Tax Strategies

The Treasury Department and the Internal Revenue Service issued proposed regulations addressing the tax treatment of an exchange of property for an annuity contract.

The chairman of the Joint Economic Committee is asking the Internal Revenue Service to refrain from taxing online gamers.

The New Jersey Supreme Court ruled that companies operating in the state may not use out-of-state subsidiaries to hold their intellectual property and subsequently shield profits from the state’s corporate income tax.The judgment, which applies only to New Jersey, means that companies will no longer be able to use a shelter strategy to transfer property such as trademarks or patents to subsidiaries in low- or no-tax states. Companies have generally paid the subsidiary for the use of brands or other proprietary property and then deducted those payments from their state income taxes. The income collected by the subsidiary is than taxed at a lower rate, or not at all.

White men can’t jump, and movie actor Wesley Snipes apparently can’t fill out his tax returns properly, according to a recently unsealed indictment from the Internal Revenue Service.The eight-count indictment charges Snipes and two Florida men with conspiracy to defraud the IRS and presenting a fraudulent claim for payment. Snipes is facing six counts of failing to file income tax returns between 1999 and 2004.

Individuals who owe delinquent federal income taxes will now be able to apply online for a payment agreement, the Internal Revenue Service announced.

H&R Block Inc., best known for its tax preparation services, is expanding into banking.The company, based here, announced at its annual meeting in mid-September that it will begin offering bank accounts to customers to facilitate direct deposit of tax refunds.

The tax prep software industry is both expanding and contracting, as Wolters Kluwer and Thomson continue their acquisitions, while new entrants surface with online and application service provider offerings.Thomson's Creative Solutions purchased Dunphy Systems in May, with the intention of converting existing Dunphy customers to Creative Solutions. CCH, on the other hand, announced its acquisition of Rockville, Md.-based ATX/Kleinrock in August, but will keep it as a distinct product line. CCH followed this move with an announcement in September that it would acquire Rome, Ga.-based TaxWise. It likewise will keep TaxWise as a separate product line, according to CCH president and chief executive Kevin Robert.

SURVEYED TACS ARE RIGHT 75 PERCENT OF THE TIME: Using one of dozens of scenarios, undercover government auditors were mostly satisfied with the levels of assistance that they received at several of the Internal Revenue Service's Taxpayer Assistance Centers. A report from the office of the Treasury Inspector General for Tax Administration details the results of auditor visits to more than 70 TACs during the 2006 filing season. Using 47 standard scenarios, the auditors made anonymous visits to 50 TACs asking 200 tax law questions. Later, an additional 10 scenarios relating to the Katrina Emergency Tax Relief Act of 2005 were developed and another 20 visits to additional TACs were made to ask 80 questions.The report found that TAC workers:

A professional tax preparer has received a prison sentence of 10 years and five months for her role in a scheme that allowed businesses to claim false business deductions on their income taxes.

A Senate panel’s review of interactions between imprisoned former lobbyist Jack Abramoff and a number of tax-exempt organizations had lead the committee to question the groups’ tax status and a portion of the federal Tax Code dealing with unrelated business income taxes.