Tax Strategies

The Internal Revenue Service announced that through March 13, more than 2.6 million taxpayers have electronically filed their returns using the agency’s Free File program. TThough that’s about 4 percent drop from the number of returns filed during the same time last year.

Federal prosecutors have arrested a New York-based Internal Revenue Service agent on tax fraud charges, according to a published report.Harry Willner, 59, who has been an IRS agent for more than three decades, was charged with five counts of tax fraud on Monday. Federal prosecutors have accused him of cheating on his personal income taxes, as well as offering loopholes to other taxpayers.

The Canada Revenue Agency announced that Canadians should be able to resume e-filing their tax returns before the end of the week, after a computer glitch discovered last week put the processing of more than 1 million tax returns on hold.CRA Commissioner Michel Dorais said that the problem, a malfunctioning software patch, was not the work of hackers, or a computer virus, and did not threaten the security or privacy of taxpayer data. He said the agency’s services, including E-file, Netfile and a “My Account” feature should be back online no later than March 15. Dorais said that the data for any taxpayers who had already filed was still intact, and that the personalized account feature would allow taxpayers to track the progress made on their return.

A Goldman Sachs investment banker, who earned $115,000 in 2002, will not be able to take all of the $55,000 charitable contribution deduction she took for that tax year -- $49,000 of which she took for donations of used clothing to a thrift store.

In an early spurt of spring cleaning, I came across an ancient, yellowed clipping from the New York Post. Although there was no date on it, it is clearly from 1986, the year the Bears won the Super Bowl and Ronald Reagan got his tax reform. It tells the story of then-Treasury Secretary James Baker, who in his enthusiasm for both rap music and a simpler tax code, broke out into rhyming couplets during a rally to tout tax reform. His poetic achievement was based loosely on the Chicago Bears’ “Super Bowl Shuffle,” which members of the team recorded en route to their victory in Super Bowl XX, and which reached No. 41 on the Billboard charts before actually landing a Grammy nomination.

The U.S. Tax Court found that a non-CPA tax preparation and bookkeeping business is an accounting service and subject to the 35 percent tax applicable to qualified personal service corporations.A Las Vegas firm had argued that because it was not a public accounting firm, its employees didn’t perform services that required them to be CPAs and because state law doesn’t state that accounting services can only be performed by CPAs, it shouldn’t be defined as a provider of accounting services as outlined under Section 448(d)(2) of the tax code.

The Thomson Corp. announced that it has acquired CrossBorder Solutions, a tax software company whose products are used for the planning and compliance needs of corporations.

The American Institute of CPAs has asked Congress to restrict the issuance of patents for tax strategies.

An Internal Revenue Service pilot project is asking the very tax lawyers and accountants who create shelters and take advantage of tax code loopholes to assist in drafting new tax rules, according to published reports.According to a recent New York Times article, its becoming increasingly common for the federal government to ask outsiders to do more of the work in drafting such rules -- a practice that critics say could create a conflict of interest if those outsiders have their own clients’ interests to consider.

U.S. marshals arrested a Battle Creek, Mich., man for refusing to release the names of the clients that he provided with income tax advice.Charles Conces, who was a candidate for Michigan Attorney General last year, was arrested earlier this month for civil contempt after he failed to comply with a Feb. 8 court order. The order had also compelled Conces to disclose the identities of the people who are responsible for his Web site, as well as any documents that he drafted, or assisted in drafting -- all of which Conces refused to do.