UNDER FSC/ETI BILL, SUV WRITE-OFFS WILL GO: When President Bush signs the FSC/ETI bill, the days of small business owners and professionals such as doctors and lawyers expensing luxury SUVs are over.
Writers of the 600-page measure closed a tax break that allowed business owners to save as much as $33,000 on the purchase of a $100,000 vehicle, according to Tax Analysts.
The Jobs and Growth Tax Relief Reconciliation Act of 2003 created the break by increasing from $25,000 to $100,000 the amount that small businesses can expense in the first year for buying a vehicle weighing 6,000 pounds or more.
The incentive was originally written to assist farmers and contractors to invest in larger equipment, but the floodgates opened when it was discovered that luxury SUVs also qualified.
The amendment reduces the SUV deduction to $25,000, while still allowing the farmers and contractors the break.
GAO SAYS IRS NEEDS TO REVISE PENALTY RULES FOR FALSE SSNs: As part of efforts to ensure the accuracy of Social Security numbers on wage statements, the Internal Revenue Service should consider revising its rules for waiving the penalties associated with filing statements with inaccurate numbers, the Government Accountability Office said.
The IRS has the capability to identify employers who file wage statements with inaccurate SSNs; however, it doesn't have a dedicated compliance program to penalize employers who file wage statements that contain inaccurate Social Security numbers, according to a GAO report released in October.
While the IRS is authorized to penalize employers who fail to file information returns or fail to include complete and correct information on them, under a reasonable cause waiver added under the Tax Reform Act of 1986, any potential penalties can be waived. The GAO concluded that the bar is set so low with regards to meeting the criteria that few employers would be penalized. The report noted that the IRS has no record of ever penalizing an employer, including employers who were contacted during a review by the agency of "egregious" employers.
To qualify for the reasonable cause waiver, employers must be able to demonstrate that they solicited an SSN from each employee from one to three times, depending on the circumstances, and that they used this information to complete the wage statements. Employers are not responsible for verifying the accuracy of a Social Security number.
In its report, the comptroller general recommended that the IRS consider revising the reasonable cause waiver, and that it consult with other agencies that could be affected prior to issuing any regulations.
NEW IRS TOOL DETERMINES CLIENTS' ELIGIBILITY FOR THE EITC: The Internal Revenue Service has unveiled a new tool to help tax professionals determine whether their clients are eligible for the earned income tax credit.
The IRS said that the new EITC Assistant, which is available in English and Spanish, aims to help minimize EITC errors. It will help determine eligibility for the credit, the filing status of taxpayers, and whether the taxpayers' children meet the definition of "qualifying children" for EITC purposes. Beginning next year, the IRS said that tax professionals and taxpayers will be able to use it to calculate the amount of the expected credit. The IRS said that the tool, which is available now at http://apps.irs.gov/app/eitc/, will be prominently displayed on the IRS Web site, www.irs.gov, during the 2005 filing season.
THOMSON TAX & ACCOUNTING ACQUIRES GEAR UP INC.: Thomson Tax & Accounting has acquired Gear Up Inc., a Vancouver, Wash., provider of training and continuing professional education for tax and accounting practitioners.
Terms of the transaction were not disclosed. Gear Up's offerings include its flagship two-day "Form 1040 Individual Tax" and a nationwide "Business Entities Tax" seminar, as well as other live courses and self-study solutions.
Steve Ball, formerly chief operations officer for Gear Up, has been hired as director of operations and will continue to run the company's day-to-day operations.
"Adding Gear Up to Thomson's offerings will provide Thomson Tax & Accounting with an instructor-lead-training capability, which is national in scope and an important component in providing overall CPE solutions," said Peter Warwick, president and chief executive officer of Thomson Tax & Accounting.
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