Practice Management

Joining an increasingly loud chorus, National Taxpayer Advocate Nina E. Olson released her annual report to Congress, designating the alternative minimum tax and the federal tax gap as the most serious problems facing taxpayers.Olson also reserved a healthy dose of the 80-page-report’s scorn for concerns about the Internal Revenue Service’s collection policies and the transparency of IRS information to the tax-paying public.

Over the years, Practical Accountant has written about firms’ growing use of mission statements and taglines to describe what a firm is about to potential clients. These marketing techniques serve a number of functions. They may identify the type of clients that the firms are targeting, contain the firm’s philosophy, or define what is unique about the firm. Similarly, we have reported on firms’ use of vision statements and core values for similar objectives.

Partnership taxpayers can electronically file 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.”

Liberty Tax Service announced the acquisition of eSmartTax, the income tax preparation business of San Jose, Calif.-based C&S Technologies.

Profound changes in the accounting profession began in 1977 with the Bates decision, and were subsequently accelerated by technology, by regulation and, most profoundly, by the new competitive environment and the measures taken by accounting firms to compete with one another.At the same time, these factors dramatically altered the nature of the clients served by accounting firms. How does a contemporary accounting firm function in this new environment? And what do today's clients really want?

Saginaw, Mich. – As planned, the Rehmann Group has completed the acquisition of two Michigan firms -- Farmington Hills-based Boyes, Wright, Pittman & Co. PLLC and Traverse City-based Weber, Curtin & Pahssen LLC.Financial terms of the deal, which became effective Jan 1, were not disclosed.

In a grab for a share of the exploding Web-based banking market, QuickBooks parent Intuit Inc. agreed to acquire online banking services provider Digital Insight Inc. for $1.35 billion in a combination of cash and debt.Under the terms of the deal, which is expected to close during the first quarter of 2007, Intuit will tender $39 in cash for each share of Calabasas, Calif.-based Digital Insight - roughly 18 percent over the company's closing share price of $33 prior to the announcement. Intuit will also assume about $1 billion in debt financing.

A company's obligation to a worker for federal tax purposes depends primarily on whether the worker is an employee or an independent contractor, according to G. J. Stillson MacDonnell, a shareholder at the national labor and employment law firm of Littler Mendelson. "There is no other option," she said.While independent contractor status provides benefits to companies and individuals, it draws hostility from the Internal Revenue Service and state tax agencies, she said.

The Internal Revenue Service announced a formula allowing businesses and tax-exempt organizations to estimate their federal telephone excise tax refunds.In May, the government announced that it would stop collecting the federal excise tax on long-distance telephone service beginning Aug. 1, 2006, and provide refunds for taxes billed after Feb. 28, 2003.

Tax strategies don't just come from nowhere. They arise out of necessity and typically are reactive, constructed as work-arounds to avoid certain tax pitfalls or to meet certain rules. Viewed from this perspective and appropriate to the start of a New Year, we offer our list of the Top 10 tax developments of 2006 that will shape tax strategies in 2007.* No. 1: The IRS's use of the economic substance doctrine. Under the economic substance doctrine as adroitly used by the Internal Revenue Service Chief Counsel's Office in the Coltec case, Black & Decker and other tax-shelter-related litigation, a tax strategy can conform to the letter of the Revenue Code, yet fail to win the desired result.