Tax planning

Following a damning government report, lawmakers opened fire on the nation's commercial tax preparers, charging that the current "tax preparation system is severely breaking down," and that "bad practices seem to be pervasive and systematic in the industry."The sharpest criticism levelled against the paid preparer companies came from the one lawmaker that tax services can't afford to alienate - Senate Finance Committee chair Chuck Grassley, R-Iowa.

Intuit Inc. has sued H&R Block Inc. for copyright infringement, alleging that Block's television spots echoed Intuit's promotions for its market-leading TurboTax software.Intuit sought a court order to stop the H&R Block ads airing in Oregon and Florida.

DECISION TO CLOSE TACS BASED ON BAD INFO: The Treasury Inspector General for Tax Administration, J. Russell George, said that bad data is to blame for the Internal Revenue Service's never-realized plan to close 68 Taxpayer Assistance Centers across the country.Late last year, Congress stopped the IRS from reducing any taxpayer service functions or programs until TIGTA completed a study detailing the effect of the planned reductions on taxpayer compliance and assistance.

In an attempt to head off politicians' talk about taxing the recent high earnings of oil companies, President Bush said last week that the industry should be allowed to reinvest its profits into energy research.

Bjorn Ulvaeus, one quarter of super group Abba, is facing charges from regulators that he failed to pay more than $11.5 million in taxes on song royalties.

The Internal Revenue Service has released updated draft instructions for the new Schedule M-3, filed by large and midsized corporations, and which should be rolled out for the 2006 tax year.

The Internal Revenue Service has shifted its enforcement priorities from tax shelters to high-impact tax cheats -- including attorneys and CPAs.

When criticism of the Internal Revenue Service's revision of its more-than-30-year-old preparer disclosure rules first surfaced, it came as an attack from consumer groups outraged that rules were being eased to permit the marketing of taxpayer information.However, contrary to press reports, the IRS said that the proposed rules actually tighten existing requirements regarding the customer consent that a return preparer must obtain to disclose the customer's tax return information to third parties. In fact, explained IRS Commissioner Mark Everson, "For over 30 years, under the law, return preparers have been able to disclose tax return information with the consent of taxpayers."

Code Section 7216 governs the disclosure and use of tax return information by tax return preparers. Late last year, in Notice 2005-93, the Internal Revenue Service issued a proposed revenue procedure purportedly to update the disclosure rules to account for changes in return filing, particularly to account for the growing use of electronic filing and electronic signatures and the foreign outsourcing of tax preparation work.The proposals have set off some apparently unexpected protests from several consumer protection groups, basically concerned that the proposals make it too easy for taxpayers to unknowingly grant permission for disclosure of their tax information.

KPMG moved a bit closer to putting another piece of its tax shelter troubles in the past, filing court papers that more than 200 investors have agreed to a settlement in a class-action lawsuit against the accounting firm and law firm Sidley Austin Brown & Wood LLP.

As their colleagues float talks of $100 gas-rebate checks for taxpayers, the heads of the Senate Finance Committee have asked the Internal Revenue Service to provide tax and financial information on the nation's largest oil and gas companies.

According to a report from the Treasury Inspector General for Tax Administration, the nation's tax gap -- the annual difference between federal taxes owed and those paid -- could in fact exceed the $345 billion estimate from Internal Revenue Service.

The Internal Revenue Service announced that the recently completed 2006 filing season set a series of records, highlighted by 70 million tax returns being filed electronically this year and home computer usage jumping 18 percent.

The Internal Revenue Service won its first court case against the questionable tax shelters known as "Son of Boss" on a procedural point.

Government and software industry officials proclaimed this year's filing season a success, with numbers up in nearly every category.

H&R Block Inc. hopes that it will be able to put at least one refund anticipation loan lawsuit in its past.

The Internal Revenue Service said that the roughly 400 taxpayers who mailed their returns late because of incorrect information in Cleveland's major newspaper will not be penalized by the federal government.

Taxpayers used the Internal Revenue Service Web site at record levels as the filing deadline approached, the agency said.

Anti-virus software provider Symantec said that the Internal Revenue Service is seeking roughly $1 billion in additional taxes, with the majority of that figure coming from Veritas Software Corp. -- a business that Symantex acquired in July.

In the glut of stories that came out around Tax Day, one in particular stood out.