* IRS SUSPENDS PLAN TO CLOSE ASSISTANCE CENTERS: The Internal Revenue Service will scrap its plans to close 68 Taxpayer Assistance Centers after Congress insisted the agency further study the potential impact of the closures.
In a statement issued in late July, IRS Commissioner Mark W. Everson thanked Congress for upping funding for the 2006 budget. The Senate Appropriations Committee fully funded the $10.68 billion that President Bush requested for the IRS, and the House has already passed a bill providing $10.56 billion. The IRS's 2005 budget is $10.24 billion.
In late May, the IRS announced a plan to close 68 of its 400 TACs later this year. But both the House bill as passed and the Senate Appropriations markup included provisions that would have stopped the IRS from moving ahead with the closures until usage studies were completed. In recent years, the IRS has made significant improvements in service to taxpayers, including phone services and Internet technology, which Everson said have alleviated taxpayer demands on the walk-in centers. In July, the Treasury Inspector General for Tax Administration said that the effectiveness of the centers was hard to quantify due to a lack of management information.
* E-FILE AVAILABLE FOR EXTENSION FILERS BEYOND AUG. 15: Taxpayers and tax professionals who filed for an extension can use e-file to file their 2004 tax returns, according to the Internal Revenue Service.
The IRS expects some 10 million taxpayers to file after the April 15 deadline. Among them are those who received an automatic four-month filing extension to Aug. 15. In addition to e-file, several private companies participating in the Free File program will continue to provide free return preparation and e-filing services to eligible taxpayers through mid-October.
Aug. 15 was the last time that TeleFile could be used to file tax forms of any kind. The IRS said that it discontinued the TeleFile system because of declining use and the growth of other electronic filing alternatives, such as Free File.
* CONGRESS TO TAKE ON FUTURE OF ESTATE TAX: Already with a lengthy to-do list before adjourning for its August recess, reports have Congress moving to address the future of the estate tax soon.
President Bush's 2001 tax cuts will gradually scale back the estate tax until 2010, but unless Congress passes new legislation, the tax on inherited assets will return in 2011 to the rates of 2001. The House has approved bills to make the repeal permanent several times, most recently in mid-April, but procedural hurdles haven't been cleared in the Senate.
Senate Republicans have been floating a compromise to cut the estate tax rate - which now ranges up to 47 percent - to a flat 15 percent, the rate applied to most long-term capital gains. Last year, the estate tax generated $25 billion in revenue.
Another proposal would increase the estate tax exemption to $8 million or $10 million, in order to ensure that most family-owned businesses don't have to worry about paying the tax when their current owners die.
A group lobbying for permanent repeal of the tax, the American Family Business Institute, released a study earlier this month saying that congressional actuaries have underestimated how tax cuts increase economic activity and result in an increase in revenues collected by the government. The Joint Committee on Taxation has estimated that repealing the tax would cost $140 billion in federal revenues.
* GAO OFFERS IRS WAYS TO IMPROVE PRODUCTIVITY: The Internal Revenue Service has experienced declines in enforcement productivity, according to the Government Accountability Office. Since the IRS's ability to correctly measure its productivity has important budget implications, the GAO was asked to illustrate methods to better measure productivity at the IRS. In its report, the GAO said that activities such as exams or audits conducted must be adjusted for complexity and quality. For example, an increase in exams closed per employee would not indicate an increase in productivity if the IRS had shifted to less complex exams, or if quality declined.
The GAO recommended that the IRS improve productivity measures by using a variety of methods for calculating productivity that adjust for complexity and quality. The methods range from ratios using a single output and input to methods that combine outputs and inputs into composite indexes.
