A company's obligation to a worker for federal tax purposes depends primarily on whether the worker is an employee or an independent contractor, according to G. J. Stillson MacDonnell, a shareholder at the national labor and employment law firm of Littler Mendelson. "There is no other option," she said.While independent contractor status provides benefits to companies and individuals, it draws hostility from the Internal Revenue Service and state tax agencies, she said.

The Internal Revenue Service announced a formula allowing businesses and tax-exempt organizations to estimate their federal telephone excise tax refunds.In May, the government announced that it would stop collecting the federal excise tax on long-distance telephone service beginning Aug. 1, 2006, and provide refunds for taxes billed after Feb. 28, 2003.

Tax strategies don't just come from nowhere. They arise out of necessity and typically are reactive, constructed as work-arounds to avoid certain tax pitfalls or to meet certain rules. Viewed from this perspective and appropriate to the start of a New Year, we offer our list of the Top 10 tax developments of 2006 that will shape tax strategies in 2007.* No. 1: The IRS's use of the economic substance doctrine. Under the economic substance doctrine as adroitly used by the Internal Revenue Service Chief Counsel's Office in the Coltec case, Black & Decker and other tax-shelter-related litigation, a tax strategy can conform to the letter of the Revenue Code, yet fail to win the desired result.

In pursuit of auditing standards that would be clear to auditors around the world, the International Auditing and Assurance Standards Board has issued exposure drafts of existing international standards that have been recast in a clearer form.While the changes do not affect auditors in the U.S., who audit under the standards of the Auditing Standards Board, that board may soon begin a similar clarification process, perhaps following the IAASB model, or perhaps devising its own.

As many of you have already discerned by now, I spend a goodly piece of time in England, specifically because I work with the development office and president of my graduate college there on a new capital campaign that will affect women’s health issues worldwide.

The Financial Accounting Standards Board has created a new committee comprised of a dozen individuals from the investment community who regularly focus on accounting and financial reporting matters.

Rep. Barney Frank said that wage inequality among U.S. workers is his No. 1 priority as he prepares to take over chairmanship of the House Financial Services Committee this week.In a speech at the National Press Club, Frank, D-Mass., said that he will hold hearings about wages over the next two years in an attempt to address the gap between economic growth and workers' wages.

As president and chief executive of the Institute of Management Accountants for the past three years, Paul Sharman has worked to establish a new direction for the association.Sharman’s ultimate goal is to reposition management accountants at the forefront of the accountancy profession, and in recent years the IMA has focused on advancing the management accounting and finance profession through certification, superior professional ethical standards and competence-based continuing education.

It was just this July that I authored a column praising Securities and Exchange Commission Chairman Christopher Cox for successfully navigating through a number of potentially sensitive issues during his first year on the job.Among one of the examples I cited was Cox’s handling of a number of investigations involving the practice of stock-options granting to executives. Now, just four months after implementing tough new rules on how companies have to disclose executive compensation, the SEC issued a quiet statement on Dec. 22 saying that it would take another look at those rules.

Baby Boomers are just becoming aware that when they retire and because of greater life expectancies, they will probably need a steady income steam for at least 25 years, maybe for as long as 35 or more.

The International Federation of Accountants is proposing the first major revisions to its code of ethics for accountants since late 2001.

The President's Identity Theft Task Force announced that it is seeking public comment on various recommendations to improve the effectiveness and efficiency of the federal government's efforts to reduce identity theft.

Refco Inc., which collapsed amidst the revelations of an accounting scandal just over a year ago, has emerged from Chapter 11 bankruptcy to wrap up its business.A federal bankruptcy court approved the company’s exit plan on Dec. 15 to essentially dissolve itself by selling off its remaining operations and eliminating others. Payouts won’t put much of a dent in the $16.8 billion that creditors have claimed they are owed.

To finish off the year, I thought it might be very worthwhile, as we get ready for New Year’s Resolutions, to consider certain ideals, courtesy of my friends at Buckingham Asset Management. They have adopted the following principles to help them serve as a trusted advisor. It bears repeating over and over because Buckingham is right on target:

The American Institute of CPAs has asked the Internal Revenue Service to clarify the deductibility of health insurance premiums covering S corporation shareholders.

Beleaguered health insurer UnitedHealth Group Inc. announced that a Securities and Exchange Commission probe of the stock-options practices has been formalized.

Canadian firms reporting under the Sarbanes-Oxley Act have as many, if not more, internal control problems than American companies, according to a new study authored by a Toronto-based academic.

Philadelphia, the city in which our Founding Fathers created the words to govern our country, this month housed the fathers of another language -- one they hope businesses in every nation will adopt to turn financial reporting from a tower of babble into a world of ubiquitous fluency. Backers of the Extensible Business Reporting Language expressed excitement over their progress in enticing companies to conduct internal reporting and regulatory filings in this format. Roughly 500 people from 27 countries attended the 14th international conference, which indicates increased interest from last fall’s showing of 300, but not necessarily increased understanding. At least conference organizers foresaw the dilemma and astutely prepared novices, even promising “compelling” demos free of technical jargon to prove that XBRL applications can make life easier for accountants, auditors, and investors looking to do everything from internal budgeting on Excel spreadsheets to quantitative analysis for investment management.

After four months, the Securities and Exchange Commission has already revisited its rule on disclosing executive compensation.In a statement issued Dec. 22, SEC Chairman Christopher Cox said that the new requirements will make it easier for companies to prepare statements and for investors to understand the cost of stock options.

A CPA will take over as the Securities and Exchange Commission’s chief financial officer and associate executive director of finance.The appointee, Kristine Chadwick, had most recently served as the chief financial officer for the Department of Agriculture's Farm Service Agency, Foreign Agricultural Service, and Commodity Credit Corporation. She will replace Margaret Carpenter, who is retiring in January after 32 years in the federal government.