Nexus - the amount of contact between a taxpayer and the state that subjects the taxpayer to taxation - continues to vary widely from state to state. In addition, the nexus for sales and use tax differs from the nexus for income tax.The nexus requirement is derived from the language in two different places in the Constitution - the commerce clause, which prohibits states from unduly burdening interstate commerce, and the due process clause, which requires a minimum connection between a state and an entity it seeks to tax.

Just in time for the summer, the U.S. Tax Court denied the like-kind exchange treatment for vacation homes that are not strictly held for investment purposes.In a memo issued Wednesday, the court said that a Georgia couple's exchange of vacation homes did not qualify for the treatment according to Section 1031(a) of the tax code -- finding that the holding of any residence, even if motivated in part by an expectation that the property will appreciate in value, is insufficient to justify the classification of that property as being held for investment.

The Internal Revenue Service is alerting taxpayers to the new versions of an old e-mail scam -- which attempts to fool people into believing that they are under investigation by the agency’s Criminal Investigation Division.An e-mail purporting to be from IRS Criminal Investigation falsely states that the person is under a criminal probe for submitting a false tax return to the California Franchise Board. The e-mail seeks to entice people to click on a link, or open an attachment, to learn more information about the complaint against them. Both the e-mail link and attachment contain a harmful program that can take over the computer hard drive and allow someone to have remote access to the computer.

Federal prosecutors will not bring criminal charges against Ernst & Young for the firm’s sale of legally questionable tax shelters -- although that news probably brought little comfort to the four current and former partners of the Big Four firm who were indicted on charges of tax fraud conspiracy.

The Canada Revenue Agency will appoint a new independent tax ombudsman by the fall -- creating a post similar to the Internal Revenue Service’s National Taxpayer Advocate for the first time.

A memo issued by the Internal Revenue Service’s Office of Chief Counsel could possibly eliminate a tax-saving strategy used by some investors with brokerage accounts.Wrap accounts charge a flat percentage fee instead of a commission, and for tax purposes, the annual fees that investors pay are often treated as miscellaneous itemized deductions. But under a provision, some taxpayers can instead opt to add the fees to the cost basis of the securities, which could reduce potential capital-gains taxes (or enhance potential losses).

The Illinois CPA Society recently released the results of its fifth annual “Accounting Women: 2007 Survey on the Role of Women in CPA Firms.”The survey found only slight shifts in hiring and retention patterns from the results of prior years -- again concluding that women are still underrepresented in key leadership positions.