Finance

Three Democratic congressmen have announced plans to draft legislation that would impose a war surtax to pay for operations in Iraq as a way to demonstrate their opposition to the war.

Sen. Carl Levin, D-Mich., has proposed a bill that would change the tax treatment of corporate stock option deductions.

Rep. John Dingell, D-Mich., has proposed a 50-cent tax on each gallon of gas in an effort to limit carbon emissions.

Treasury Secretary Henry Paulson and Commerce Secretary Carlos Gutierrez called on the Senate to pass a permanent moratorium on taxes for Internet access and electronic commerce.

The Internal Revenue Service has been called on to develop federal licensing requirements for all paid tax return preparers - an approach that would involve potentially controversial competency rankings to help taxpayers to identify and select tax professionals based on their level of expertise.The proposal was recently placed on the table by the IRS's own Taxpayer Advocacy Panel as part of a laundry list of recommendations for improvements at the tax service.

The Securities and Exchange Commission voted with the Board of Governors of the Federal Reserve System to implement the bank broker provisions of the Gramm-Leach-Bliley Act of 1999.

Democratic presidential candidate Sen. Barack Obama, D.-Ill., outlined his tax proposals in a speech at the Tax Policy Center in Washington, highlighted by a proposal for a tax cut of between $80 billion and $85 billion, coupled with increases in the capital gains tax.

Sen. Chuck Grassley, R-Iowa, ranking member of the Committee on Finance, along with two committee members, is urging the Treasury Department and Internal Revenue Service to take action to ensure that families who lose their homes to foreclosure face more reasonable, accurate tax bills for their home loan debt forgiveness. "Working families who lose their homes are getting hit with huge tax bills," Grassley said. "Some of those bills are unfairly high and even inaccurate. The IRS needs to take steps to ensure the accuracy of the bill in the first place. Then the IRS should offer the taxpayer every opportunity to negotiate the size of the bill and a fair payment plan. The agency has plenty of authority to treat taxpayers reasonably in these situations. It needs to use that authority to serve taxpayers." Grassley and fellow GOP Finance Committee members Sens. Gordon Smith of Oregon and Pat Roberts of Kansas, wrote to the Treasury to urge these changes. "While the Congress considers the president's proposal for relief Americans shouldn't have to wait to get the relief that is needed right now," they wrote. "We strongly urge the Treasury Department to take immediate steps to encourage working families that face the difficulties that the President outlined in his (Aug. 31) speech to submit (and have the Internal Revenue Service accept) offers in compromise that will either eliminate or reduce the taxes that they owe due to cancelled mortgage debt on a primary residence."

Senate Finance Committee Chairman Max Baucus, D-Mont., has proposed a series of measures intended to provide tax relief and disaster assistance to farmers and ranchers as part of a revamped farm bill.

Congress held hearings last week on a grab-bag of tax topics, including carried interest, the effect of the Bush administration tax cuts, and the rapidly expanding reach of the alternative minimum tax, but neither of the other two issues is the ticking time bomb that the AMT presents.

Computer Sciences Corp. said it would restate its fiscal 2007 results after examining the impact of FASB Interpretation No. 48, or FIN 48, and discovering accounting errors for fiscal 1997 through 2007.

The House of Representatives voted 220-175 to overhaul patent rules and place a ban on tax-planning method patents.

Although U.S. taxpayers contribute billions of dollars annually to support charitable causes, many of those very same charities are dipping deeper into the pockets of Americans by chiseling on their own taxes, government investigators charged.Auditors at the Government Accountability Office told lawmakers that charities and other tax-exempt organizations are shortchanging the Treasury to the tune of nearly $1 billion by neglecting to make payroll tax payments or pay other taxes required by the government.

The Senate Finance Committee continued its examination of whether to raise taxes on the earnings of managers of private equity firms and hedge funds by looking at the impact of carried interest taxation on pension funds.

While the Internal Revenue Service has issued a plan that adopts the IRS Oversight Board's goal of 86 percent voluntary compliance by 2009, National Taxpayer Advocate Nina Olson cautioned against IRS efforts to ramp up enforcement excessively and cut corners in its treatment of taxpayers if it is pressured to do too much too soon."For fiscal year 2008, both the Internal Revenue Service and the Taxpayers Advocate Service face similar challenges," she said, in the second of her two annual reports to Congress. "The IRS is under scrutiny for its efforts to close the tax gap, while the TAS is struggling to address taxpayer difficulties that arise as a result of these very efforts."

President Bush is considering the possibility of simplifying the corporate tax system, as long as the changes don't affect the amount of taxes the government collects.The president's announcement came on the heels of a conference convened by Treasury Secretary Henry Paulson in July, in which he proposed a cut in corporate taxes to make the U.S. more competitive.

The House Ways and Means Committee held hearings on proposals to raise taxes on managers of private equity firms and hedge funds, and to combat the expanding impact of the alternative minimum tax, as well as listening to testimony about the impact of the Bush tax cuts.

President Bush made several proposals late last week to relieve homeowners from the burden of the imploding mortgage market, just in time to grab Congress's attention as it returns this week from summer recess.

House Ways and Means Committee Chairman Charles Rangel, D-N.Y., plans to hold a hearing on fairness and equity in the Tax Code.

Two high-ranking senators are calling for the Government Accountability Office to investigate the growing problem of tax fraud related to identity theft and how it contributes to the tax gap.