IRS disregards privacy, says IPI: The recent release by the Internal Revenue Service of confidential tax data on many prominent United States citizens, including a current candidate for governor of California, demonstrates the IRS’s total disregard for the privacy of U.S. taxpayers, according to Tom Giovanetti, president of the Institute for Policy Innovation, a nonprofit public policy research organization based in Dallas.
According to a recently concluded IPI study titled, "Tax Reform: The Key to Preserving Privacy and Competition in a Global Economy," the personal income tax requires individuals to either disclose or make available upon demand almost every shred of their personal financial data to the IRS. This represents a sweeping but unnecessary assault on privacy, according to Dan Mitchell, the author of the study.
"Fundamental tax reform is the solution to an invasive tax code that gives government the right to know every detail about a taxpayer’s financial existence," said Mitchell.
The full study is available from the Institute for Policy Innovation at http://www.ipi.org.
IRS launches enhanced K-1 compliance effort: The Internal Revenue Service has launched an enhanced compliance effort to encourage taxpayers to properly report partnership, S corporation or trust income or losses on their individual tax returns. Some taxpayers may soon receive notices requesting an explanation for a discrepancy.
Earlier this year, the IRS began matching information reported on Schedule K-1 with income or losses reported on Form 1040 and other schedules. The tax service will send notices to taxpayers when there is a mismatch in information provided on tax year 2000 returns. In many cases, the taxpayer or tax professional can resolve the issue with a letter or phone call.
In an effort to perfect the matching program, IRS examiners are manually screening returns to ensure consideration of issues such as passive loss limitations and income or losses reported on Schedule E. A notice is generated when the examiners are unable to determine the cause of the discrepancy.
IRS loses canadian court ruling: A Canadian judge has ruled against the Internal Revenue Service in an evidentiary hearing to release records of offshore banking promoter/author Jerome Schneider, who resides in Vancouver, B.C.
Access to the records was denied because the U.S. government refused permission for IRS agents to testify. The agents had accompanied the Royal Canadian Mounted Police on a raid of Schneider’s offices in downtown Vancouver. According to Schneider’s attorney, the IRS agents had actively participated in the raid.
Schneider has authored "The Complete Guide to Offshore Money Havens, How to Profit and Avoid Taxes by Organizing Your Own Private International Bank and Hiding Your Money." He advertises that he will teach the ins and outs of how to select accounts and investments that are not reportable, own an offshore company, establish an offshore trust and hide money within institutions.
Major tax bill introduced: Congressman Rob Portman (R-Ohio), a member of the House Ways and Means Committee, has introduced the Tax Simplification Act of 2002. The proposed legislation contains a score of measures intended to drastically simplify the tax code.
"Our current tax code is a mess," said Portman. "It is filled with provisions that are complicated, confusing and contradictory. My legislation will take significant steps toward making our tax code simpler so that taxpayers can spend less time calculating their taxes."
The bill would simplify taxes for both families and businesses, and clarify some of the code's most confusing provisions. For example, the current tax code has five different definitions of a 'qualifying child’ and nine different definitions of Ôqualifying higher education expenses.’ The Portman bill would create one uniform definition of each concept.
The bill would eliminate the Alternative Minimum Tax, and would simplify capital gains calculations by adopting a uniform percentage deduction in lieu of multiple tax rates. It would also create a "Small Savers" exemption that would exempt the first $500 of dividend or interest income. This will keep many taxpayers who save just a small amount each year from having to itemize.
