Tax planning

The House of Representatives passed the final piece of $95 billion in tax cuts in early December, in a vote split mostly along party lines.The most recent bill approved $56 billion in tax cuts over the next five years, including a two-year, $20 billion extension of President Bush's 2001 tax cut for stock dividends and capital gains.

TAX OVERHAUL MAY BE ANOTHER YEAR AWAY: Reports from inside the White House are that President Bush's administration may wait until 2007 to begin pushing a proposal to overhaul the tax code.A proposal was originally planned as a key part of President Bush's second-term agenda, but Republican sources have said that any push would have problems gaining traction in a mid-term election cycle. The Treasury is currently reviewing the recommendations issued by the President's Advisory Panel for Tax Reform before submitting a plan to the president.

As the Internal Revenue Service moves towards its goal of 80 percent e-filing for individuals, it is placing more emphasis on the e-filing of corporate returns.In 2005, over 200,000 corporations voluntarily e-filed, and beginning in 2006, many corporations will be required to file electronically. Recently issued regulations require corporations with assets of $50 million or more that file over 250 returns each year to file Forms 1120 and 1120S electronically, starting with tax periods ending on or after Dec. 31, 2005.

In violation of a longstanding court order, the Internal Revenue Service has stopped providing detailed statistics about how the agency enforces the nation's tax laws, according to a motion filed in the United States District Court for the Western District of Washington.The legal challenge was brought by Susan B. Long, a professor of management information and decision sciences at Syracuse University's Martin J.Whitman School of Management.

Treasury Secretary John Snow predicted that Congress would probably extend a number of tax cuts when it returns in session, according to reports.

A recent claims study conducted by Camico Mutual Insurance Co. indicated that more than half of all claims reported by Camico-insured CPAs come from tax engagements.

Americans avoided paying taxes on a record $1 trillion in income in 2003, according to a new federal government report.

The Internal Revenue Service announced the release of the fall 2005 issue of the Statistics of Income Bulletin.

The Congressional Budget Office recently released its long-term budget outlook. The report doesn't offer specifics in terms of a solution to the country's increasing debt burdens, but does point out a number of reasons why the current system won't be able to solve itself.

As the year winds down, tax professionals are gearing up for the coming season by checking supplies, test-driving software, training additional staff, and packaging year-end planning tips to their clients."It's never too late for tax planning," said New York City-based CPA Marc Albaum. "You've got till the ball drops to take action, and if you do it later than that, then you've got an early start for 2006."

The Internal Revenue Service recently estimated that the 2001 tax gap ranged from $312 billion to $353 billion. Although the IRS said that it would eventually recoup some of that shortfall, it still leaves a huge net tax gap that the IRS sets at between $257 billion and $298 billion.Previous estimates of the tax gap relied on research conducted for tax years 1988 and earlier. The National Research Program, which examined 2001 returns, was completed in the fall of 2004, and provided the data that the IRS now uses to project estimates of the tax gap. The study found that underreporting of income is the largest component of the tax gap, accounting for more than 80 percent of the total. Non-filing and underpayment account for about 10 percent each.

Until now, individual taxpayers who were unable to meet the April 15 tax return filing deadline could file a Form 4868 and receive an automatic four-month filing extension until August 15. And if August 15 didn't provide enough time to get the tax return completed, taxpayers could provide a good reason for the delay on a Form 2688 and request another extension for two months until October 15.Effective for tax returns due after Jan. 1, 2006, the kinder, gentler, more cost-effective Internal Revenue Service has done away with the second extension request and changed the initial automatic extension period from four months to six. Not only will this action remove the need for taxpayers to come up with a reason for requesting the extra two months to file tax returns, it will cut back on lots of paperwork and processing time.

The Justice Department has filed to stop Ohio twin brothers Joseph and Edward Flickinger from promoting alleged tax fraud schemes.The suit also asks the court to permanently bar the Flickinger brothers from preparing federal income tax returns for others.

The Ohio Department of Taxation will begin accepting tax amnesty applications on Dec. 15.

A new study out of think tank the Center on Budget and Policy Priorities says that despite recent revenue growth and budget surpluses in some states, most states continue to feel the after-effects of a recession that hit in 2000.

An European Union court ruled that British retailer Marks & Spencer PLC can deduct losses from other countries on its tax bill if the company can't claim the losses in those countries.

Tax scam promoters John J. Rizzo and his wife, Carol, were sentenced to 43 months and 24 months in prison, respectively, for their roles in a tax evasion scheme, the Department of Justice and Internal Revenue Service announced.

The House of Representatives has already passed three tax cuts and had the details of a fourth nearly pinned down, cutting taxes by $94.5 billion over the next five years.

The Internal Revenue Service issued proposed guidance on the disclosure or use of tax return information by tax return preparers.

Reports from inside the White House are that President Bush's administration may wait until 2007 to begin pushing a proposal to overhaul the tax code.