Tax research

California is preparing to kick off its first tax amnesty program in two decades, in hopes of narrowing its whopping budget deficit.

The Treasury Department and the Internal Revenue Service have published a new revenue procedure that offers guidance on the like-kind exchange of a home.

CCH Tax and Accounting has unveiled a Web site for sales and use tax professionals.

The U.S. Supreme Court has ruled unanimously that the portion of a money judgment or settlement paid to a plaintiff's attorney under a contingent-fee agreement is income to the plaintiff.

A federal judge here has reportedly denied a request by BDO Seidman LLP to force a group of its former tax shelter clients to arbitrate their complaints out of court, according to a published report.

Turnaround specialist firm Alvarez & Marsal has expanded its tax advisory unit, adding eight managing directors in several of its regional locations, as well as unveiling an office here.

Tax law changes, expanded electronic services from the Internal Revenue Service, simplified tax filing rules for certain forms and an expected increase in total returns mark the start of the 2005 tax filing season.

New regulations to Circular 230 calling for "highest quality representation" may encourage malpractice litigation involving tax advisors, according to some observers.

The American Jobs Creation Act of 2004 permits taxpayers to deduct either their state and local income taxes or their state and local sales taxes as an itemized deduction for 2004 and 2005.

BLOCK FINANCIAL ADVISORS SETTLES WITH NASD: H&R Block Financial Advisors, the investment arm of the tax prep giant, agreed to pay a $500,000 fine and to return $325,000 in clients' mutual fund trading profits to settle charges brought against it by the National Association of Securities Dealers related to the market-timing of mutual fund shares by two of its former financial advisors. The company, which did not admit or deny the NASD's allegations, said that the settlement won't have a material effect on its operations.

The Internal Revenue Service has appointed 12 new members for the Internal Revenue Service Advisory Council, the group that serves as a forum for IRS officials and public representatives to discuss relevant and emerging tax issues.

A significant increase in sales prices for CPA firms in 2005 was one of several predictions made by a panel of experts at a recent accounting conference here.

Acorn, the Association of Community Organizations for Reform Now, will provide free tax preparation services for low- and moderate-income families in 45 cities nationwide from now through the end of tax season.

Taxpayers who misreported their income to snare unjustified Earned Income Tax Credits are draining $2 billion a year from the U.S. Treasury, auditors at the Government Accountability Office recently told Congress.

Thanks to the help of the Financial Accounting Standards Board, more American jobs may stay in America in the near future.

President George W. Bush said this week that he will appoint Jeffrey F. Kupfer, Treasury deputy chief of staff, to serve as executive director of his bipartisan Advisory Panel on Federal Tax Reform.

The Treasury Department and the Internal Revenue Service issued interim guidance on two new penalty provisions enacted as part of the American Jobs Creation Act of 2004.

Tax-prep conglomerate H&R Block and the Association of Community Organizations for Reform Now have teamed up in a partnership to help boost awareness of the Earned Income Tax credit and to reduce filing costs for low-income taxpayers. Block and Acorn will canvass some 65 cities in a door-to-door joint education effort aimed at low-income filers who may be eligible for the EITC. The effort will also highlight the costs and speed factors associated with refund options, and also work to hasten the elimination of costly fees connected with refund anticipation loans. Ironically, the Block-Acorn alliance comes exactly one year after Acorn held rallies at Block offices protesting what they perceived were aggressive sales of the company's RALs, which they claim unfairly targeted lower-income taxpayers.

Richard Hatch, the winner of the first season of the TV reality show "Survivor," has been charged with filing false tax returns by the Office of the U.S. Attorney for Rhode Island. The office alleged that Hatch had filed a false income tax return that omitted the more than $1 million in prize money that he received for winning the popular reality show. He also was charged with failing to report approximately $321,000 paid to him by a Boston radio station for co-hosting a program. The district attorney's office charged that, in November 2002, Hatch filed a false personal income tax return for the year 2000 and neglected to report the $1,010,000 paid to him by Survivor Entertainment Group, the production company of the reality show. Hatch reportedly was paid $10,000 for his appearance on the final episode of the first season, and $1,000,000 for winning the competition.

The Public Company Accounting Oversight Board's plan to place new restrictions on the ability of accountants to offer tax services to their audit clients doesn't go far enough to restore investor confidence in financial reporting, critics of the accounting profession warned. In comments to the board expressing concern over new tax service restrictions proposed late last year, several tax experts urged the PCAOB to place auditors on an even shorter leash. In order to "help restore investor confidence in the independence of auditors and the integrity of their audits," the PCAOB should adopt a rule which prohibits audit firms from providing any tax services "which are unrelated to the audit," New York City tax attorney Robert Chira told the board. "I believe the board has clear and ample legal authority to prohibit such non-audit related tax services," he said in comments on the PCOAB proposal. "I further believe the board should exercise leadership in this area to persuade the Securities and Exchange Commission to the position that an audit firm should perform audits and not commingle that function with the performance of unrelated tax services." Harvard Law Professor Bernard Wolfman called for an even more far-reaching set of limitations on the sale of tax services by accountants. Arguing that the rule that the PCAOB proposed does not go far enough to ensure the independence of auditors, Wolfman maintained that "the auditor of a public company should not be permitted to render tax services to any company, whether the company is an audit client of the auditor or not." The only exception under Wolfman's plan would be for routine compliance work and tax return preparation. In contrast, the new rule proposed by the PCAOB in December would allow accountants to continue providing general tax services to audit clients, but prohibit them from marketing tax strategies that involve "an aggressive interpretation of applicable tax laws and regulations," or result in a tax avoidance maneuver that is a "listed or confidential" transaction under Treasury regulations. The proposal also calls for outlawing the use of contingent fees for tax services to audit clients, and would bar audit firms from providing any tax services to corporate officers who are "in a reporting oversight role of an audit client." The PCAOB wrestled with the idea of a far more restrictive policy toward tax services by auditors, but ultimately concluded that such an approach would be unnecessarily burdensome for accountants and their clients. In defending the PCAOB's decision to stop short of an all-out prohibition against the sale of tax services to audit clients, board member Daniel L. Goelzer said that "auditors have traditionally performed these kinds of services for their audit clients, and this kind of assistance is particularly important to small and medium-sized businesses that lack the resources to maintain extensive in-house tax expertise."