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Showing posts from 2006

New Tax Law Has Many Tax Breaks

Wide-Ranging Tax Gifts
For Businesses
and Individuals


Before heading home for the holidays, Congress passed a long-awaited bill that retroactively extends several valuable tax breaks that expired last year. The law also includes a new deduction for certain taxpayers buying homes in 2007, and it contains several provisions that make Health Savings Accounts more attractive.
Why Some IRS Forms
Are Already Out of Date
For the 2006 Tax Year



The Tax Relief and Health Care Act of 2006 is filled with many provisions that can save taxpayers money. Unfortunately, it was passed after the IRS printed the tax forms and other materials it provides to taxpayers. In some cases, printed materials will not have a line for certain deductions, such as the one for state and local sales taxes.
The tax agency is now scrambling to print new mailings, update information on its Web site and launch a media campaign to inform taxpayers about the new and extended tax breaks. Professional assistance in the p…

529 Plans are Good Tax Investment

Section 529 Plans Can Provide Tax-Smart Learning for Kids and Adults

Contributing to a Section 529 Plan before year end on behalf of children or grandchildren can be a wise idea. But have you ever thought about

one of these tax-favored accounts for yourself — to pay for post-secondary courses you might want to take in the future?
Adults can open up Section 529 plans (also called Qualified Tuition Programs) and make themselves the beneficiaries. The plans allow you to put money in a state plan for tuition, fees, books, supplies, and equipment that are required to attend an eligible educational institution.
What's an eligible school? "It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions," according to the IRS.
That means you can generally use withdrawals to study for a second career, go to graduate school, or do coursework in retirement.
Section 529 advantages include:
Your ac…

Purchase Equipment before Year-End!

Purchase Equipment before Year-End!

Under current tax guidelines, businesses can deduct up to $108,000 in equipment purchases, as long as they do not buy more than $430,000 in equipment. Therefore, if you're going to buy something in January, buy it now and get the deduction this year !

YEAR END TAX PLANNING

YEAR END TAX PLANNING

Help Minimize Your
Company's 2006 Tax Bill


A basic principle of year-end tax saving is, accelerate deductible expenses into this year and defer income until next year. Of course, that doesn’t work in all cases. The right strategy for your company depends on several factors, including how you answer these questions:
Does your business operate on a cash or accrual basis?

Do you expect a profit or a loss for 2006?

Do you anticipate that 2007 will bring significantly higher revenue or expenses, or a tax bracket change?
Depending on the answer, you could be better off reserving some tax breaks for next year or New Court Case:
Accounting for Inventory Shrinkage

Astute inventory accounting at the end of the year can help improve the bottom line. But as one new Tax Court case illustrates, there’s no need to be greedy.

Facts of the case: The Tax Court ruled that a company could not increase reported purchases by the same amount it had properly allocated to invent…

Is New Wife Liable for Husband's Prior Taxes?

Is New Wife Liable for Husband's Prior Taxes?

===========
Question:
===========
Category: Tax and Taxation Law
Location: VA
Subject: responsibility

If I marry a man that has back taxes due federal and state will I be responsible for his back debt also?


===========
Reply:
===========
Category: Tax and Taxation Law
Location: VA
Subject: Re: responsibility

No, you will not be responsible for the prior taxes of your husband. Nevertheless, if you file a joint tax return, the IRS will keep the refund and apply it to his past due taxes. You would then have to fight to get it back. You should talk to a tax lawyer to answer your questions.

My web site www.taxesq.com has some articles which may help you.

I hope this helps!

Ron Cappuccio


Don't Be Fooled by Jackson Hewitt's 'HELP'

 Don't Be Fooled by Jackson Hewitt's 'HELP'
PR Newswire via NewsEdge Corporation :


Jackson Hewitt, a leading tax preparer with more than 6,000 offices throughout the country, claims they want to "HELP" low-income consumers this year. Their "HELP" though is an expensive and risky loan known as the Holiday Express Loan Program or "HELP." "HELP" loans are based on a taxpayer's projected 2006 tax refund calculated only with paystub information, and not official tax documents. Jackson Hewitt started offering HELP loans on November 13 and will continue the program through early January. Click Here for the full article.



