Former Internal Revenue Service district director Jesse Ayala Cota pleaded guilty to conspiring to defraud the United States through his involvement in a tax fraud scheme promoted by the Topeka, Kansas-based organization "Renaissance, The Tax People Inc."Cota admitted in his plea agreement that from 1997 through April 2002, the conspirators, through Renaissance, operated a scheme to defraud the government by marketing a program designed to sell illegal tax deductions through false and misleading representations.

The Internal Revenue Service has granted further relief for taxpayers in New York State in the Presidential Disaster Area of Orange, Rockland and Westchester Counties that was struck by severe storms and flooding during the period from April 14-18, 2007. Deadlines for affected taxpayers to file returns, pay taxes and perform other time-sensitive acts falling on or after April 14, 2007, and on or before June 23, 2007, have been postponed to June 23, 2007. In addition, the IRS will waive the failure to deposit penalty for employment and excise deposits due on or after April 14, 2007, and on or before April 30, 2007, so long as the deposits are made by April 30.

After learning that more than 450,000 federal workers and retirees owe a whopping $3 billion to the Internal Revenue Service in back taxes, the Senate Finance Committee is urging the president to step up efforts to collect from those delinquent employees.According to the Washington Post, Senate Finance Committee chairman Max Baucus, D-Mont., and ranking Republican member Sen. Charles Grassley, R-Iowa, sent a letter to President Bush requesting that he remind the delinquent federal employees and warn them of the consequences of non-compliance.

Distilling the nation's complex tax code is the key to reducing the $290 billion tax gap, the American Institute of CPAs told lawmakers. In a hearing before the House Small Business Committee, James Brennan, chair of the AICPA's IRS Practice and Procedures Committee, said simplification should be the foundation to begin stripping away the mammoth deficit.

Sen. Chuck Grassley, R-Iowa, ranking member of the Senate Finance Committee, has sent a letter to his chamber colleagues in an attempt to blunt what he termed "inaccurate claims" about the private collectors employed by the Internal Revenue Service. In a "Dear Colleague" letter, Grassley pointed out that the IRS's own collection infrastructure is better set up for placing liens and garnishing wages than making initial phone calls to delinquent taxpayers to set up a payment plan. Grassley wrote that the private debt collection program consists of having contractors make basic phone calls to taxpayers, contrary to the images of thuggish collection agents using questionable tactics, as has been portrayed by opponents of the program. As evidence, he said that of 24,000 cases of collection just 36 inquiries have been registered. Grassley said there is roughly $90 billion in unpaid taxes that is languishing instead of being collected. His letter said that some of that money is best collected by the "tough cops" of the IRS, fully empowered to seize property, garnish wages, freeze bank accounts and sell the family home or business. However, a large percentage, typically the smaller, newer debts, is better obtained by a modern outbound calling system -- a system that the IRS currently doesn't have, nor are its employees trained for it.

I’m a sucker for financial calculators -- you know, those little widgets that help you find out how much you’ll pay monthly on your 30-year mortgage, how long it’ll take to pay off your student loans, or what you can save when you switch your balances to a new credit card.So it was with some interest that I came across a little application last week, courtesy of journalist Kay Bell’s “Don’t Mess with Taxes” blog (http://dontmesswithtaxes.typepad.com), that allows users to calculate what their income tax liability would have been under the original Form 1040 -- issued in1913. (The calculator can be accessed directly at http://politicalcalculations.blogspot.com/2007/04/income-tax-original-form-1040.html).

Liberty Tax Service reported a 20 percent increase in the number of tax returns prepared at its franchises for the 2007 fiscal year.