Practice and client management

The Internal Revenue Service has granted further relief for taxpayers in New York State in the Presidential Disaster Area of Orange, Rockland and Westchester Counties that was struck by severe storms and flooding during the period from April 14-18, 2007. Deadlines for affected taxpayers to file returns, pay taxes and perform other time-sensitive acts falling on or after April 14, 2007, and on or before June 23, 2007, have been postponed to June 23, 2007. In addition, the IRS will waive the failure to deposit penalty for employment and excise deposits due on or after April 14, 2007, and on or before April 30, 2007, so long as the deposits are made by April 30.

After learning that more than 450,000 federal workers and retirees owe a whopping $3 billion to the Internal Revenue Service in back taxes, the Senate Finance Committee is urging the president to step up efforts to collect from those delinquent employees.According to the Washington Post, Senate Finance Committee chairman Max Baucus, D-Mont., and ranking Republican member Sen. Charles Grassley, R-Iowa, sent a letter to President Bush requesting that he remind the delinquent federal employees and warn them of the consequences of non-compliance.

Sen. Chuck Grassley, R-Iowa, ranking member of the Senate Finance Committee, has sent a letter to his chamber colleagues in an attempt to blunt what he termed "inaccurate claims" about the private collectors employed by the Internal Revenue Service. In a "Dear Colleague" letter, Grassley pointed out that the IRS's own collection infrastructure is better set up for placing liens and garnishing wages than making initial phone calls to delinquent taxpayers to set up a payment plan. Grassley wrote that the private debt collection program consists of having contractors make basic phone calls to taxpayers, contrary to the images of thuggish collection agents using questionable tactics, as has been portrayed by opponents of the program. As evidence, he said that of 24,000 cases of collection just 36 inquiries have been registered. Grassley said there is roughly $90 billion in unpaid taxes that is languishing instead of being collected. His letter said that some of that money is best collected by the "tough cops" of the IRS, fully empowered to seize property, garnish wages, freeze bank accounts and sell the family home or business. However, a large percentage, typically the smaller, newer debts, is better obtained by a modern outbound calling system -- a system that the IRS currently doesn't have, nor are its employees trained for it.

I’m a sucker for financial calculators -- you know, those little widgets that help you find out how much you’ll pay monthly on your 30-year mortgage, how long it’ll take to pay off your student loans, or what you can save when you switch your balances to a new credit card.So it was with some interest that I came across a little application last week, courtesy of journalist Kay Bell’s “Don’t Mess with Taxes” blog (http://dontmesswithtaxes.typepad.com), that allows users to calculate what their income tax liability would have been under the original Form 1040 -- issued in1913. (The calculator can be accessed directly at http://politicalcalculations.blogspot.com/2007/04/income-tax-original-form-1040.html).

Liberty Tax Service reported a 20 percent increase in the number of tax returns prepared at its franchises for the 2007 fiscal year.

According to Vertex Inc.’s annual Sales Tax Rate Report, the average number of U.S. sales tax rate changes per year has grown by 28 percent since the late 1990s.Based on a comparison of the number of state, county, city and district sales tax rate changes during the six-year periods between 1995 and 2000, and 2001 and 2006, the study found that the average number of rate changes per year was 610 and 779, respectively. According to the report, the number of rate changes decreased for the earlier period, while the number of yearly rate changes fluctuated for the later period.

At first glance, the recent testimony of Treasury Secretary Henry Paulson, Jr. before the Senate Finance Committee on ways to reduce the tax gap was fairly typical, in that he urged Congress to approve the Presidential-submitted budget with increased IRS funding, and to pass 16 legislative proposals aimed at narrowing the tax gap.

The leaders of the Senate Finance and the House Ways and Means Committees have reached agreement on a tax package aimed at providing nearly $5 billion in tax relief for small businesses.

