Tax research

Pharmaceutical giant Merck & Co. announced that it would settle a number of tax disputes with the Internal Revenue Service at a net cash cost close to $2.3 billion.

The Internal Revenue Service and the U.S. Treasury announced that they have released guidance on the estimated tax penalty for citizens or residents of the United States living and working abroad.The Tax Increase Prevention and Reconciliation Act of 2005, which was enacted in May 2006, changed the maximum amount of foreign earned income and housing costs that can be excluded from gross income -- increasing the maximum amount of foreign earned income that may be excluded from gross income to $82,400 and limiting the amount of housing costs that may be excluded or deducted.

Wolters Kluwer Tax, Accounting & Legal announced that it will open an office in India for its CCH unit and other related businesses.

Somewhere in my parents’ attic, there resides a copy of Vanilla Ice’s debut album, “To the Extreme.”

The New Year began with a symbolic victory for Big Four firm KPMG, as a federal judge here dismissed a criminal conspiracy charge against the U.S. arm of the Big Four firm for conspiring to sell illegal tax shelters.The charge was dropped after prosecutors said that the firm had met its obligations under a deferred-prosecution agreement struck with the government roughly 18 months ago.

Tax preparation service Jackson Hewitt Inc. will pay $5 million to settle allegations that it violated state and federal laws when marketing its refund anticipation loans to California customers. California Attorney General Bill Lockyer said that the tax preparer will pay $4 million in restitution to customers who purchased same-day "Money Now!" loans and other loan products. The company will also pay $500,000 in civil penalties and $500,000 to reimburse investigative costs.Lockyer's complaint alleged that Jackson Hewitt violated 13 state and federal laws, and also shared consumers' tax information without their consent.

The latest American Institute of CPAs' Statement on Standards for Tax Services has some practitioners upset that it could hurt smaller firms that are primarily engaged in tax preparation.SSTS 9, available on the AICPA Tax Center Web site, was released a year ago in proposed form and is slated to go into effect on June 30, 2007. It "sets forth the applicable standards for members concerning the obligation to have a system of quality control for their tax practice (public practice) or function (nonpublic practice)."

Liberty Tax Service announced the acquisition of eSmartTax, the income tax preparation business of San Jose, Calif.-based C&S Technologies. Financial terms of the deal, which does not include C&S's payroll-tax-related filing services, were not disclosed.The eSmartTax acquisition will allow Liberty customers to prepare and file individual tax returns on the Internet through the company's Web site, or through the Internal Revenue Service's Free File Alliance site.

Partnership taxpayers can now use the modernized e-File platform when filing Form 1065, "U.S. Return of Partnership Income," and Form 1065-B, "U.S. Return of Income for Electing Large Partnerships."The modernized platform makes use of Extensible Markup Language, and allows users the additional benefits of transactional processing instead of batch processing, allowance for binary file attachments, elimination of the duplicate filing of international returns, and a federal/state partnership program.

KPMG LLP has announced the establishment of the Tax Governance Institute, an open forum for board members, management, stakeholders and government representatives to debate various aspects of tax oversight and management.Through video and audio Webcasts, roundtables, other events and its Web site, the institute's goal is to regularly bring together interested parties to discuss tax matters of common concern relating to the day-to-day and long-term management of corporate tax risk. The institute will soon announce regularly scheduled events. Other online features will include a library of thought leadership and relevant business news, and interactive polling to help gauge the marketplace's awareness of emerging topics.

The House Ways & Means Committee will begin marking up a small business tax package today, according to committee chairman Charles Rangel, D-N.Y.

The complexity of the tax code, the widening tax gap and private debt collection sit atop National Taxpayer Advocate Nina E. Olson's list of the most serious problems facing taxpayers.The recently released report also cited the oversight of unenrolled return preparers, correspondence delays, concerns about the Office of Appeals, and lengthy processing times for injured spouse relief.

Companies don’t believe broad-based tax reform is coming anytime soon, though they do think that the change of control in Congress will have a significant impact on tax policy, according to a survey conducted by a Washington law firm.

Germany’s Deutsche Bank has reached a settlement -- reportedly in the tens of millions of dollars -- with hundreds of investors to whom it sold questionable legal tax shelters in the 1990s.

A provision in the president's budget proposals could shelter 529 college-savings plans from being counted in determining federal student financial aid.

Following up on threats concerning possible tax-preparer fraud and blatant abuse of the phone tax refund, the Internal Revenue Service announced it is taking additional steps to ensure preparers and taxpayers are making accurate requests for the one-time refund.

Sen. Chuck Grassley, R-Iowa, the ranking member of the Senate Finance Committee, has taken National Taxpayer Advocate Nina E. Olson to task over her recent annual report to Congress.

President Bush’s 2008 budget has tabbed $11.4 billion for the Internal Revenue Service, a direct appropriation increase of 6.3 percent from the agency’s 2007 budget.

Everyone in Washington seems to be in agreement that there needs to be a better way of closing the tax gap, but like the other problems facing the Internal Revenue Service, there’s seems to be little Beltway consensus over how to meaningfully tackle the problem.It wasn’t lost on me that the same week that the IRS released its 2008 budget proposal --complete with a number of legislative proposals, a Congressman and the National Taxpayer Advocate continued to spar over the future of one of the agency’s newer attempts to combat the tax gap -- the outsourcing of simple collection cases to private companies as part of a pilot program.

As part of the White House’s proposed $2.9 trillion budget plan for the 2008 fiscal year, President Bush announced an effort aimed at significantly tightening the tax gap.