Tax planning

The Nelson A. Rockefeller Institute of Government issued a report detailing a 13.3 percent average increase in state tax revenues across the country. The report, "State Revenue Growth Continues in Most States," compared revenues from the second quarter of 2005 to the same period in 2004. The growth percentage was the fastest since 1991, when the public policy research arm of the State University of New York began tracking state revenues."The growth in overall collections from final settlements is generally stronger than states had anticipated," said senior policy analyst Nicholas Jenny, in a statement. "It's now getting back into the range of the growth in final settlements states experienced regularly from the mid-1990s through 2001. This favorable 'April surprise' has put many states in a budget surplus position."

Gov. Arnold Schwarzenegger vetoed several bills that would have strengthened the enforcement of business tax laws in California.

Complying with the federal tax code costs American taxpayers at least $100 billion annually, and lost economic efficiency associated with the tax system may top half a trillion dollars, auditors for the Government Accountability Office told Congress.In a report likely to add fuel to the campaign for an easy-to-administer national consumption tax, the GAO said that the lowest available estimates of the cost of complying with federal income, payroll and excise taxes is $107 billion - a whopping 1 percent of the nation's total gross domestic product. Other studies suggest that compliance costs may be 50 percent higher than these estimates.

A federal prosecutor asked a Los Angeles judge to deny bail to a former KPMG partner indicted in the government's tax shelter fraud case, calling him a flight risk.

With the President's Advisory Panel on Federal Tax Reform due to report Nov. 1, we asked industry leaders, many who made Accounting Today's recently released 2005 Top 100 Most Influential People list, to tell us what sort of tax system they would create.

Two proposals for tax reform took definitive shape at the latest meeting of the President's Advisory Panel on Federal Tax Reform. The panel's final report is due Nov. 1.

The Tax Policy Center, a nonpartisan joint venture of the Urban Institute and Brookings Institution, has established a new Web page dedicated to the President's Advisory Panel on Federal Tax Reform, providing a number of links to relevant research and testimony.

The Government Accountability Office said that the Internal Revenue Service should work with federal agencies to make sure companies follow rules prohibiting tax deductions for fines and penalties paid in civil settlements.

The American Institute of CPAs has released a nonpartisan tax reform report, titled, "Understanding Tax Reform: A Guide to 21 st Century Alternatives." The report is meant as an overview to understanding major issues in the debate over making changes to the country's system.

Gov. Phil Bredesen has told Nashville business leaders that he will not seek a state income tax if re-elected in 2006. Bredesen made the same promise before his first term, but had refused to extend the pledge as he campaigns for a second term.

The Internal Revenue Service could revoke the tax-exempt status of about 20 credit-counseling firms, just as the country's new bankruptcy laws are set to go into effect on Oct. 17.

With the President's Advisory Panel on Federal Tax Reform due to report Nov. 1, we asked industry leaders, many who made Accounting Today's recently released 2005 Top 100 Most Influential People list, to tell us what sort of tax system they would create.

Bolstered by higher sales and lower costs, consulting giant Accenture posted a 25 percent hike in fourth-quarter profits, to $229.1 million, versus the year-ago period.

Meeting for the first time since July, the President's Advisory Panel on Federal Tax Reform began focusing discussions on what recommendations will be included in its report, due on Nov. 1.

Adelphia Communications Corp. founder John Rigas and his son, Timothy, were indicted by federal prosecutors on charges of engaging in a $300 million tax evasion scheme. Both men were found guilty of fraud earlier this year in connection with accounting fraud at the bankrupt cable company.

KPMG ANNOUNCES NEW TAX SERVICES HEADS: Moving on from its recent legal troubles, KPMG named vice chairs for its tax services and tax services operations.Shaun T. Kelly, 46, and Frederick S. "Rick" Smith, 49, will take over the respective tax leadership roles effective at the end of the fiscal year on Sept. 30. Tax services vice chair James Brasher will assume other significant duties within KPMG's organization, while operations vice chair John Chopack will retire in early 2006, as previously planned.

As the U.S. mobilizes on a number of fronts to assist in the recovery from Hurricane Katrina, the Internal Revenue Service has mobilized as well. The IRS has already released several information releases in response to Hurricane Katrina.There have already been disasters this year involving droughts, floods, tornadoes and other hurricanes. The IRS had released relief guidance earlier this year involving Hurricane Dennis and a tornado in Wyoming. It is seldom, however, that a disaster of the scope and national impact of Hurricane Katrina comes along.

The Streamlined Sales Tax Project, in labor since 2000, officially gave birth on Oct. 1, 2005, when the threshold of 10 states representing at least 20 percent of the population was crossed."There are now 13 full-member states and five more associate states," said SSTP co-chair Scott Peterson, of the South Dakota Department of Revenue and Regulations. The associate-member states are those that have passed the requisite implementing legislation, but where the legislation had not yet gone into effect by October 1.

Repealing the federal estate tax could end up choking off billions of dollars in contributions to charities whose resources have been stretched thin by the Hurricane Katrina relief effort, a top tax policy researcher warned Congress.Testifying on behalf of the Brookings Institution's Tax Policy Center, economist William Gale cited a variety of studies suggesting that "estate tax repeal would reduce charitable bequests by between 22 and 37 percent" - a drop that would drain between $3.6 billion and $6 billion each year from the nation's charities.

Calling the proposal for a "return-free" filing system "flawed" and "dangerous to taxpayers," 14 groups have written the President's Advisory Panel on Tax Reform to urge that it be taken off the table in any final report.While the timetable for a final report has been delayed by Hurricane Katrina relief efforts, with the final two scheduled meetings postponed, the return-free concept is one of the proposals under consideration by the panel.