Tax research

Fiducial, a provider of business outsourcing services to small businesses and entrepreneurs, has acquired the accounting offices of Prince William County, Va., CPA firm Frisch Ambrosiano & Kontos PC, adding nearly 1,300 tax, write-up and payroll clients and two locations to its operations.

The Internal Revenue Service has revised Schedules K-1 for this year's filing season in an effort to reduce common errors and the burden associated with preparation and filing requirements.

Joining firms such as KPMG and Grant Thornton and tax prep firm Liberty Tax Service, members of the accounting community continue their efforts to offer relief to victims of the tsunami that has devastated Southeast Asia.

The total number of partnerships increased 5.2 percent to 2,242,169 for tax year 2002, while partnership net income decreased by 2.1 percent to $270.7 billion, according to the just-released Fall Statistics of Income Bulletin. For the first time, limited liability companies were the most common partnership entity type, totaling 946,130 partnerships, about 42 percent of all partnerships. The Fall 2004 SOI Bulletin also contains articles on individual tax returns for 2002, as well as articles on nonprofit charitable organizations, private foundations and the foreign tax credit. Taxpayers filed 130.1 million individual income tax returns for tax year 2002, a slight decrease from the 130.3 million returns filed for tax year 2001, according to the bulletin. The adjusted gross income reported on these returns totaled just over $6.0 trillion, a 2.2 percent drop from the previous year. This was the second consecutive year that AGI fell. The principal cause of the decline between 2001 and 2002 was a large decline in net capital gain on returns with income above $200,000. AGI on returns with income below $200,000 increased both years.

Just in time for consideration by the President's new bipartisan panel on tax reform, National Taxpayer Advocate Nina E. Olson has released a report to Congress that identifies the complexity of the Internal Revenue Code as the most serious problem facing taxpayers and the IRS alike. "Without a doubt, the largest source of compliance burdens for taxpayers and the IRS alike is the overwhelming complexity of the tax code, and without a doubt, the only meaningful way to reduce these compliance burdens is to simplify the tax code enormously," Olson wrote. The report cited the alternative minimum tax , the earned income tax credit, and the large number of provisions designed to encourage taxpayers to save for education and for retirement as key illustrations of the problems of complexity wrought by the 1.4 million-plus word tax code. Once again, Olson noted the problems associated with the alternative minimum tax. "The need for AMT relief looms like the proverbial elephant in the room," she said, "and for that reason we once again, for the third year, recommend its repeal." The report also recommended that Congress simplify certain tax burdens on small businesses, streamline and simplify tax incentives for education savings and spending, streamline and simplify tax incentives for retirement savings, and provide guidance to the IRS to accept a broader array of offers in compromise submitted under a new "equitable consideration" standard.

Financial planning and tax prep firm Gilman + Ciocia, based here, has plans to expand in the Northeast, with the opening of three new offices slated for this month.

The Internal Revenue Service has updated for three states the tables that taxpayers can use to determine whether they'll benefit from deducting sales tax rather than state and local income taxes.

Practitioners who began adding tax planning services to their basic preparation several years back have found that it's a small step to branch out completely into year-round financial planning.

Washington - Senate Finance Committee chair Chuck Grassley, R-Iowa, and ranking member Max Baucus, D-Mont., are calling for an independent investigation by the Government Accountability Office of the Offer in Compromise Program.In a letter to Treasury Secretary John Snow, the senators had questioned the Internal Revenue Service and Treasury implementation and administration of the OIC program. Based on the IRS response, the senators said that they have called for an investigation.

IRS INTEREST RATES UNCHANGED FOR THE FIRST QUARTER OF 2005: Interest rates for calculating the amount owed on refunds and deficiencies will remain unchanged for the calendar quarter beginning Jan. 1, 2005, the Internal Revenue Service said.The rates will remain at 5 percent for overpayments (4 percent for corporations); 5 percent for underpayments; 7 percent for large corporate underpayments; and 2.5 percent for the portion of a corporate overpayment exceeding $10,000. The rates are computed from the federal short-term rate based on daily compounding determined during October 2004.

President Bush has named two former senators to lead a new nine-member bipartisan panel charged with arriving at options to reform the tax code.

H&R Block Inc. announced that Brian L. Nygaard, president and chief executive officer of H&R Block Financial Advisors Inc., has decided to leave the company.

In a move triggered by lawmaker's concerns over the marketing of abusive tax shelters by some accounting firms, the Public Company Accounting Oversight Board has proposed new rules restricting the ability of accountants to provide tax services to their audit clients.

With the tax law becoming increasingly complex, it is no surprise that there often can be several well-intentioned interpretations of a particular provision. Also no surprise is the expectation of many clients that a fee for planning advice should almost always result in an exponential decrease in overall tax liability.

In a display of bipartisan cooperation, the Senate and the House on Thursday unanimously approved legislation allowing extra time for 2004 deductions for tsunami relief donations, just two days after it was proposed by Senate Finance Committee chair Chuck Grassley, R-Iowa, and ranking member Max Baucus, D-Mont.

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 told Congress.

After 14 months of negotiations, law firm Jenkens & Gilchrist PC, based here, has agreed to pay $81.55 million in a class-action settlement to put claims related to its tax shelter work behind it.

Senate Finance Committee chair Chuck Grassley, R-Iowa, and ranking member Max Baucus, D-Mont., announced a plan Tuesday to extend the period of time in which Americans can claim tax deductions for charitable donations to assist victims of the earthquake and tsunami that hit Southeast Asia on Dec. 26.

As the Internal Revenue Service kicked off its 2005 tax filing season this week, it announced that it expects that its e-file program will hit a milestone.

The Internal Revenue Service has expanded a program aimed at enabling some business taxpayers to resolve certain tax issues before they file their returns.