Audit & Accounting

Everybody knows that taxes are a drag on performance, but I am constantly surprised at the number of investors who blithely pay taxes each year on their investment earnings without considering the impact on accumulation or the alternative strategies that they could employ.It's never a good idea to let the tail wag the dog, of course - a rational investor shouldn't seek tax avoidance, or tax minimization per se. But it makes sense to pursue the highest after-tax return.

ONLY 51% READY FOR FISCAL CRISISResults from the fourth annual "financial fitness" survey conducted by Quicken revealed that only 51 percent of consumers were prepared for a financial emergency or had an emergency fund in the event of accident or illness.

LogicalApps, a provider of embedded governance software, announced that it has acquired the Integra product line from Applimation, a provider of management consulting and software for businesses using Oracle and PeopleSoft applications.

The Deloitte Foundation, a not-for-profit arm of Deloitte & Touche, announced the 2007 recipients of fellowship grants through the organization’s doctoral fellowship program.

Fitch Ratings has released its annual outlook of issues it expects to continue having an impact on the accounting profession in the coming year.

The Internal Revenue Service may not reach the 80 percent e-filing goal for the 2007 fiscal year set by Congress in 1998, but it continues to advance with the help of improved technology, wider perception of its benefits, and both state and federal mandates for taxpayers and preparers.Last year, more than 73 million tax returns were filed electronically - nearly 54 percent of all tax returns - while the Free File Alliance, a partnership between the IRS and software vendors, continues to help drive taxpayers toward e-filing, serving about 4 million individuals last year. This year, the program has been expanded, with 70 percent of taxpayers - those with an adjusted gross income of $52,000 or less - now eligible.

The odds are looking better for Senate approval of legislation to increase the minimum wage, but reconciling that bill with a House version - which contains no tax breaks for businesses - figures to take some negotiating.Senate debate on the bill ended in late January with an 87-10 vote, and final Senate passage of the bill was expected in early February.

The Internal Revenue Service Oversight Board said that the agency still has a ways to go before fully reaching the vision outlined in the IRS Restructuring and Reform Act of 1998. The board's "foremost concern" remains the tax gap - estimated at $290 billion, according to 2001 tax returns.In 2006, the board examined a variety of recommendations to reduce the gap, finally concluding that there was no one "silver bullet" that will solve the problem. According to the board, reducing the tax gap requires a comprehensive set of strategies balancing prevention and correction - similar to the recommendations suggested by other groups. Among the board's recommendations are a simpler tax code, more complete information reporting to more IRS audit and collection personnel, and quality customer service. The IRS must also address information technology modernization and human capital challenges as it continues to modernize itself.

The recent decision by the Financial Accounting Standards Board not to defer the effective date of FASB Interpretation No. 48, despite appeals from companies and industry groups to postpone its implementation, spotlights the radical changes in approach required of financial-statement preparers, auditors and tax advisors.FIN 48, Accounting for Uncertainty in Income Taxes, is effective for fiscal years beginning after Dec. 15, 2006. It establishes a "more-likely-than-not" threshold for the reporting of uncertain tax positions on financial statements. Under the rule, an uncertain tax position may not be recognized unless it is more likely than not that it will be sustained on its technical merits, and there is a more than 50 percent likelihood that it would be sustained if it were challenged and considered by the highest court in the particular jurisdiction.

The Internal Revenue Service has released a fact sheet explaining the 2006 alternative motor vehicle credit allowed for the 44 automobiles certified as eligible.The credit, enacted under the Energy Policy Act of 2005, provides up to $3,150 for taxpayers who purchased qualified vehicles and placed them in service during 2006.