporation.

The co-directors of a data research center have filed a federal Freedom of Information Act lawsuit against the Internal Revenue Service, claiming that the agency is illegally withholding information about its operations.

The recent Internal Revenue Service report indicating that it collected $3.2 billion from 1,165 taxpayers from the "Son of Boss" tax shelter scheme may just be the tip of the iceberg when it comes to filling government coffers. Hundreds of individuals and corporations are still fighting in court, while most likely thousands of other tax shelter participants who have yet to be investigated should consider stepping forward, rather than waiting to be targeted.While usually poker-faced, the IRS this time around seems publicly pleased with what it has achieved, and the odds are good that we will see more of these kinds of settlement offers to help clean up a number of other popular abusive tax shelters. As numerous stories reported, the IRS recently announced a settlement initiative for executives who transferred millions of dollars of compensatory stock options to trusts and other vehicles owned by family members and then claimed that the exercise of those options and sale of the stock was not taxable to them.

The Internal Revenue Service has named Janice J. Lambert as its chief financial officer.

Members of the President's Advisory Panel on Federal Tax Reform are set to discuss "return-free" filing, among other things, at their next meeting, slated for May 17.

The types of activities that allow a state, under its own rules, to tax a business entity vary widely. In fact, the same company with relatively light activity within one state might be subject to tax in that state, yet not be taxed in a state where its activity is greater.

STF Services Corp. president Charles F. Ter Bush has left the Syracuse, N.Y.-based tax forms company to join LexisNexis as vice president for the tax and accounting market segment.

A newly issued revenue procedure, Rev. Proc. 2005-28, makes it easier for some taxpayers to adopt a simpler method of allocating and apportioning interest expenses in determining their net U.S. and foreign-source income for foreign tax credit purposes.

H&R Block Inc. reported total tax prep and related fees through April 15 of $2.4 billion -- up 7.3 percent over last year.

The President's Advisory Panel on Federal Tax Reform will hold its eighth meeting this week, said the body's chairman and vice-chairman, senators Connie Mack and John Breaux.