Tax Strategies

The use of private annuities to shelter gain on appreciated property has come to an abrupt halt, if the Internal Revenue Service has its way.Whether the IRS can withstand pressure to withdraw or substantially amend new proposed regs before they are made final, or whether the final regs can withstand judicial challenge, remains to be seen. For now, however, effective for annuity transactions after Oct. 18, 2006 (subject to a relatively brief six-month "estate planning" exception), the division between "old rule" and "new rule" is dramatic.

There are a number of interesting trends with regard to technology that I expect will have a very significant impact in how firms operate over the next couple of years. One is a direct outgrowth of firms going paperless, focusing on document management, and studying outsourcing. It is the automation of workflow. The motivating factors for this are increased efficiency and better control of the work products and the driving forces are technological advances. But I would like to add a caution. Automating workflow shouldn’t simply be viewed as a technological overlay on the process and procedures of the firm. It is much more than that.

Internal Revenue Service Commissioner Mark Everson said he’s happy with the agency’s enforcement efforts for the 2006 fiscal year -- with tax collections totaling some $48.7 billion.Everson, who’s now been on the job for three and a half years, has long stressed the need to improve on his agency’s collection efforts. “The bottom line for our enforcement efforts shows that dollars collected rose again last year,” he said in a statement.

The Internal Revenue Service encouraged U.S.-based employees and former employees of foreign embassies, foreign consular offices and international organizations to participate in a one-time settlement initiative to resolve tax matters related to their employment.The offer is only open to U.S. citizens, green-card holders and foreign employees with a U.S. tax obligation. Accredited diplomatic personnel are generally exempt from income taxes on their wages under international treaties or agreements.

After previous testimony from the Government Accountability Office that federal contractors have abused the tax system with little consequence, the office was asked to review the Internal Revenue Services coding of tax debt excluded from the Federal Payment Levy Program.The levy program is an automated system used to collect unpaid taxes from certain federal payments, and the GAO estimated that as of Sept. 30, 2005, over 500,000 tax records -- equated to about $2.4 billion in tax debt -- contained inaccurate codes that IRS systems used to exclude tax debts from the program. Among the inaccuracies were tax debts coded as having active installment agreements, even though the tax debtor had stopped making payments.

The Internal Revenue Service announced a formula allowing businesses and tax-exempt organizations to estimate their federal telephone excise tax refunds.In May, the government announced that it would stop collecting the federal excise tax on long-distance telephone service beginning Aug. 1, 2006, and provide refunds for taxes billed after Feb. 28, 2003.

Thomson Tax & Accounting, a unit of Thomson Corp., announced that it has acquired Scottsdale, Ariz.-based ePropertyTax Inc. -- a business that offers a range of property tax solutions by licensing its proprietary software to outsourcing compliance services.

Vice president of taxation for the American Institute of CPAs Tom Ochsenschlager listed the top 10 provisions in recent tax legislation in his keynote speech at the New York State Society of CPAs’ Annual Tax/Plenary Conference on Nov. 16.Provisions folded into the Tax Increase Prevention and Reconciliation Act Ochsenschlager outlined included:

In a new report to Congress, the Government Accountability Office takes a hard look at how the Internal Revenue Services manages its paperwork and customer service.

In a 25-page response NCAA president Myles Brand made an adamant case for his association’s tax-exempt status, following questions raised by the outgoing chairman of the House’s Committee on Ways and Means.Brand cited new NCAA penalties for poor team-wide academic performance and rising player graduation rates as evidence of the association's attention to education, adding that school spending on athletics -- including hikes in coaches' salaries -- are driven by a media and consumer market beyond the association’s control.