Tax planning

The Internal Revenue Service announced the beginning of an outreach campaign to the entertainment industry regarding the taxability of gift bags and promotional items. The effort follows an agreement the tax agency and the Academy of Motion Picture Arts and Sciences.

The U.S. Tax Court denied a petition from a West Virginian welder to deduct the cost of the Rocky Wolverine boots, as well as other clothes and gloves, which he said he purchased specifically for his work during the 2002 tax year.

A court has said that two documents prepared by KPMG, analyzing the tax consequences of transactions by restaurant company Yum! Brands Inc., are protected from a summons issued by the Internal Revenue Service.

According to a new budget survey, while growing revenues should allow U.S. states to increase their 2006 revenue surpluses by nearly 25 percent, to about $57 billion, that figure will shrink in the upcoming fiscal year -- which began for most states on July 1. The conference said that by year's end, the aggregate surplus would be reduced by nearly 30 percent, shrinking to about $40 billion -- much of that drop due to the uncertainty of tax collections.

Depending on what report you read, and how the statistics get manipulated, the Internal Revenue Service gets a grade somewhere between tremendous and embarrassing for its work auditing the returns of wealthy taxpayers.

The "Pension Protection Act of 2006" (H.R. 4) means a whole lot of work for accounting firms. First of all, it is a massive piece of legislation that goes way beyond pension reform, so firms will first be analyzing what it says. The various publishers are helping with summaries of the numerous provisions, providing detailed analysis, and identifying tax-planning strategies that the new law will generate.

Since its 2001 announcement that it would target tax fraud schemes and tax prep hucksters, the Justice Department has won more than 200 court-ordered injunctions.

Spokespeople for Senate Finance Committee Chairman Chuck Grassley, R-Iowa, are already saying that his take on an estate tax reform bill could be next on Congress's docket.

A class-action lawsuit has been filed, challenging the Internal Revenue Service's plan to reimburse taxpayers for their past three years' worth of long-distance phone taxes.

The chairman of the Ways and Means Committee, which oversees the Internal Revenue Service, has urged the agency to reconsider its contracts with Computer Sciences Corp.

The Internal Revenue Service has again selected CCH to provide sales tax information for the 2006 filing period, providing the sales tax data for use by all taxpayers who file a 1040 return.

The Internal Revenue Service needs to do a better job on its partnership examinations, according to a new report from the Treasury Inspector General for Tax Administration.

Officials of the Canada Revenue Agency and the United States Internal Revenue Service announced progress in unraveling an abusive cross-border tax scheme.

A former consultant for the central purchasing agent of the Archdiocese of New York pleaded guilty today to eight fraud, tax and obstruction of justice charges, the Department of Justice announced.

While audits of high-income taxpayers have increased, the actual impact on compliance may be limited, according to a new report from the Treasury Inspector General for Tax Administration.

A Republican effort to pass a bill cutting taxes on estate inheritance, by piggybacking the measure on top of a minimum wage increase, failed on the eve of the Senate's four-week summer recess.

Agents won't be allowed to challenge whether casino comps to high-rolling patrons qualify for treatment as promotional expenses, according to a memo released by the Large and Mid-Size Business Division of the Internal Revenue Service.

The move by the Internal Revenue Service to further limit contingent fees for Circular 230 tax practitioners has drawn opposition from virtually every group of tax professionals.Representatives from the American Institute of CPAs, the American Bar Association Tax Section, the American Association of Attorney-CPAs, the National Association of Enrolled Agents and the National Association of Tax Professionals, along with others, opposed the change at recent IRS hearings.

Whether accounting firms and tax practitioners should be allowed to seek patent protection for the tax advice that they offer is a question being raised on Capitol Hill in response to a recent upsurge in patent applications by the developers of new tax reduction strategies.By describing their strategies as "business methods," a number of shelter promoters have convinced the U.S. Patent and Trademark Office to protect their estate and gift tax reduction programs from copycats.

IRS SAVES PAULSON FROM TAX HIT: The Internal Revenue Service will issue guidance clarifying the 20 percent penalty for executives who divest a deferred-compensation arrangement. The new regulations will translate into significant savings for incoming Treasury Secretary Henry Paulson. Paulson will sell off the more than $470 million that he owns in Goldman Sachs stock to comply with conflict-of-interest provisions for his new position. The guidance says that any executive divesting a deferred-compensation arrangement specifically to comply with government rules on conflicts of interest doesn't have to pay the penalty. Paulson will still have to pay regular income taxes on the deferred compensation.A spokesperson for the Treasury said that the IRS had been working on the guidance for some time, but accelerated its work in time for Paulson to be covered. The writing of the new rule hadn't been a priority because so few people are affected under the provision.