Tax

The U.S. Tax Court will continue its consideration of a requirement that would push the Internal Revenue Service commissioner to publicly file answers to all small tax cases.Chief Judge John Colvin first announced the proposed change in September, noting that small tax cases comprise about half of the court’s docket. He said that petitioners in those cases are increasingly being represented by low-income taxpayer clinics, and suggested that those parties, as well as the court itself, might benefit from improved pretrial communication between all the parties involved in settling some of those cases.

ADP Employer Services, a division of Automatic Data Processing Inc., announced that it has completed its acquisition of Taxware LP from First Data Corp.

State tax policy has only a modest effect on entrepreneurship rates, according to a report released by the Small Business Administration’s Office of Advocacy.A new analysis by professors at the University of Tennessee and Creighton University takes into account tax rates, as well as the type of taxes in a state’s portfolio, to reach the conclusion. “State Tax Policy and Entrepreneurial Activity” looks at detailed tax policy information from 50 states, spanning from 1989 through 2001.

After years of sounding the fiscal imbalance bell, Comptroller General David Walker, the head of the Government Accountability Office, has committed a to-do list to paper for the 110th Congress.In a letter dated Nov. 17, Walker outlines a number of areas his federal watchdog agency, says the newly-elected politicians should consider in getting a “jump-start” on legislative planning.

From its origins as a response to client inquiries on how transactions would affect their tax returns, tax planning has morphed into a year-round enterprise for practitioners, as well as a solid builder of client loyalty.Yet it's still a relatively well-kept secret, according to Jorge Olivarietta, senior product manager at Lacerte. "When a client comes in for tax prep, it's not just about inputting the information and creating a return," he said. "An accountant's job is to take the inputs, and make sure that what the customer is planning on doing is the right action. At the end of the day, you want to come as close to zero liability as possible."

It's not uncommon to read stories about companies that stretch the rules to avoid paying taxes. But currently there's a tax that many companies are already paying, though at present they have no legal obligation to do so.The Streamlined Sales Tax Program, the tax designed to recoup perceived lost state tax revenues due to online and other out-of-state sales, is chugging along, even though federal legislation to institute it on a permanent basis appears to be standing still.

With the Democrats winning control of the U.S. House of Representatives and Senate, the tax legislative outlook has shifted to new priorities and concerns, according to Mel Schwarz, a partner in Grant Thornton’s National Tax Office.

Tax and financial products provider Thomson Tax & Accounting has bolstered its Fast-Tax print services to include Schedule K-1s for trusts and estates.

Business tax reform needs a bipartisan, national consensus, but is absolutely necessary for the country to remain competitive in a global economy, according to Senate Finance Committee chair Chuck Grassley, R-Iowa."I think the consensus is there that the business tax system is in desperate need of reform," he told a recent hearing on the business tax system. "But we need to start building consensus on how to do it."

The use of private annuities to shelter gain on appreciated property has come to an abrupt halt, if the Internal Revenue Service has its way.Whether the IRS can withstand pressure to withdraw or substantially amend new proposed regs before they are made final, or whether the final regs can withstand judicial challenge, remains to be seen. For now, however, effective for annuity transactions after Oct. 18, 2006 (subject to a relatively brief six-month "estate planning" exception), the division between "old rule" and "new rule" is dramatic.