Asset Protection Failure - Man Jailed until He pays Creditors

Asset Protection Failure - Man Jailed until He pays Creditors

11-30-2006 -The unprecedented length of disgraced financier Martin Armstrong's confinement for civil contempt did not violate the law, the 2nd U.S. Circuit Court of Appeals ruled Monday.

Addressing several novel issues of law, the circuit upheld the decision of Southern District of New York Judge Richard Owen to keep Armstrong behind bars until he obeyed a court order to turn over millions of dollars in valuables sought by a receiver overseeing the assets left over from the implosion of Armstrong's Princeton companies.



Milton Friedman, Free Market Economist Dies

Milton Friedman, Free Market Economist Dies

Today was a loss to the country and the economics profession. Nobel prize winning, free-market-championing Milton Friedman, the primary advocate of monetary economic policy, died today at the age of 94. He was a key economic advisor to several presidential administrations, and his free market ideas probably can be credited for why the U.S. economy is so dynamic, flexible, and efficient today. I was always a big fan of Friedman, and it is sad to see him go.

IRS Continues to Attack Taxpayers

IRS Continues to Attack Taxpayers

A new government report concludes in fiscal year 2006 there was a:

7 percent increase in individual audits
18 percent increase in high-income audits
8 percent increase in small-business audits
15 percent increase in collection case closures

The increase in IRS Audit and Collection activity requires preparation and early representation to prevent IRS attacks.

Turbo Tax is Not A Defense to Tax Penalties

Turbo Tax is Not A Defense to Tax Penalties

The U.S. Tax Court has again rejected a taxpayer’s attempt to pin the blame for their negligent tax return on tax preparation software.

On Nov. 9, the court handed down an opinion finding against a petition filed in New Jersey by Henry R. Broderick.

According to court records, the petitioner blamed defects in his income tax return on software that he claimed to use in preparing the Form 1040 return. Broderick, who owns a consulting firm, understated his taxable income by more than $50,000, leaving him with no tax on his 2002 return. However, the court said the blame rested with taxpayer negligence -- which includes failure by the taxpayer to keep adequate books and records or substantiate line items properly.

According to the court, “Such a program is only an aid for preparation of a return and depends on careful entry of accurate information, which petitioner manifestly failed to do. Petitioner admits that he has the education to prepare and r…

IRS Charges More For Installment Agreements

IRS Charges More For Installment Agreements

The IRS has announced that effective Jan. 1, 2007, the following fees will increase:

The fee for new direct debit installment agreements, where payments are deducted directly from a taxpayer’s bank account, will increase from $43 to $52.


The fee for other new installment agreements will increase from $43 to $105.


The fee to restructure an existing or reinstate a defaulted installment agreement will increase from $24 to $45.

IRS Issues 2007 Mileage Rates

IRS Issues 2007 Mileage Rates

The IRS issued the 2007 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning Jan. 1, 2007, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

48.5 cents per mile for business miles driven;
20 cents per mile driven for medical or moving purposes; and
14 cents per mile driven in service to a charitable organization

NJ Supreme Court Rules in Favor of Gay Marriage

The New Jersey Supreme Court held on October 25 in a 4-3 decision that the state’s constitution requires that same-sex couples be granted the same legal rights as married heterosexual couples. However, the dissenters argued the majority didn’t go far enough in vindicating the rights of same-sex couples. Lewis v. Harris, No. A-68-05 (Oct. 25).

"Denying committed same-sex couples the financial and social benefits and privileges given to their married heterosexual counterparts bears no substantial relationship to a legitimate governmental purpose," said the majority in Lewis, brought by seven same-sex couples. "The court holds that under the equal protection guarantee ... of the New Jersey constitution, committed same-sex couples must be afforded on equal terms the same rights and benefits enjoyed by opposite-sex couples under the civil marriage statutes."

