Tax strategies

U.S. marshals arrested a Battle Creek, Mich., man for refusing to release the names of the clients that he provided with income tax advice.Charles Conces, who was a candidate for Michigan Attorney General last year, was arrested earlier this month for civil contempt after he failed to comply with a Feb. 8 court order. The order had also compelled Conces to disclose the identities of the people who are responsible for his Web site, as well as any documents that he drafted, or assisted in drafting -- all of which Conces refused to do.

The U.S. Tax Court handed down bad news to a California group this week, agreeing with the Internal Revenue Service that Families Against Government Slavery shouldn’t be granted tax-exempt status as an educational organization.According to court documents, the group began organizing in 2003, and had as its mission the goal of educating the public about the alleged slavery and entrapment of Hollywood celebrities by government officials. The group’s activities consisted largely of public demonstrations made solely by its founder.

Halfway through the filing season, the Internal Revenue Service said that 35.6 million taxpayers had chosen to have their refunds -- totaling more than $100 billion -- deposited directly into a savings or checking account this year.

There is no question that most people appear quite serious about preparing an estate plan that can get passed along to future generations. The intention is all there but too many people still seem to find ways to mess it up entirely.

The U.S. Tax Court ruled this week that the three-year statute of limitations on the Internal Revenue Service attempting to collect on a tax return can be extended indefinitely, even when it was the taxpayer’s preparer who was responsible for committing a fraud.Under Section 6501(c)(1) of the tax code, when a fraudulent return is filed with the intent to evade tax, the tax may be assessed, or a proceeding in court for collection of such tax may be begun without assessment, at any time.

Businesses paid $554 billion in state and local taxes during the 2006 fiscal year, representing 45 percent of total taxes collected by all state and local governments, according to the annual study prepared by Ernst & Young in conjunction with the Council on State Taxation. The study includes estimates of taxes paid by major industry groups, with the share of taxes paid being determined by a state's overall tax system, the structure of its economy, the types of business taxes levied, as well as business tax features that may provide a competitive advantage or disadvantage in attracting and retaining business employment and investment.

Taking a vacation this time of year may as well be considered illegal.

Making its annual announcement, the Internal Revenue Service said that it is holding more than $2.2 billion in unclaimed refunds for about 1.8 million people who failed to file a federal income tax return for 2003.

The Internal Revenue Service completed a round of staff cuts in recent weeks, letting go nearly 100 employees from the division that oversees gift- and estate-tax returns, according to published reports.

The Internal Revenue Service announced that taxpayers are continuing to file their tax returns electronically from home computers at a record pace, up almost 7 percent from the same period last year.

For the past year, the Securities and Exchange Commission has been investigating how Google accounted for its income taxes, according to the online search giant’s 2006 annual report.

The Internal Revenue Service announced that farmers and fishermen affected by the mid-February snowstorms could ask the agency to waive any estimated tax penalties.

The Tax Court has ruled that although a taxpayer spent more than 1,000 hours playing video poker in 2003, he was not a professional gambler.As part of its decision, the court implied that playing video poker might never constitute a trade or business under Section 162 of the tax code. After noting that the petitioner, a Chicago building operating engineer, never adjusted his gaming strategy even when it became apparent that he never had a winning year, the court also said that it remained unconvinced that the petitioner’s gambling activity meets the standard for being a trade or business.

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.