Tax planning

The Treasury Department and the Internal Revenue Service issued final regulations on the treatment of nonqualified deferred compensation plans and arrangements under Section 409(a) of the tax code.

The Internal Revenue Service has updated the list of areas included as being within the "North American area," referred to in Section 274(h) of the Internal Revenue Code.The section of the tax code limits deductions for expenses incurred in connection with a convention, seminar, or similar meeting held outside the “North American area.” In a recent revenue ruling, the agency updated the list of all geographical areas currently included in the North American area for purposes of the section.

Husband and wife grape-growers in Geyserville, Calif., got some mixed news last week, after the U.S. Tax Court took a closer look at how they could depreciate improvements made to their vineyard.The court found that although Leo and Evelyn Trendadue properly classified wine grape trellises on their land as farm machinery or equipment, because the irrigation systems and well the couple built on their property have a longer class life (20 years, as opposed to 10 years) those enhancements should be classified -- and depreciated for -- as permanent land improvements.

According to published reports, House Democrats are preparing legislation to permanently shield all but the wealthiest of taxpayers from the alternative minimum tax.According to the New York Times, the plan is still in its early stages, but would have the end goal of exempting millions from the tax -- although how exactly the revenue loss would be offset remains to be determined. The newspaper said that by the close of May, House Democrats hope to draft a permanent overhaul of the AMT that would exclude anyone who earns less than about $200,000 a year -- which covers about 97 percent of taxpayers.

There is a greater push for transparency, both in terms of financial reporting and in regard to regulatory actions, but I wonder how successful this push will ultimately be. It is the regulatory bodies that will have to be the driving force, along with institutional investors. A recent action indicated to me that one particular regulatory body seems to have little concern for transparency. It was reported at www.indystar.com/apps/pbcs.dll/article?AID=/20070405/BUSINESS/704050480 that Conseco Life Insurance Co. has been fined $750,000 by Iowa regulators. The article reports that state kept secret exactly what triggered the penalty. This got me curious, as the fine was described as ”one of the Iowa Insurance Division's largest such penalties,” so I tracked down the order.

Over the six-plus years I’ve spent as editor-in-chief at Accounting Today, I’ve come to anticipate several certainties as tax season winds down.

A former Internal Revenue Service commissioner will head up Jackson Hewitt Tax Service Inc.’s internal review of fraud charges lodged last week against a major franchisee.Last week, the nation’s No. 2 tax preparer announced that Fred Goldberg, currently a partner at the Washington law firm Skadden, Arps, Slate, Meagher & Flom LLP, would lead a review of charges brought by the Department of Justice. Goldberg served as IRS commissioner for three years, before returning to private practice with Skadden Arps in late 1992. That same year, he also served a stint as assistant secretary of the Treasury for Tax Policy.

Dating back to 2000, the Internal Revenue Service has continued to take steps towards reversing several noncompliance trends that took hold in the 1990s.According to the Treasury Inspector General for Tax Administration, compliance activities increased and results improved during the IRS’s 2006 fiscal year as the agency continues to make greater use of collection enforcement tools. Last year, enforcement revenue collected continued to increase (to $48.7 billion), although the total dollar amount of uncollected liabilities did increase, to $271 billion.

Hourly rates charged by accountants are on the rise overall, according to Intuit’s 2007 ProConnection rates survey, which polled more than 1,100 professional accountants.

A Swedish couple is battling the country’s tax board for the right to name their 6-month-old daughter “Metallica.”In addition to acting as the Swedish version of the Internal Revenue Service, the Swedish National Tax Board is in charge of the country’s population registry and issuing personal identification numbers, similar to the Social Security numbers used in the United States. As part of that process, the board also gets final approval over the names of children.

Between January 2003 and June 2006, at least 490 Internal Revenue Service computers -- some containing sensitive data -- were lost or stolen, according to a new report from the Treasury Inspector General for Tax Administration.TIGTA said that the missing computers, and other data-sensitive equipment, were lost or stolen in 387 separate incidents. Worse, in more than 75 percent of the cases, IRS employees failed to notify the agency’s computer security office, which could have helped negate the risk to taxpayers.

The federal government is suing the leader of a national movement that claims most Americans are not required to pay income tax.

In a decidedly non-scientific survey, Money Management International found that tax time can be very different for consumers born under different sun signs.For example, the MMI survey found that Libras expecting a refund plan to receive an average refund of $2,200, while Aries are expecting a significant $800 less.

Alleging pervasive fraud, the government has filed civil injunction suits against five corporations that operate Jackson Hewitt tax prep franchises, as well as 24 individuals who manage or work at the franchises, the Justice Department and the Internal Revenue Service announced.According to the four lawsuits -- filed in federal courts in Chicago, Atlanta, Detroit and Raleigh, N.C. -- the corporations operate under franchise agreements with Jackson Hewitt Tax Services Inc. of Parsippany, N.J., the nation’s second-largest tax preparation firm. Collectively, the suits allege that the businesses cost more than $70 million in losses to the U.S. Treasury.

As part of its audit of the Internal Revenue Service’s 2005-06 financial statements, the Government Accountability Office took a look at what the agency was doing to correct previously reported information security weaknesses.

The Department of Justice and the Internal Revenue Service put on a bit of a dog and pony show yesterday, holding a special press conference to announce highlights of their work during the past year to enforce federal tax laws.

The Public Company Accounting Oversight Board released a new auditing standard along with guidance targeting how tax services are provided to people in financial reporting oversight roles.

Tax Freedom Day will fall on April 30 this year, two days later than 2006, according to the Tax Foundation's annual calculation using the latest government data on income and taxes.Tax Freedom Day marks the calendar date by which Americans have worked enough days to pay off the federal and state taxes they will pay. The foundation calculates the date by dividing the total tax collections by the nation's income and then converting that percentage into days worked. This year, the percentage fell at 32.7 percent -- meaning that counting from January 1, it would take until April 30 before a worker begins to "take home" their earnings.

The Internal Revenue Service has alerted taxpayers about Internet scams in which fraudulent e-mails are sent that appear to be from the IRS.The e-mails direct the consumer to a Web link that requests personal and financial information, such as Social Security, bank account or credit card numbers. The practice of tricking victims into revealing private personal and financial information over the Internet is known as “phishing” for information.

Although there were delays on issuing 1099s, and some problems have surrounded the telephone tax refund, the 2007 filing season has been relatively uneventful, observers said. The traditionally frenetic period had, at press time, passed its midpoint without any real snags."So far, the season has been remarkably quiet and very smooth," said Teresa Mackintosh, CPA, CITP and vice president of strategic marketing at Thomson Tax and Accounting Professional Software and Services.