Tax research

The Justice Department has sued a tax preparer from Charlotte, N.C., to prevent him from preparing federal tax returns for others, alleging that he abused the federal fuel tax credits.

The Internal Revenue Service is finally reaching out to former homeowners who have suffered foreclosure and now are being hit with taxes on any money they were forgiven on their mortgages.

Orrtax Software Solutions has appointed a new president, Matt Scheuing, to develop the tax prep company's corporate strategies.

The Treasury Department's watchdog group thinks it smells a rat when it comes to reports of Schedule C losses on tax returns, and it's urging changes in the Tax Code to establish "bright-line" rules for determining when an activity is a legitimate business.

Democratic presidential candidate Sen. Barack Obama, D.-Ill., outlined his tax proposals in a speech at the Tax Policy Center in Washington, highlighted by a proposal for a tax cut of between $80 billion and $85 billion, coupled with increases in the capital gains tax.

The American Institute of CPAs has sent comments to the Internal Revenue Service recommending changes in the redesigned form for tax-exempt nonprofit organizations.

Sen. Chuck Grassley, R-Iowa, ranking member of the Committee on Finance, along with two committee members, is urging the Treasury Department and Internal Revenue Service to take action to ensure that families who lose their homes to foreclosure face more reasonable, accurate tax bills for their home loan debt forgiveness. "Working families who lose their homes are getting hit with huge tax bills," Grassley said. "Some of those bills are unfairly high and even inaccurate. The IRS needs to take steps to ensure the accuracy of the bill in the first place. Then the IRS should offer the taxpayer every opportunity to negotiate the size of the bill and a fair payment plan. The agency has plenty of authority to treat taxpayers reasonably in these situations. It needs to use that authority to serve taxpayers." Grassley and fellow GOP Finance Committee members Sens. Gordon Smith of Oregon and Pat Roberts of Kansas, wrote to the Treasury to urge these changes. "While the Congress considers the president's proposal for relief Americans shouldn't have to wait to get the relief that is needed right now," they wrote. "We strongly urge the Treasury Department to take immediate steps to encourage working families that face the difficulties that the President outlined in his (Aug. 31) speech to submit (and have the Internal Revenue Service accept) offers in compromise that will either eliminate or reduce the taxes that they owe due to cancelled mortgage debt on a primary residence."

Jamie Fowler, a Grant Thornton LLP tax partner, has been named the firm's new national managing partner for its National Tax Process Group. The group, which supports the more than 1,000 tax practice professionals in the firm, encompasses not only process improvements, but also internal tool development, deployment, training and support; external tool and third-party research selection, deployment, training and support; vendor and contract management; project management; and knowledge management. Fowler has over 22 years of experience leading major large-scale international and domestic restructuring projects for companies nationwide, bringing to bear international, federal, and state and local resources. Prior to joining Grant Thornton's Dallas office as tax practice leader in 2004, she was a federal tax partner at KPMG in Dallas.

The Justice Department has filed suit against a Detroit tax preparer to keep her from preparing federal tax returns for others, accusing her of cheating her clients.

Senate Finance Committee Chairman Max Baucus, D-Mont., has proposed a series of measures intended to provide tax relief and disaster assistance to farmers and ranchers as part of a revamped farm bill.

David Amir Makov, one of the remaining defendants in the KPMG tax shelter case, pleaded guilty in Federal District Court in Manhattan to one count of conspiracy to commit tax fraud and agreed to cooperate with prosecutors.

Congress held hearings last week on a grab-bag of tax topics, including carried interest, the effect of the Bush administration tax cuts, and the rapidly expanding reach of the alternative minimum tax, but neither of the other two issues is the ticking time bomb that the AMT presents.

The Internal Revenue Service is not doing enough to match incorrect or missing identification numbers on income and wage statements with existing tax accounts, potentially costing the U.S. Treasury billions in lost revenue, charged a Treasury Department watchdog.

The House of Representatives voted 220-175 to overhaul patent rules and place a ban on tax-planning method patents.

Of the roughly one hundred thousand cases a year that go before the Internal Revenue Service Appeals Division, more than 80 percent get resolved without going to litigation. That by itself is a good reason for tax professionals to utilize the appeals process, according to Sarah Ingram, chief at the IRS Appeals unit."We see large taxpayers, small taxpayers, individuals. We see large-dollar figures, any topic under the sun," she said. "Almost half of those cases come from the Collection Division, including either collection due process or offers-in-compromise kinds of activities."

With the Tax Code constantly in a state of flux with new tax laws, not to mention delayed effective dates on tax provisions, sunsetting provisions, and phase-ins and phase-outs, every year offers some new wrinkles for tax professionals to worry about.The 2007 tax year is no exception.

Jackson Hewitt Tax Service said it has completed its internal review of fraud allegations by the Justice Department against several of its franchisees and said its corporate employees were not involved.

The Senate Finance Committee continued its examination of whether to raise taxes on the earnings of managers of private equity firms and hedge funds by looking at the impact of carried interest taxation on pension funds.

While the Internal Revenue Service has issued a plan that adopts the IRS Oversight Board's goal of 86 percent voluntary compliance by 2009, National Taxpayer Advocate Nina Olson cautioned against IRS efforts to ramp up enforcement excessively and cut corners in its treatment of taxpayers if it is pressured to do too much too soon."For fiscal year 2008, both the Internal Revenue Service and the Taxpayers Advocate Service face similar challenges," she said, in the second of her two annual reports to Congress. "The IRS is under scrutiny for its efforts to close the tax gap, while the TAS is struggling to address taxpayer difficulties that arise as a result of these very efforts."

President Bush is considering the possibility of simplifying the corporate tax system, as long as the changes don't affect the amount of taxes the government collects.The president's announcement came on the heels of a conference convened by Treasury Secretary Henry Paulson in July, in which he proposed a cut in corporate taxes to make the U.S. more competitive.