Tax Strategies

The Senate Finance Committee didn’t get the answers it was hoping for during a hearing this week with Treasury Department representatives on how to reduce the tax gap.In testimony before the committee, Treasury Secretary Henry Paulson said that Congress should focus its efforts on reducing the complexity of the tax code, as well as approving the entire budget request from the Internal Revenue Service and enacting the Treasury’s February legislative proposals that are backed by President Bush. Paulson said that in developing more than a dozen proposals to minimize the gap, the Treasury focused on changes that would come with minimal additional burdens.

Taxpayers frustrated by delays in Intuit Inc.’s tax-processing capabilities will have until midnight on April 19 to electronically file their returns.The Internal Revenue Service and Intuit said that as many as several hundred thousand last-minute tax filers were affected by Intuit’s server problems Tuesday night -- meaning that they, or their accountants, may have been unable to electronically file returns.

The Internal Revenue Service will grant a six-month tax filing and payment extension to those affected by the shootings at Virginia Tech.The relief applies to the victims, their families and emergency responders, as well as university students and employees.

The Brookings Institution has issued a new report, “A Local Ladder for Low-Income Workers: Recent Trends in the Earned Income Tax Credit.”Prepared by research analyst Elizabeth Kneebone, the report contains an analysis of Internal Revenue Service data on low-income working families who received the federal EITC for the 2000 and 2004 tax years. Among the report’s findings:

If Democrats are serious about rolling back the alternative minimum tax, then they should be happy to have gotten a little more fodder last week to use in whatever PR campaign accompanies the unveiling of their plan.The White House released copies of the tax returns for both the Bushes and the Cheneys last Friday, and both families somehow found their way to avoiding the AMT.

Internal Revenue Service Commissioner Mark Everson will leave the agency to become president and chief executive of the American Red Cross next month.Everson, 52, has served as IRS commissioner since May 2003. During his time with the agency, he has publicly focused his attention on efforts to better serve taxpayers, continue the agency’s modernization of its systems and enhance its enforcement activities. In recent months, Everson has heard increased clamoring from Congress over how the agency and the Treasury Department should best work to address the nation’s growing tax gap -- estimated at $345 billion for the 2001 tax year.

Like crocuses, Justice Department press releases detailing prosecutions for tax evasion seem to proliferate in early spring, usually just before the the bulk of tax returns are to be filed. This year was no different.

A real estate investor from Brooklyn, N.Y., had the requisite skillz to win the $25,000 TaxRap contest sponsored by TurboTax.In a statement, the company said that the submission from Christian Pulfer, 28, stood out as one of the most individual and creative entries. Pulfer’s entry, “It’s Just a Breeze…G,” was selected by guest judge Vanilla Ice from more than 370 homemade rap videos.

The White House released copies of the tax returns for both the Bushes and the Cheneys late last week.

Late last week, the Internal Revenue Service learned of a new tax scam on the Internet that lures taxpayers into filing tax information on a site masquerading as a member of the Free File Alliance.The IRS reminded taxpayers the only place to access the Free File program is through the official IRS Web site, at www.IRS.gov.