The Internal Revenue Service has released the summer 2006 issue of the Statistics of Income Bulletin, taking a closer look at corporations claiming the possessions tax credit and the use of estate tax provisions. The bulletin includes in-depth looks at:

California’s Franchise Tax Board is in the process of notifying more than 200 corporate taxpayers that their information was made public Sept. 19 when an employee accidentally e-mailed a list of companies under audit. The e-mail distribution list included two writers for BNA, a publisher of print and electronic news, which promptly reported that the listing of taxpayers under audit for tax years 2003 and earlier had been released. The list included the name of the taxpayers, their identification numbers, and the name of the auditor assigned to each case. The tax board is responsible for collecting state personal income taxes, as well as bank and corporate taxes for the entire state. Under California’s Revenue and Taxation Code, the board must notify taxpayers that their information had been disclosed, and the responsible employee can be charged with a misdemeanor. An FTB spokeswoman told BNA that the employee intended to send the message to himself, but accidentally sent the message to a broader distribution list. In a follow-up email sent the same day, he asked recipients to permanently delete the e-mail from their computers. According to BNA, the list includes several well-known corporations in a variety of industries, including entertainment, energy, electronics, and banking. Notes in the file appear to show that several of the taxpayers are being audited for possible participation in abusive tax shelters.

Though the Internal Revenue Service’s toll-free customer service line met its performance goals for the 2006 filing season, a federal report was still able to recommend a number of improvements for the system. Overall, the report from the Treasury Inspector General for Tax Administration found that callers waited less time to speak with assistors and abandoned fewer calls while on hold, but the level of service provided was still only on par with the 2005 season, and lower than the 2004 season. During the 2006 filing season, the IRS made approximately 9,900 customer service representatives available to answer the toll-free telephone lines at 25 call centers located throughout the United States and Puerto Rico. The agency met all of its goals -- an 81.8 percent level of service (according to a customer satisfaction survey), a 295-second average speed of answer, and 15 million answered calls. The call centers had originally planned to reduce their operating hours from 15 hours to 12 hours this year, and, accordingly, hire fewer assistors, but Congress passed legislation barring the cuts until the inspector general completed a study of the proposal. When the reduced operating hours didn’t happen, it was too late for the call centers to hire and train seasonal assistors, which the report noted means that the 2006 results were measured against years when there were more assistors available to answer the telephones. Between January and mid-April of 2006, TIGTA broke down the handling of customer calls as follows:

Comptroller General David Walker delivered testimony this week at the Senate Finance Committee’s hearing on “Our Business Tax System: Objectives, Deficiencies and Options for Reform.” Walker, who runs the Government Accountability Office, framed his testimony around the need for broader tax reform, telling the senators that the size of business tax revenues makes them very relevant to any plan for addressing the nation's long-term fiscal imbalance. In a report prepared by the GAO that accompanied Walker’s testimony, the office said that the design of the current system of business taxation is flawed. “It distorts investment decisions, hurting the performance of the economy,” the report said. “Its complexity imposes planning and record keeping costs, facilitates tax shelters and provides potential cover for those who want to cheat.” Walker said that some features of current business taxes channel investments into tax-favored activities and away from more productive activities, reducing the economic well-being of all Americans. Walker said principles that should guide the business tax reform debate include:

And then there were three -- three major tax software companies, that is. With CCH taking over the operations of ATX and TaxWise, there are very few tax preparation software companies left that are not owned by billion-dollar corporations. The remainder are Drake Software, Greatland, Orrtax, Petz Enterprises, and TaxSimple. Everybody else of consequence is owned by CCH, Thomson (Creative Solutions and GoSystem), and Intuit (Lacerte and ProSeries. If anyone is interested in nostalgia, there's a long litany names that have vanished over the last 15 years, and many of them over the last five. But nostalgia doesn't help to run a business, and the question is what this last rush of consolidation means to preparers. It probably means that the large vendors have greater control over pricing, which is where the battle is increasingly taken place, since most vendors had loaded up on features that make a difference. This doesn't necessarily mean higher pricing, because CCH, which was at the high-end of the market with ProSystem fx Tax, is likely to put pressure on Intuit at the low end. But it means the vendors have more flexibility. Suites, or at least one-stop shops, will get greater impetus. CCH has already expressed its intention to bring other accounting firm applications into the ATX and TaxWise offerings. And Internet-based computing will spread. The larger companies have an advantage in being able to develop Web-based platforms, and a big interest in cutting cost by trying to get out of the business of shipping CDs. They have a lot to gain on the cost-cutting and delivery side, and as they integrate their other applications with document management systems, the Web is a natural place to move.

The U.S. government recorded record-high overall and corporate tax receipts on Sept. 15 -- a quarterly deadline for tax payments, the Treasury announced.

A federal grand jury has indicted five individuals for allegedly orchestrating a $14 million tax fraud scheme, the Department of Justice and Internal Revenue Service announced.