The court declined to label those rights as marriage, instead ordering the state legislature to amend its marriage…

Credit Counseling Agencies have new tax Requirements

The new tax law requires an organization to meet the following new rules in addition to other non-profit legal requirements:

Services – Must provide credit counseling services tailored to the specific needs and circumstances of the consumer;
Loans – Cannot make loans to debtors;
Credit Repair – Can only provide incidental services to improve consumer credit records and credit history, and cannot charge a separate fee for such services;
Ability to Pay – Cannot refuse services based on ability to pay or ineligibility/unwillingness of consumer to enroll in a debt management plan (“DMP”);
Fee Policy – Must charge reasonable fees and provide waivers if consumer is unable to pay;
Board Composition – Majority of members must represent broad interests of the public; maximum of 49 percent can be employed by organization or benefit from it;
Ownership – Cannot own more than 35 percent of an entity that is involved in the credit counseling or similar business; and
Referrals – Cannot pay for referrals or …

NJ Expands Tax Nexus

New Jersey may apply its corporation business tax notwithstanding a taxpayer's lack of a physical presence in the state, according to the New Jersey Supreme Court. In a per curiam decision with national significance, the state high court held that the U.S. Supreme Court's holding in Quill Corp. v. North Dakota, 504 U.S. 298 (1992) should be limited to the area of sales and use tax nexus.

The Lanco decision expands NJ claims that every business must pay NJ Tax!

Bill Collections Cannot Threaten Suit

A bill collector who cries wolf, making idle threats about how it could file lawsuits or refer a case to an attorney without intending to pursue either avenue, has more to worry about than not being taken seriously by debtors.

According to the Philadelphia-based 3rd U.S. Circuit Court of Appeals, empty assertions could leave the debt collector on the hook for damages and attorney fees under the Fair Debt Collections and Practices Act. That’s because the act prohibits "false and misleading statements" from debt collectors, a standard that must be judged from the perspective of the least sophisticated debtor.

The full Brown v. Card Service Center opinion details the limits on bill collectors.

No Tax On Injury Awards

The federal government may not tax the money plaintiffs receive as compensation for emotional distress and other intangible injuries, a federal appeals court said Tuesday.

The U.S. Court of Appeals for the D.C. Circuit struck down as unconstitutional a portion of the tax code that said only compensation for physical injuries is tax exempt.

This only applies in the District of Columbia. Nevertheless, It is possible the IRS may accept this interpretation for other states.
Like most laws containing tax provisions, the title of the newly passed Pension Protection Act of 2006 only tells part of the story. The legislation, which President Bush signed on August 17, 2006, does contain numerous provisions involving pension plans, but it also includes changes in the tax rules for charitable contributions, college savings plans, and more. Here are eight highlights from the massive piece of legislation spanning more than 900 pages.

Click here for full article

IRS Hires Collection Agencies

The American Jobs Creation Act of 2004 created section 6306 of the Internal Revenue Code allowing private collection agencies to collect taxes.

Later this year private collection agencies will start calling to cllect for the IRS. If you are contacted by a collection agency, SAY NOTHING! Do not admit to the debt and tell them to contact your tax attorney!

The private collection agencies will not be authorized to take enforcement actions such as liens, levies or seizures. Nor will they work technical issues such as offers in compromise, bankruptcies, hardship issues or litigation. They will be assigned cases in which the taxpayer has not disputed the liability.

Nonrefundable 20% payment required when submitting Offer In Compromise

The new Tax Law effective July 17, 2006 requires taxpayers to pay a NONREFUNDABLE 20% of the amount they offer in an Offer In Compromise with the offer. If they also offer to make monthly payments then they must begin the monthly payments.


The 20% with the OIC and the monthly payments are nonrefundable.

THis means most taxpayers cannot risk submitting an Offer In Compromise.

