IRS SELECTS FIRMS FOR COLLECTION EFFORT: The Internal Revenue Service awarded contracts to a trio of firms to participate in the first phase of its private debt collection initiative. A total of 33 firms took part in the bidding process.The selected firms are The CBE Group Inc., of Waterloo, Iowa; Linebarger Goggan Blair & Sampson LLP, of Austin, Texas; and Pioneer Credit Recovery Inc., of Arcade, N.Y.
To assist the agency in collecting back taxes, the 2004 American Jobs Creation Act authorized the IRS to hire private firms to collect federal tax debts. The law included a number of limitations to ensure that the private firms will be subject to the same taxpayer protection and privacy rules that agency employees work under. The IRS expects to assign uncollected liabilities to the firms beginning this summer.
The IRS has developed its own guidelines for the private firms, including background checks on all firm personnel associated with the project, as well as a mandatory, IRS-directed training program for company personnel. The IRS will assign the firms cases where a taxpayer has not disputed the liability.
In the second phase of the project, scheduled for 2008, the IRS plans to contract with up to 10 firms. Over the course of 10 years, the agency expects that the private firms will help it collect an additional $1.4 billion in outstanding taxes.
TAXPAYERS TURN TO E-FILING: Taxpayers don't seem to be returning to pencil and paper after the Internal Revenue Service discontinued its TeleFile service.
In the first release of tax filing statistics this year, the agency said that the percentage of electronically filed returns had increased, alongside a big increase in home computer use.
Through early March, more than 39.5 million taxpayers had already e-filed. Home computer use was up 16.5 percent, and e-filing by tax professionals was up nearly 4 percent.
Out of the 54 million tax returns filed by early March, e-filing represented 73 percent of the total returns, a slight uptick in the percentage of electronically filed returns for the comparable period last year. Just 3 million people used TeleFile a year ago. The IRS shut the system down last summer, saying that a decline in use for most forms, increasing costs to maintain the system, and more people turning to other electronic filing alternatives led to the decision.
Other released figures included:
* Since January, the IRS Web site had 70.4 million visits, up almost 6 percent from last year. In one week in March alone, the site had more than 7.2 million visits, up nearly 9 percent.
* By mid-March, 629,251 credit card payments had been made by individual taxpayers, up 41 percent, compared to 448,547 for the same period last year. That represented $355 million, a nearly 50 percent increase from the same period last year.
NSA SAYS 1040 PREP RUNS FROM $110 TO $201: Professional preparation of a non-itemized Form 1040 will cost a taxpayer about $110, while an itemized 1040 with Schedule A will run about $201, according to a survey from the National Society of Accountants.
The society's survey of 1,371 accountants across the nation did reveal cost differences based on location. For example, accountants in the Midwest charged a mean of $96 (non-itemized) and $163 (itemized Form 1040), while those working in the Northeast, South and West charged between $111 and $116 for a non-itemized return and between $205 and $226 for an itemized return.
The society found that the mean costs for preparing other types of tax returns were:
* $165 for a Form 1040 Schedule E (Rental);
* $207 for a Form 1040 Schedule F (Farm);
* $477 for a Form 1065 (Partnership);
* $640 for a Form 1120 (Corporation);
* $624 for a Form 1120S (S Corporation);
* $386 for a Form 1041 (Fiduciary);
* $1,732 for a Form 706 (Estates); and,
* $449 for a Form 990 (Tax Exempt).
The survey also found that taxpayers are increasingly choosing to e-file returns. More than 70 percent of all returns that can be e-filed are submitted that way - up more than 20 percent over the last three years. The average fee for the service is $23.
Hourly fees for accountants to provide tax services averaged $109, while hourly fees for estate and financial planning averaged $123. The society also reported that surveyed accountants had raised their tax preparation fees 6.5 percent in 2005, and expected fees to rise 6.8 percent in 2006.
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