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Showing posts from January, 2004
IRS Audits its Own! The IRS recently targeted 800 of its employees for audit in an effort to ensure that IRS employees are meeting tax filing and payment requirements. Last year, IRS staff first discovered a pattern of business loss deductions on their coworkers' returns. The Treasury Inspector General was notified of these suspicious Schedules C, "Profit or Loss from Business, resulting in audits of 25 employees. Half of the 25 employees improperly reported items on Schedule C. This year, a wider net is being cast, starting with the 800 employees identified for immediate audit.
Florida Republicans Hike Taxes Although Rebublicans have cut taxes in Florida for the past 5 years, Gov.Jeb Bush and Republican lawmakers are now quietly presiding over Florida's biggest tax increase in more than a decade. The $133 million automatic tax increase is required by state law to replenish benefits that have been all but wiped out by record-high jobless claims in recent years. The tax increase nearly triples the amount of state unemployment taxes that thousands of businesses across Florida must pay starting in April.
Bush Attacking Medical Malpractice Victims In a typical pandering to the medical profession's attempt to protect physicians who carelessly harm patients, President Bush is campaigning to stop malpractice victims from recovering for their full losses. Mr. Bush is attempting to limit damages to $250k. If a physician negligently removed a limb, or blinded you, is that fair compensation?
IRS Computer Error Rejects Tax Returns Thousands of electronically filed tax returns were initially rejected in the past few days because of a computer glitch. The problem began January 16, 2004 when the Internal Revenue Service officially opened the channels for electronic filing used by many professional tax preparers and individual taxpayers filing from their home computers. An error buried in 55 million lines of code, which had been updated to reflect new tax laws, caused the problem, which was corrected by Wednesday, January 21.
Revised Form 8332 permits never-married parents to waive child exemption IRS has revised Form 8332 (Release of Claim to Exemption for Child of Divorced or Separated Parents) and IRS Pub No. 504 p. 8 (Divorced or Separated Individuals) to permit a never-married noncustodial parent to claim a dependency exemption where the custodial parent has waived this exemption . These changes show that IRS now agrees with the Tax Court's holding in King, (2003) 121 T.C. No. 12, that the noncustodial parent was entitled to a dependency exemption because the custodial parent signed Form 8332 waiving the exemption. Background of child dependency exemption. A dependency exemption generally is allowed for parents who provide over half of a child's support during the calendar year. (Code Sec. 152(a)) Under a special support test, the parent with "custody" for a greater portion of the year is treated as providing more than one-half of a child's support where the child rece
Pres. Bush's State of The Union Address Advocates Making Tax Cuts Permanent President Bush state that tax cuts had invigorated the economy, and he wants Congress to make permanent the temporary tax reductions passed in 2001 and 2003. Those tax cuts include an expansion of the bottom, 10 percent tax bracket that lowered taxes for virtually every wage earner. It includes changes that eliminated some of the so-called marriage penalty, which causes some couples to pay more than they would as two single individuals. It also includes the child tax credit, just increased to $1,000 per child, which would drop back to $700 at the end of the year. Renewal of the No Child Left Behind education law might also offer an opportunity to make some education and retirement saving incentives permanent. A bigger question surrounds a law, designed as an economic stimulus, that allows businesses to immediately write off half of their investments this year. Left unchanged, the law will e
IRS Continues to Reject Formula Gifts In TAM 200337012 (September 12, 2003), the IRS has specifically rejected the effectiveness for gift tax purposes of a clause attempting to make a gift of whatever percentage of interest in a family limited partnership equal to a stated dollar amount. The IRS states that the formula gift clause was ineffective for gift tax purposes because it violates public policy and that it is actually a gift of the specified percentage of the family limited partnership, without regard to value. The IRS refused to distinguish a formula which seeks to transfer a specific dollar value of an asset from a clause that rescinds any portion of the gift that exceeds a specified amount, stating, "[a] different label does not nullify the effect Paragraph B [the formula clause] would have on the gift." The IRS noted that the formula clause had the same effect as the revaluation clause and that it violated the same public policies. Analysis of the deci