The Senate Finance Committee didn’t get the answers it was hoping for during a hearing this week with Treasury Department representatives on how to reduce the tax gap.In testimony before the committee, Treasury Secretary Henry Paulson said that Congress should focus its efforts on reducing the complexity of the tax code, as well as approving the entire budget request from the Internal Revenue Service and enacting the Treasury’s February legislative proposals that are backed by President Bush. Paulson said that in developing more than a dozen proposals to minimize the gap, the Treasury focused on changes that would come with minimal additional burdens.

Solutions to your problems are everywhere. Just look at all the products, services and companies that proudly proclaim their status as solutions.

Taxpayers frustrated by delays in Intuit Inc.’s tax-processing capabilities will have until midnight on April 19 to electronically file their returns.The Internal Revenue Service and Intuit said that as many as several hundred thousand last-minute tax filers were affected by Intuit’s server problems Tuesday night -- meaning that they, or their accountants, may have been unable to electronically file returns.

The Internal Revenue Service will grant a six-month tax filing and payment extension to those affected by the shootings at Virginia Tech.The relief applies to the victims, their families and emergency responders, as well as university students and employees.

If Democrats are serious about rolling back the alternative minimum tax, then they should be happy to have gotten a little more fodder last week to use in whatever PR campaign accompanies the unveiling of their plan.The White House released copies of the tax returns for both the Bushes and the Cheneys last Friday, and both families somehow found their way to avoiding the AMT.

Internal Revenue Service Commissioner Mark Everson will leave the agency to become president and chief executive of the American Red Cross next month.Everson, 52, has served as IRS commissioner since May 2003. During his time with the agency, he has publicly focused his attention on efforts to better serve taxpayers, continue the agency’s modernization of its systems and enhance its enforcement activities. In recent months, Everson has heard increased clamoring from Congress over how the agency and the Treasury Department should best work to address the nation’s growing tax gap -- estimated at $345 billion for the 2001 tax year.

A real estate investor from Brooklyn, N.Y., had the requisite skillz to win the $25,000 TaxRap contest sponsored by TurboTax.In a statement, the company said that the submission from Christian Pulfer, 28, stood out as one of the most individual and creative entries. Pulfer’s entry, “It’s Just a Breeze…G,” was selected by guest judge Vanilla Ice from more than 370 homemade rap videos.

Carbis Walker LLP, a firm specializing in public accounting and consulting, is offering manufacturers and distributors the opportunity to participate in a national benchmarking survey through a partnership with McGladrey & Pullen LLP.

Jayne V. Bates is in the home stretch of her one-year term as president of the Association for Accounting Marketing, which will end in July. Bates has served on the association’s board of directors since January 2001.Herself a CPA, Bates is currently the director of marketing for Carter, Belcourt & Atkinson PA CPAs, a firm based in Lakeland and Tampa, Fla. She has been with CBA for nearly 20 years, spending her first eight years with the firm as a professional staff accountant and serving in a marketing capacity during the rest of her tenure.

When Matt Camden, chief information officer at UHY Advisors in Chicago, faced an audit server outage in one of his New England offices over a February weekend, he was able to restore his data in a period of 11 hours."Two of our disks failed, which is a terrible thing to happen," Camden recalled. "All we had to do is put new server hardware in place, which is our responsibility, then we got the data back up, loaded it, and it worked like a charm." He credited his online data protection company, EVault, for the rapid restoration process.

IRS REVISES OFFER IN COMPROMISE APPLICATIONWASHINGTON - The Internal Revenue Service announced that its revised taxpayer application for an offer in compromise, Form 656, is now available. The Form 656 package was last revised in 2004 to help taxpayers prepare an offer correctly and completely.

Strategies for the use of tax-deferred like-kind exchanges have grown over the years from almost exclusively a real estate concern to one in which billions of dollars of business tangible personal property are traded each year. While the main battle continues to be waged over what dissimilarities in property are allowed and still qualify as "like kind," another fight has developed over how the property received in a like-kind exchange is to be depreciated.After tinkering with the depreciation rules in 2001 and 2004, the Treasury issued final regulations early in 2007. In its preamble to the final regs, the Treasury admitted that confusion and resulting inconsistency among taxpayers had developed. The final regs appear to do little to end those problems.