Finance

The presidential race has produced an interesting series of charges and counter-charges about the candidates' tax policies, and lately they've involved taxes on small business owners.

Sen. Barack Obama, D-Ill., has proposed a tax credit for small businesses that offer health insurance to their employees.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson expressed their support for the convergence of International Financial Reporting Standards with U.S. generally accepted accounting principles.

Sen. Chuck Grassley, R-Iowa, ranking member of the Senate Finance Committee, provided an update this week on his correspondence with several media-based ministries about issues related to their tax-exempt status, indicating that some ministries have not been answering his questions.

The Senate Foreign Relations Committee held hearings on proposed tax treaties and protocols with Canada, Iceland and Bulgaria.

So far, 2008 has not been a year for major tax legislation.Nor, being an election year, are the remaining six months likely to offer major legislation. Two bills that did make it through Congress prior to Memorial Day included tax provisions focused on farmers and alternative energy and on military personnel and veterans. The farm legislation required the override of a presidential veto and included a procedural snafu where one of the non-tax titles of the legislation was not forwarded to President Bush along with the rest of the legislation. Barring any litigation over that issue, the enactment date of the legislation is May 22, 2008.

The Justice Department has filed papers seeking an order from a federal court in Miami, authorizing the Internal Revenue Service to request information from banking and financial concern UBS AG regarding U.S. taxpayers using Swiss bank accounts to evade taxes. The Justice Department is seeking permission to allow the IRS to serve a "John Doe" summons on the bank. In June, former UBS banker Bradley Birkenfeld pleaded guilty to conspiring to defraud the IRS by assisting UBS clients in avoiding U.S. reporting requirements on income in Swiss bank accounts. Birkenfeld admitted to conspiring with an American billionaire real estate developer, Swiss bankers and co-defendant Mario Staggl to help the developer evade paying $7.2 million in taxes by helping him conceal $200 million of assets in Switzerland and Liechtenstein. According to Birkenfeld,, UBS employees assisted wealthy U.S. clients in hiding offshore assets by creating sham entities and then filing IRS forms falsely claiming that the entities were the owners of the accounts. He also claimed that UBS had approximately $20 billion of assets under management in undeclared accounts for U.S. taxpayers. If approved, the summons would mandate UBS to produce records that identify U.S. taxpayers with accounts at UBS in Switzerland who elected to have their accounts remain hidden from the IRS.

The Treasury and Internal Revenue Service have issued Revenue Procedure 2008-35, TD 9409, and Reg. 121698-08, which update the rules regarding disclosure of tax return information by tax return preparers.The new rules provide an exception that allows a U.S. tax return preparer to obtain consent from a taxpayer to disclose a taxpayer's Social Security number to a non-U.S. tax return preparer when: The U.S. preparer makes the disclosure through the use of an "adequate data return safeguard;" the non-U.S. preparer receives the SSN via an "adequate data protection safeguard;" and the U.S. preparer verifies the maintenance of the adequate data protection safeguards in the request for the taxpayer's consent.

The Senate has confirmed three new members of the Securities and Exchange Commission by unanimous consent, restoring the SEC to its full strength of five members.

The Senate Finance Committee held hearings on reforming international tax rules, looking at the ways the federal government taxes the foreign income of U.S. taxpayers and businesses.

A study by Grant Thornton found that only 843 U.S. corporations out of nearly 10,000 took advantage of a one-time dividend deduction that rewarded them for repatriating their foreign profits, giving them deductions totaling $265 billion.

The House passed a bill promising relief for another year from the spread of the alternative minimum tax, but the bill already faces opposition from the White House.

The House Ways and Means Select Revenue Measures Subcommittee held hearings on bills that would encourage employers to automatically enroll their employees in individual retirement account plans.

Questions about economic stimulus payments and tax rebates kept the phones buzzing at Internal Revenue Service offices and cost the IRS a considerable chunk of its budget.

Calculations of economic stimulus payments by the Internal Revenue Service may have been wrong in nearly 400,000 cases.

The House Ways and Means Committee has passed a bill aimed at forestalling the spread of the alternative minimum tax for another year.

A provision in a bill that recently made its way through the House would correct the imbalance between tax payers and preparers that was created by legislation last year.Changes to the Tax Code by the Small Business and Work Opportunity Act of 2007 tightened the disclosure requirements for tax preparers under Code Sec. 6694 by requiring preparers to disclose any tax positions taken by a taxpayers that didn’t meet the code’s “more likely than not” standard.

With the 2008 presidential election looming, proposals that could turn the most sanguine tax accountants into habitual nailbiters came under serious discussion on both sides of Capitol Hill.In the Senate, congressional leaders called together a panel of top economists to help plot a course for tax reform next year, but the discussion produced more conflict than consensus.

Senate Finance Committee Chairman Max Baucus, D-Mont., introduced the Energy Independence and Tax Relief Act of 2008 as Democrats and Republicans haggle over how to pay for extending expiring tax provisions.

Presidential hopefuls Sen. Barack Obama, D-Ill., and Sen. John McCain, R-Ariz., clashed over their tax plans, trading accusations of hikes in capital gains and Social Security taxes.