Finance

Congress left town without passing a number of tax breaks that expired at the end of 2005, including the option to deduct state sales taxes in place of state income tax, a deduction for college tuition and fees, the deduction for school teachers, and a research and development credit.Although the breaks themselves are not controversial, and leaders of the Senate Finance Committee pushed for their enactment, the breaks became mired in political infighting when they were attached to "trifecta" legislation that would have included an increase in the minimum wage and a slash in estate tax rates.

The Internal Revenue Service is pushing back the printing schedule for a number of its tax products, including several versions of the 1040 and 1099 forms.Earlier this month, the IRS warned the Senate Finance Committee tax staff that delays in enacting a number of expiring tax breaks could have an adverse impact on tax administration -- affecting outside contracts with vendors to get the forms and instructions printed, and possibly eventually having a negative impact on collections.

In response to a senator’s inquiry, the Government Accountability Office will review the operations of the Securities and Exchange Commission’s enforcement division and compliance department.

In a press conference timed to coincide with the 20th anniversary of President Reagan’s signing the last major tax reform act into law, former Sen. Bill Bradley, D-N.J., and Sen. Ron Wyden, D-Ore., issued a call for another tax reform push.Wyden has introduced his Fair Flat Tax Act in the Senate, which includes provisions to lower tax rates and broaden the overall tax base. The legislation would allow taxpayers to file their returns on a simplified, single-page 1040 form; collapse individual tax brackets from the current six down to just three; and set a single, flat corporate rate. The bill would also end the alternative minimum tax and contains a unique provision to provide a refundable 10-percent tax credit for every taxpayer’s state and local taxes -- a benefit for taxpayers who don’t itemize.

A federal panel is recommending changes to governmental accounting that would require the cost of future Social Security and Medicare payments to be accounted for year-by-year as workers accumulate entitlements.

The chairman of the Joint Economic Committee is asking the Internal Revenue Service to refrain from taxing online gamers.

Political fundraisers for the accounting profession have already contributed nearly $6 million to the campaigns of more than 300 candidates in this fall's congressional elections, including House and Senate hopefuls from both political parties and every spot on the American political spectrum.Donations from the accounting industry's free-spending political action committees have been spread around to an assortment of candidates, ranging from liberal Massachusetts Democrat Rep. Barney Frank, to arch-conservative Mississippi Republican Sen. Trent Lott.

Congress left town without passing a number of tax breaks that expired at the end of 2005 -- among them the option to deduct state and local sales taxes in place of state income tax, a deduction for college tuition and fees, the deduction for school teachers, and a research and development credit for business.Although the breaks themselves are not controversial, and leaders of the Senate Finance Committee pushed for their enactment before Congress adjourned, the breaks became mired in political infighting when they were attached to “trifecta” legislation that would have included an increase for the minimum wage and a slash in estate tax rates.

The Tax Foundation has cross-tabulated state demographics with tax data from the Internal Revenue Service to take a look at which states benefited the most from the tax cuts enacted under the Bush administration in 2001 and 2003.

The chairman of the House Ways and Means Committee has asked for information on the NCAA’s finances -- suggesting in the process that he might next be questioning the association to justify its tax-exempt status. "Most of the activities undertaken by educational organizations clearly further their (tax) exempt purpose," Rep. Bill Thomas, R-Calif., wrote in a letter to NCAA president Myles Brand. "The exempt purpose of intercollegiate athletics, however, is less apparent, particularly in the context of major college football and men's basketball programs." Specifically, Thomas asked for information on the NCAA’s television contract, the salaries of coaches, school sports facilities and total annual revenues and expenditures for Division I-A football programs and Division I basketball programs. He requested a response by the end of this month. Since 2004, the Ways and Means committee of Representatives has been conducting a broad review of the tax-exempt sector -- already looking into the tax-exempt status of nonprofit hospitals and credit unions among others. The NCAA's projected 2006-07 budget anticipates nearly $563 million in revenue, most from its TV contracts. More than half that figure is distributed to member leagues and schools, through student-athlete welfare, academic-enhancement and other programs. The remainder is paid according to the success of schools in the annual NCAA men's basketball tournament. Thomas notes in his letter that the annual returns filed by the NCAA with the IRS states that the primary purpose of the NCAA is to "maintain intercollegiate athletics as an integral part of the educational program and the athlete as an integral part of the student body,” and goes on to obliquely question college athletics' connection to higher education.

The leaders of the Senate Finance Committee have asked the Government Accountability Office to take a closer look at the Pension Benefit Guaranty Corp., which insures the private pension plans for millions of workers.

This week, the Tax Technical Corrections Act of 2006 was introduced in both houses of Congress. The legislation will essentially serve to cross the T’s and dot the I’s to several pieces of already-enacted legislation, clarifying definitions and refining certain timelines. Ways & Means Committee Chairman Bill Thomas, R-Calif., sponsored the bill in the House, while Finance Committee Chairman Charles Grassley, R-Iowa, and ranking member Max Baucus, D-Mont., did the same in the Senate. Among others, the bill would make changes to:

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.

To divine the true meaning of a gap, I usually need to go beyond calculating the difference between my gross pay and net pay on the 15th and 30th of each month.That my friends, is Webster’s unabridged definition of a gap.

Poor oversight and shaky internal controls on the use of government purchase cards to make relief transactions for victims of Hurricane Katrina led to widespread abuse and fraud, according to a report issued by the Government Accountability Office.

The Securities and Exchange Commission and the Department of Justice formally supported the constitutionality of the Public Company Accounting Oversight Board with the filing of a 46-page legal brief just before Labor Day.The brief outlined the government's arguments in support of the PCAOB's constitutionality, and was submitted in the U.S. District Court for the District of Columbia in a case brought by the Free Enterprise Fund in February.

Comptroller General David Walker delivered testimony this week at the Senate Finance Committee’s hearing on “Our Business Tax System: Objectives, Deficiencies and Options for Reform.” Walker, who runs the Government Accountability Office, framed his testimony around the need for broader tax reform, telling the senators that the size of business tax revenues makes them very relevant to any plan for addressing the nation's long-term fiscal imbalance. In a report prepared by the GAO that accompanied Walker’s testimony, the office said that the design of the current system of business taxation is flawed. “It distorts investment decisions, hurting the performance of the economy,” the report said. “Its complexity imposes planning and record keeping costs, facilitates tax shelters and provides potential cover for those who want to cheat.” Walker said that some features of current business taxes channel investments into tax-favored activities and away from more productive activities, reducing the economic well-being of all Americans. Walker said principles that should guide the business tax reform debate include:

After watching the country's largest home-mortgage loan giants cope with restatement fallout from accounting scandals for years, reports say that the U.S. Treasury might back away from its position to set limits on the portfolios of Fannie Mae and Freddie Mac.

A representative from the Justice Department told a Senate panel that the agency is satisfied with the tactics used by prosecutors to pursue corporate criminals.

After a five-year effort, the American Society of Appraisers is taking credit for some of the provisions contained in the Pension Protection Act of 2006.