IRS says Apply Now If You Want To E-File: Tax professionals who would like to e-file tax returns for their clients during 2003 should file their applications soon, says the Internal Revenue Service. The form must be submitted by those new to the e-file program and by those who need to update prior applications.
"Tax professionals know that their clients want to e-file because it’s fast, error-free and provides proof that the IRS has received it," said Terry Lutes, director of the Electronic Tax Administration. "This filing season, more than 99 percent of the forms and schedules related to Form 1040 can be filed electronically."
Although tax professionals had to submit Form 8633, "Application to Participate in the IRS e-file Program," by December 2 if they want to provide e-file services on the first day of the e-filing season - Jan. 10, 2003 - the IRS will accept applications until May 31.
The e-file program has grown exponentially since it began as a pilot in 1986. This year, almost 47 million tax returns were filed electronically - an increase of more than 16 percent over last year. Of that 47 million, more than 33 million were filed through tax professionals.
Block Settles For Less: H&R Block has settled with members of the plaintiff class in a Texas class-action lawsuit over refund anticipation loans.
Block said that it would absorb a $41.7 million pre-tax charge to second-quarter earnings as settlement to the lawsuit.
Under the settlement, Block has agreed to provide a five-year package of coupons to class members that they can redeem to obtain a variety of tax preparation and tax planning services. The coupons will be issued to Texas class members who received RALs between 1992 and 1996.
"We strongly disagree with the claims made by the plaintiffs and are disappointed in the court’s early rulings," said Block chairman Mark Ernst. "Even though we believe we would have ultimately prevailed, we think this settlement is preferable to what would have undoubtedly been a lengthy and costly trial and appeals process."
Block’s share of the settlement cost will result in a one-time charge of 14 cents per share in the second fiscal quarter. In addition, the company will recognize the cost of the tax preparation rebate coupons as they are redeemed each year.
Senate Approves Military Tax Relief Bill: The Senate has unanimously approved an amended version of a military tax relief bill already passed by the House that restores the tax-exempt status of death gratuity payments, and excludes gains from the sale of principal residences.
The amendment updates the Armed Forces Tax Fairness Bill of 2002 (HR 5557). The amendment doesn’t include taxes of individual expatriates, but does exempt some user fees applied to certain pension benefit plans.
In addition, the bill would exempt from tax certain monetary distributions for attendees of U.S. military academies, and includes provisions related to travel expenses for members of the National Guard and Reserves.
Treasury says Radical Reform Needed In International Tax: The rise of corporate inversions and other international issues underscores the need for reform of the way the U.S. taxes international business, according to Kenneth Dam, deputy secretary of the Treasury.
Dam told a meeting at the Tax Foundation’s 65th National Conference that corporate inversions and the recent judgment against the U.S. in a World Trade Organization dispute settlement case are related, and that any solution to either of these issues should address them both.
"There is no reason why a U.S.-owned firm should be acquired by a foreign-owned firm simply because of ill-designed international corporate tax rules," he said.
Dam said that the Treasury will work with Congress next year on reforming our international tax rules. "When U.S. tax law treats U.S.-owned and foreign-owned firms alike, our economy will be stronger and U.S. enterprises will be more competitive around the world," he said.
