Hurricane Isabel Victims Get Tax Relief: The Internal Revenue Service is providing special tax relief for residents in the Presidential Disaster Areas that were struck by Hurricane Isabel.
This relief applies in the District of Columbia and parts of Delaware, Maryland, North Carolina and Virginia. The relief gives affected individual and business taxpayers additional time to file and pay certain taxes, and it provides affected employers extra time to make federal tax deposits.
For the purposes of this tax relief, affected taxpayers include individuals and businesses located in the disaster area, those whose tax records are located in the disaster area, and relief workers. The same relief will also apply to any counties added to the Presidential Disaster Area.
The IRS gives affected taxpayers until the extension date to file tax returns or make tax payments that have either an original or extended due date falling within the designated period. The IRS will abate interest and any late filing or late payment penalties that would apply during these dates to returns or payments subject to these extensions. The extension date is Nov. 18, 2003, except for federal tax deposits, for which the extension date is Sept. 29.
This extension to file and pay does not apply to information returns (other than the Form 5500 series), or employment and excise tax deposits; however, penalties on deposits due during this period may be abated based on reasonable cause, as long as the tax deposit is made by Sept. 29, 2003.
To qualify for this relief, affected taxpayers should put the disaster designation assigned for their area in red ink at the top of the return, except for Form 5500, where filers should check Box D in Part 1 and attach a statement, following the form’s instructions.
MTC says Net Tax moratorium could slash state and local revenues: The Internet tax moratorium passed in late September by the House would reduce state and local revenue collections by at least $4 billion and as much as $8.75 billion annually by 2006, rather than the earlier estimation of $500 million, according to a study by the Multistate Tax Commission.
The MTC said that the prospect of unintended billions in potential losses for local and state governments would result from language in the bill that courts could interpret as providing a blanket exemption from non-federal taxes for the telecommunications industry.
“This bill provides a roadmap for the telecommunications industry to sidestep as much as $9 billion annually by 2006 in taxes and succeed in doing what no other industry has done: Get Congress to relieve it of potentially all local and state taxes,” said Tennessee Revenue Commissioner Loren Chumley.
Goelzer says PCAOB May Crack Down on Tax Shelter Advice: While Sarbanes-Oxley doesn’t expressly forbid accounting firms from offering tax shelter advice to the public companies they audit, a member of the new accounting oversight board has indicated that the board one day might.
In a speech to the Investment Company Institute, the trade association for the mutual fund industry, board member Daniel L. Goelzer sought to clarify some of the gray areas of Sarbanes-Oxley, especially when it comes to tax services.
The Securities and Exchange Commission issued a release last January saying that accountants may still offer such services as tax compliance, planning and advice to audit clients, as long as such engagements are pre-approved by the internal audit committee and are “scrutinized carefully.”
But Goelzer said that he worried that this leeway could open a dangerous loophole. “This is an area in which auditors and audit committees should be cautious,” he said. “I have no problem with auditors assisting their clients with traditional tax compliance and routine planning ... . But tax services that go beyond that — especially the marketing to audit clients of novel, tax-driven financial products — raise serious issues.”
One of the reasons why neither lawmakers nor the SEC have written a rule prohibiting the marketing or sale of tax shelters is because distinguishing them from traditional tax planning advice is not an easy task, Goelzer noted.
“However, given the well-publicized congressional and public concern in this area, the board may have to try its hand at solving the problem,” he warned.
