Practice Management

The Internal Revenue Service has launched its much-anticipated Income Verification Express Service or IVES, a program offering immediate electronic delivery of client tax and income information to financial lenders such as mortgage companies.

Just one week after the Treasury Department released a report on its strategy for closing the $300 billion tax gap, the ranking minority member of the Senate Finance Committee labeled the plan “incomplete” and not credible.Sen. Max Baucus, D-Mont., said he would continue to hold up the nomination of Eric Solomon as the assistant Treasury secretary for tax policy.

Several more 2007 Toyota models have been certified by the Internal Revenue Service to qualify for the hybrid tax credit enacted by the Energy Policy Act of 2005.

Tax software publisher CCH continued making an aggressive push into the small practitioner market, announcing its second major acquisition in as many months.The Wolters Kluwer business, which produces the ProSystem fx Office line of accounting and business software products, signaled its determination to take on the marketplace leader, Intuit Inc.'s QuickBooks, by striking a pact to purchase TaxWise Corp.

During the past 15 years, I have had the opportunity to read and analyze nearly 150 partnership agreements, and it always amazes me how outdated and inadequate so many of them are.There are basically two major reasons for this. First, many firms just fail to give adequate attention to their partnership agreements. Second, over the years, the firm may have modified its original agreement or made separate agreements as new partners entered, and these agreements are significantly different from one another. None of the agreements have been consolidated into one current agreement.

H&R BLOCK, BANK REACH $39M SETTLEMENT: Tax prep giant H&R Block Inc. announced that a federal judge has approved a $39 million settlement of a class-action lawsuit brought by customers over the company's refund anticipation loans. The U.S. district court judge approved the settlement, the group's third effort to reach an agreement in the suit, which has dragged on since 1998. Block and co-defendant Beneficial National Bank - now owned by London-based HSBC - will split the payment.The lawsuit is one of several alleging that Block failed to disclose high costs and other features of RALs made to more than 17 million clients over a 13-year period.

Tax advisors are likely to hear from potential clients seeking advice on how to "re-enter" our tax reporting system.The reasons for failing to file tax returns vary with the client: the stress of a divorce or bankruptcy, ignorance of U.S. tax laws, or willful negligence. Similarly, the strategies for handling these cases should vary, considering the potential criminal, as well as civil, ramifications of a client's failure to file timely returns.

Deductible individual retirement accounts and Roth IRAs have been an attractive part of a retirement portfolio - if a taxpayer qualified for their use. The problem was that various income eligibility limits prevented many from taking advantage of IRAs.Nondeductible IRAs were generally available, but were often viewed as unattractive, since they offered only tax deferral on earnings - they offered no upfront deduction and required taxation at ordinary income rates on distribution and mandatory distributions starting at age 70-1/2.

In consideration of the continuing impact of Hurricane Katrina, the Internal Revenue Service has further postponed filing and payment requirements for businesses until Oct. 16, 2006, which is the same deadline established earlier for certain individual filers.The postponement now applies to individual, corporation, partnership, estate, trust, S corporation, generation-skipping, employment and certain excise tax returns with original or extended due dates that fall on or after Aug. 29, 2005, but before Oct. 16, 2006.

The Taxpayer Advocacy Panel has sent the Internal Revenue Service recommendations for easing taxpayer burdens in five areas.In a 12-page report dated Aug. 18, the panel made the following suggestions: