Tax strategies

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.

The Internal Revenue Service is being inundated with returns from taxpayers that don’t correctly claim the one-time telephone tax refund the federal government is issuing for the 2006 tax year.

Tuition paid for a school focused on treating learning disabilities can be classified as a medical expense, according to a private letter ruling from the Internal Revenue Service.Like other deductible medical expenses, the original ruling (PLR 2005-21003) found that the cost of tuition is deductible only to the extent that medical expenses for the year cumulatively exceed 7.5 percent of a taxpayer's adjusted gross income.

A federal court in Texas has rejected a tax shelter once sold by KPMG, in a significant win that continues to lay the legal foundation for the government’s case against 16 former employees of the accounting firm and two outside advisors.

Thomson Tax & Accounting, part of the Thomson Corp., announced that it has finalized the acquisition of Illinois-based Deloitte Tax LLP Sales & Use Outsourcing business.

It might not have generated quite the media hoopla of say, Groundhog Day, but yesterday marked the launch of the Earned Income Tax Credit Awareness Day.

On the precipice of tax season, the Internal Revenue Service is touting its 89 percent success rate last year when it came to prosecuting fraudulent preparers of tax returns.According to statistics released by the agency, the number of preparer fraud indictments increased to 135 in 2006, from 119 the previous year. Of the charges brought by the IRS, 89 percent resulting in an incarceration rate, a 3 percent increase over 2005. However, the number of fraud investigations initiated last year actually decreased to 197, down almost 20 percent from 2005's 248 investigations.