IRS Continues Crackdown, Sues for Disclosure of Offshore Accounts: Continuing its crackdown on offshore accounts, the Internal Revenue Service went to court in an effort to force more than 40 companies, including AOL Time Warner, eBay and American Airlines, to surrender information on customers that the agency suspects are hiding income in offshore accounts.
The IRS reportedly filed summonses in federal courts in seven cities in an attempt to review documents from companies whose goods or services were purchased with credit cards linked to offshore accounts. Summonses were filed in Atlanta, Chicago, Dallas, Newark, San Francisco, Seattle and Alexandria, Va.
The agency is seeking records from airlines, hotels, car renters, Internet companies, retailers and shipping companies. The companies, however, are not the targets of IRS investigations, according to the report.
The summonses were prompted by transaction information that the IRS received in the last year from MasterCard and American Express.
In some cases, said Dale Hart, a deputy commissioner, the name or address of the cardholder is not known - that is the information that the agency is seeking from the merchants.
Offshore accounts cost the Treasury Deptartment from $20 billion to $40 billion a year in tax revenue, the report noted.
Judge SAYS IRS Exempt From Disclosing Reasons for Tax-Exempt Refusal: The Internal Revenue Service does not have to make public its reasons for denying or revoking a charity’s tax-exempt status, a federal judge in Washington, D.C. ruled.
The ruling by Judge Ricardo M. Urbina of Federal District Court for the District of Columbia, is a blow to watchdog groups and state regulators that are trying to fight fraudulent charitable solicitations, especially those that exploit the Sept. 11 terrorist attacks, said experts on taxes and charities, according to a Bloomberg report.
Currently, the IRS recognizes more than 1.35 million tax-exempt organizations. The agency denies, or in some cases revokes, a tax-exempt status in cases where an organization engages in prohibited political activity or is operating on a for-profit basis or in a fraudulent manner.
SFC Leaders Want IRS Nominee: Senate Finance Committee leaders are urging President George W. Bush for his nominee to succeed incumbent IRS commissioner Charles O. Rossotti, whose five-year term expires in November.
Finance Committee chair Max Baucus, D-Mont., and ranking member Charles E. Grassley, R-Iowa, want Bush to submit his recommendation for a nominee so they can move forward with the requisite nomination process.
Baucus and Grassley were equally concerned that if a proposed candidate is not submitted soon, the tax service could "face a leadership gap in this key position."
Home Exclusion Rules Eased For Terror Victims: Taxpayers who were affected by the September 11th terrorist attacks and who sold a home before meeting the usual two-year ownership and use requirements will be able to exclude some or all of that gain under new rules just announced by the Treasury Department and the Internal Revenue Service here in Washington.
The tax law requires a person to own and use a home as a principal residence for two of the five years before the sale in order to exclude any gain, and allows an exclusion only once every two years. An exception applies if the sale is for reasons of health, change in employment, or, to the extent provided in IRS regulations, "unforeseen circumstances."
The Treasury Department and the IRS expect to issue these regulations in the near future. The regulations will consider the death of the taxpayer’s spouse, man-made disasters and acts of war as unforeseen circumstances, and will give the IRS commissioner the discretion to determine other circumstances as unforeseen.
Under the exception, the maximum exclusion amount of $250,000 ($500,000 for a married couple filing jointly) is reduced to the proportion of the two-year period that the taxpayer fulfilled the law’s requirements.
Thus, a taxpayer who owns and occupies a home for one year (half the usual two-year period) - and who has not excluded gain on another home in that time - may exclude half the regular maximum amount, or up to $125,000 of gain ($250,000 for most joint returns). The proportion may be figured in days or months of use and ownership.
