Tax Strategies

Individuals who participate in online sales at auction sites such as eBay face a plethora of bookkeeping and tax issues regarding their entrepreneurial ventures. Some people choose to ignore the issues and simply not report their financial activity.Earlier this spring, the IRS completed a National Research Program study in which it was determined that an annual tax gap of more than $300 billion exists. The tax gap represents the difference between the amount of tax that should be paid and the amount actually paid in any given year.

The American Institute of CPAs praised a new law that will prevent states from taxing the retirement income of non-resident partners last week.

One of the provisions inserted by the Conference Committee into the Tax Increase Prevention and Reconciliation Act of 2005, signed by President Bush on May 17, 2006, was a tax increase on citizens working abroad. The provision was not in either the House or Senate versions of the legislation, although Congress has considered a number of proposals related to the taxation of citizens working abroad over the years, including some Senate bills in the current Congress.It is estimated that over 4 million citizens work abroad. The U.S. Census does not count them, so we have no accurate numbers. The Treasury does try to tax them, but with questionable effectiveness. For the 1999 tax year, out of 127,667,890 returns filed, 1,350,890 had foreign addresses, but this included the APO and FPO addresses of members of the armed forces, as well as some Puerto Rico residents with offshore income. A 2004 Internal Revenue Service study reported that in 2001, fewer than 300,000 tax returns reported foreign-source-earned income.

Maintaining that there's near-universal agreement that the nation's tax code is too complex, Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, officially opened the committee's hearings titled "Kick-off for Tax Reform: Tackling the Tax Code."

Internal Revenue Service Commissioner Mark W. Everson has been elected chairman of the Forum on Tax Administration, a panel of national tax administrators that is part of the Paris-based Organization for Economic Cooperation and Development.

A Senate report estimates that tax cheating now equals about 7 cents out of each dollar paid by honest taxpayers, or as much as $70 billion annually.

The American Institute of CPAs has been working to mend fences with local officials in Durham, N.C., after the county manager threatened to pull a $400,000 subsidy package for the institute's relocation of its New Jersey headquarters.

Before adjourning for a five-week summer recess, the House pushed through a bill pairing a minimum wage increase with a GOP-led effort to extend cuts on estate taxes.

The Internal Revenue Service released formal guidance on its new tip reporting procedure, the Attributed Tip Income Program.

The Boeing Co. won't look to take a tax deduction on a $615 million settlement it paid to settle federal ethics charges.