Practice Management

The chairman of the Ways and Means Committee, which oversees the Internal Revenue Service, has urged the agency to reconsider its contracts with Computer Sciences Corp.

The Internal Revenue Service has again selected CCH to provide sales tax information for the 2006 filing period, providing the sales tax data for use by all taxpayers who file a 1040 return.

Officials of the Canada Revenue Agency and the United States Internal Revenue Service announced progress in unraveling an abusive cross-border tax scheme.

A Republican effort to pass a bill cutting taxes on estate inheritance, by piggybacking the measure on top of a minimum wage increase, failed on the eve of the Senate's four-week summer recess.

CPA and business advisory firm Joseph Decosimo and Co. has merged in the practice of FIS Associates, of Knoxville, a 36-year-old firm specializing in physician services including practice evaluation, billing and coding compliance, and physician recruitment. Terms of the merger, which became effective July 1, were not disclosed.The union adds four partners to Decosimo, as FIS principals Janice Sansing, McRae Sharpe, Mary Beth Stamps and Richard Stooksbury will join the firm. Decosimo now has 28 partners.

Management consultant and author Peter Drucker once observed, "We will never achieve our best potential if we are not willing to abandon old things ... clients, processes, policies, products and services, employees. We can't do great new things when the bad old things take up all our attention and resources."Abandoning "the bad old things" - in our case, D-level clients - is not something that comes easily to many in our profession, but I believe it's one of the most important things we can do to build our firms.

IRS SAVES PAULSON FROM TAX HIT: The Internal Revenue Service will issue guidance clarifying the 20 percent penalty for executives who divest a deferred-compensation arrangement. The new regulations will translate into significant savings for incoming Treasury Secretary Henry Paulson. Paulson will sell off the more than $470 million that he owns in Goldman Sachs stock to comply with conflict-of-interest provisions for his new position. The guidance says that any executive divesting a deferred-compensation arrangement specifically to comply with government rules on conflicts of interest doesn't have to pay the penalty. Paulson will still have to pay regular income taxes on the deferred compensation.A spokesperson for the Treasury said that the IRS had been working on the guidance for some time, but accelerated its work in time for Paulson to be covered. The writing of the new rule hadn't been a priority because so few people are affected under the provision.

An estimated 15 million immigrants in the United States are not eligible to obtain a Social Security number. However, many of these same individuals pay taxes on income and are obligated to file tax returns.If this sounds confusing to you, then you're not alone.

One of the provisions inserted by the Conference Committee into the Tax Increase Prevention and Reconciliation Act of 2005, signed by President Bush on May 17, 2006, was a tax increase on citizens working abroad. The provision was not in either the House or Senate versions of the legislation, although Congress has considered a number of proposals related to the taxation of citizens working abroad over the years, including some Senate bills in the current Congress.It is estimated that over 4 million citizens work abroad. The U.S. Census does not count them, so we have no accurate numbers. The Treasury does try to tax them, but with questionable effectiveness. For the 1999 tax year, out of 127,667,890 returns filed, 1,350,890 had foreign addresses, but this included the APO and FPO addresses of members of the armed forces, as well as some Puerto Rico residents with offshore income. A 2004 Internal Revenue Service study reported that in 2001, fewer than 300,000 tax returns reported foreign-source-earned income.

Maintaining that there's near-universal agreement that the nation's tax code is too complex, Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, officially opened the committee's hearings titled "Kick-off for Tax Reform: Tackling the Tax Code."