Tax practice

When President Bush signs the FSC/ETI bill, the days of small business owners and professionals such as doctors and lawyers expensing luxury SUVs are over.Writers of the 600-page measure closed a tax break that allowed business owners to save as much as $33,000 on the purchase of a $1000,000 vehicle, according to Tax Analysts.The Jobs and Growth Tax Relief Reconciliation Act of 2003 created the break by increasing from $25,000 to $100,000 the amount that small businesses can expense in the first year for buying a vehicle weighing 6,000 pounds or more.The incentive was originally written to assist farmers and contractors to invest in larger equipment, but the floodgates opened when it was discovered that luxury SUVs also qualified.The amendment reduces the SUV deduction to $25,000, while still allowing the farmers and contractors the break.

New data suggesting that income tax noncompliance is on the rise among the Internal Revenue Service's own employees is causing some hand-wringing among members of an IRS task force formed to address the problem.

NEW BILL WOULD PREVENT DOUBLE TAXATION OF TELECOMMUTERS: Democratic Senators Christopher Dodd and Joseph Lieberman, both of Connecticut, have introduced a bill to prevent double taxation of taxpayers who work from home. The Telecommuter Tax Fairness Act of 2004 would prohibit states from imposing personal income tax on nonresidents for any period that the individual is not physically present in the state.

Although Tropical Storm Bonnie and Hurricanes Charley, Frances and Ivan have taken their toll on Florida this season, disaster tax relief affects most preparers at some time during their career.

As the Internal Revenue Service continues to labor to finalize Circular 230 on the requirements for tax shelter opinions and when they may be relied on, a recent court decision may have already done a significant portion of its work.

House and Senate negotiators agreed to a corporate tax bill that repeals the Foreign Sales Corporation-Extra Territorial Income Tax regime, and cuts taxes across a broad swath of businesses.

The Internal Revenue Service has unveiled a new tool to help tax professionals determine whether their clients are eligible for the earned income tax credit.

As part of efforts to ensure the accuracy of Social Security numbers on wage statements, the Internal Revenue Service should consider revising its rules for waiving the penalties associated with filing statements with inaccurate numbers, the Government Accountability Office said this week.

As expected, President Bush signed into law the Working Families Tax Relief Act of 2004 on Monday, extending a number of tax breaks for families and businesses and marking his fourth tax cut in four years.

A new revenue ruling will shut down an abusive employment tax arrangement involving double employer reimbursements for an employee's parking expenses.

In a move aimed at reducing the paperwork burden for small businesses, the Internal Revenue Service said it would boost the number of small businesses eligible to file a simplified expense form.

Republican and Democratic lawmakers in a conference this week agreed to extend $145 billion worth of President Bush's tax cuts.

Legislation that extends soon-to-expire provisions of last year's tax cuts for families -- at a cost of about $146 billion over a 10-year period -- easily sailed through Congress late yesterday.

Outsourcing provider Xpitax has added accounting services for clients, including bookkeeping and write-up solutions, work paper conversion, and year-end accounting work and financial analysis, to its offerings.

Washington (Sept. 21, 2004) -- In its aggressive crackdown on credit counseling abuse, the Internal Revenue Service filed a $15 million suit against Germantown, Md.-based AmeriDebt Inc. in anticipation that the company's tax-exempt status would be overturned.

IRS GETS TOUGH ON 527S: Having identified concerns about dozens of filings among the growing tax-exempt Section 527 political group segment, the Internal Revenue Service is moving to improve reporting and disclosure by those groups.

Finally, it appears that the Internal Revenue Service has had its say for a while on the rules governing the sale of a principal residence.

by Roger Russell

IRS INITIATIVE EYES TAX-EXEMPT GROUPS’ COMPENSATION: The Internal Revenue Service has started a new enforcement effort to identify and halt abuses by tax-exempt organizations that pay excessive compensation and benefits to their officers and other insiders.

by George G. Jones and Mark A. Luscombe