Tax research

Responding to extension requests, restaurants and bars will have a few extra months -- until June 30 for this year only -- to elect to participate in the Internal Revenue Service’s Attributed Tip Income Program.

Any given week, it seems that there are plenty of PR people out there circulating trend surveys that -- to put it kindly -- are built on somewhat a dubious foundation.

Of the nearly 2,500 missing children whose pictures have appeared in the paper versions of tax forms over the past five years, 87 have been located thanks to leads generated by taxpayers, according to a recent report from the Treasury Inspector General for Tax Administration.Since 2000, the Internal Revenue Service has partnered with the National Center for Missing and Exploited Children to help locate missing children by publishing their pictures in printed instructions and publications as part of the IRS Picture Them Home Program.

Tax prep giant H&R Block Inc. reported a third-quarter loss last week, pointing to its struggling mortgage lending arm even at the start of a strong beginning to the fourth quarter’s tax season -- where the company makes the bulk of its profits.Block said that it lost $44.7 million in the three months ending Jan. 31, compared to gains of $12.1 million in the same period a year ago. Revenue for the same quarter increased to $955.1 million, from $860.3 million.

Only time will tell whether the bane of the 2006 tax filing year for the Internal Revenue Service is the scam-prone telephone tax refunds, or confusion around a number of extender provisions not included on the agency’s original forms that seems destined to arrive soon.The agency urged taxpayers to check and see if they qualify for the telephone excise tax refund after more than 10 million early filers did not request the one-time refund. In the first release of the year’s weekly filing season statistics, about 30 percent of all taxpayers did not request the telephone tax refund. Nearly half of those returns -- more than 4.8 million -- were completed by a tax preparer.

The Internal Revenue Service may not reach the 80 percent e-filing goal for the 2007 fiscal year set by Congress in 1998, but it continues to advance with the help of improved technology, wider perception of its benefits, and both state and federal mandates for taxpayers and preparers.Last year, more than 73 million tax returns were filed electronically - nearly 54 percent of all tax returns - while the Free File Alliance, a partnership between the IRS and software vendors, continues to help drive taxpayers toward e-filing, serving about 4 million individuals last year. This year, the program has been expanded, with 70 percent of taxpayers - those with an adjusted gross income of $52,000 or less - now eligible.

The odds are looking better for Senate approval of legislation to increase the minimum wage, but reconciling that bill with a House version - which contains no tax breaks for businesses - figures to take some negotiating.Senate debate on the bill ended in late January with an 87-10 vote, and final Senate passage of the bill was expected in early February.

The recent decision by the Financial Accounting Standards Board not to defer the effective date of FASB Interpretation No. 48, despite appeals from companies and industry groups to postpone its implementation, spotlights the radical changes in approach required of financial-statement preparers, auditors and tax advisors.FIN 48, Accounting for Uncertainty in Income Taxes, is effective for fiscal years beginning after Dec. 15, 2006. It establishes a "more-likely-than-not" threshold for the reporting of uncertain tax positions on financial statements. Under the rule, an uncertain tax position may not be recognized unless it is more likely than not that it will be sustained on its technical merits, and there is a more than 50 percent likelihood that it would be sustained if it were challenged and considered by the highest court in the particular jurisdiction.

The Internal Revenue Service has released a fact sheet explaining the 2006 alternative motor vehicle credit allowed for the 44 automobiles certified as eligible.The credit, enacted under the Energy Policy Act of 2005, provides up to $3,150 for taxpayers who purchased qualified vehicles and placed them in service during 2006.

Banks aren’t typically known for dishing out love to their customers.Walk into a branch of pretty much any financial institution other than a friendly local credit union, and chances are the employees will barely acknowledge you, much less know your name. Most of their customers are literally just a bunch of numbers.

Citing a bit of wisdom from Kenny Rogers, the U.S. Tax Court ruled that tournament poker is gambling, not a sport, and thus not exempt from the Section 165(d) limitations of the tax code.In a matter brought by George and Gloria Tschetschot of Cedar Rapids, Iowa, the couple argued that Gloria’s professional tournament poker playing was not gambling, and thus was not subject to limitations on losses from gambling.

Maybe not surprisingly, an overwhelmingly majority of taxpayers recently surveyed agreed that it is “not at all” acceptable to cheat on income taxes.The Internal Revenue Service Oversight Board cited said that 86 percent of respondents to its 2006 Taxpayer Attitude Survey, in concluding that there was strong continued taxpayer support for compliance. The percentage was down slightly from last year’s figure, but still within the margin of error.

The Internal Revenue Service has rolled out its annual list of the 12 most blatant tax return scams.The “Dirty Dozen” highlights a handful of new scams for the 2006 tax year that IRS auditors and criminal investigators have repeatedly encountered. Topping the list are fraudulent refunds being claimed in connection with the one-time Telephone Excise Tax Refund.

A trio of senators have proposed legislation targeting overseas tax havens.According to a bill summary released by Sen. Carl Levin, D-Mich., such havens cost the United States upwards of $100 billion a year in lost tax revenues.

The California Society of CPAs passed the 30,000-member threshold in late January.In a statement announcing the milestone, the society credited a continuing “trend of California CPAs flocking to CalCPA for advocacy, technical guidance and professional resources” for boosting its numbers.

Requests for exorbitant phone tax refunds has prompted the Internal Revenue Service to send special agents into seven cities to execute search warrants at tax prep businesses.According to affidavits filed in federal court, the agency is seeking evidence from preparers suspected of filing returns on behalf of clients that requested “egregious amounts” for this year’s special telephone excise tax refund.

A federal judge in New York has ruled that the Internal Revenue Service will not have to release documents that defendants in the KPMG tax shelter case claim reveal that some IRS personnel did not believe the Big Four firm was required to register the shelters.

Chicago attorney Robert Wayne Hallock was sentenced to serve two years in prison for a tax evasion charge.Hallock, formerly a partner at the law firm of Kirkland & Ellis LLP, was found guilty of attempting to evade taxes on more than $1 million in income following a weeklong trial in October. He will serve two years of supervised release after his release from prison.

The Internal Revenue Service said that it will renew contracts with two out of the three private agencies it signed to participate in a pilot program outsourcing debt collection. Conspicuously absent from that announcement was the fate of that third agency.The IRS said yesterday that it would extend the contracts of Waterloo, Iowa-based CBE Group Inc. and Arcade, N.Y.-based Pioneer Credit Recovery Inc., a unit of SLM Corp. The new contract will run through March 8, 2008.

Actor Paul Hogan, best known as the star of the “Crocodile Dundee” film triology, has been formally linked to court proceedings involving Australia’s largest-ever investigation of tax fraud.According to the newspaper The Australian, a string of nearly two dozen companies associated with Hogan, his financial adviser Anthony Stewart and his artistic collaborator John Cornell, have been cited in federal court relating to an alleged $300-million fraud.