HERO ACT - Increased IRA Deductions for Armed Forces

HERO ACT - Increased IRA Deductions for Armed Forces

Appropriately enough, President Bush signed the Heroes Earned Retirement Opportunities Act of 2006 — the HERO Act, for short — into law on Memorial Day of this year. This new federal law expands retirement planning benefits for members of our armed forces currently serving in combat zones.
Briefly stated, an individual is permitted to contribute to a traditional IRA or Roth IRA only if he or she has compensation (such as salary from a job) during the year. For the 2006 tax year, the limit on contributions is the lesser of $4,000 or the annual compensation. A taxpayer who is age 50 or older can make an extra $1,000 "catch-up" contribution.
The contributions to the traditional IRA may be fully or partially deductible depending on the taxpayer’s income and whether he or she actively participates in an employer-sponsored retirement plan. Roth IRA contributions are never tax deductible.
Under prior tax law, combat pa…

IRS Announces Hybrid Cars that Qualify for a Tax Credit

IRS Announces Hybrid Cars that Qualify for a Tax Credit


Last year's Energy Policy Act replaced the $2,000 clean-fuel burning deduction with a tax credit that is potentially worth much more. The tax credit for hybrid vehicles applies to vehicles purchased or placed in service on or after January 1, 2006.

The credit is only available to the original purchaser of a new, qualifying vehicle. (If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.) The amount of the credit varies based on the fuel efficiency of the vehicle.

These models have been certified by the IRS for the credit in the following amounts:

2007 Ford Escape Front WD Hybrid — $2,600
2007 Ford Escape 4 WD Hybrid — $1,950
2007 Mercury Mariner 4 WD Hybrid — $1,950
2007 Toyota Camry Hybrid — $2,600
2005 Toyota Prius — $3,150
2006 Toyota Prius — $3,150
2006 Toyota Highlander 4WD Hybrid — $2,600
2006 Toyota Highlander 2WD Hybrid — $2,600
2007 Lexus GS 450h — $1,550
2006 Lexus RX400h 2WD — $2,200
2…

Governent Makes Offers in Compromise Impossible

The Tax Increase Protection and Reconciliation Act changes the rules for Offers in Compromise (OIC), eliminating the breathing room a taxpayer has while waiting for the IRS to accept or reject an OIC. That is not good news.

Starting with OICs filed on or after July 16, 2006, taxpayers must make a non-refundable payment or the OIC will not be processed. The non-refundable payment amount depends on the type of OIC made. Lump-sum offers must include a 20% “down payment.” Thus an OIC to pay $10,000 cash to settle a tax liability must include a $2,000 payment with the OIC to be considered. If the IRS rejects the OIC, it keeps the cash.

If the OIC is based on periodic payments, the OIC must include the first proposed payment and the taxpayer must keep making payments under the proposed terms of the OIC until the IRS accepts or rejects the OIC. Again, if the IRS rejects the offer, it keeps the cash.

Bankruptcy Relief Down 75%

Bankruptcy filings are drying up at a level not seen in at least two decades and there’s no telling for sure when — or if — that phenomenon will stop.

An analysis of the latest filing figures reveals bankruptcy actions are plummeting more than 70 percent.

Powering that nose dive is the law Congress enacted to make it much harder for people to abuse the system by declaring bankruptcy to avoid paying their debts.

That remains to be seen. For now, though, the early numbers appear to demonstrate how a new and tough federal law can quickly crimp a financial bailout procedure that had become a way of life .


The numbers compiled by New Jersey Lawyer from numerous reports of the Administrative Office of the U.S. Courts show that during the second quarter of the federal fiscal year — January, February and March — the bottom fell out of personal and business bankruptcy filings in New Jersey and to a slightly less extent in the bankruptcy courts dotting the nation.

In New Jersey, fili…

IRS Shuts Down Credit Counseling Agencies

Credit Counseling companies, claiming non-profit status are frequently shams and simply profit-making businesses in disguise. The IRS has shut down credit counseling agencies responsible for 41% of the revenue from such agencies. Click Here for the full IRS report.

2006 Auto Depreciation Limits

Guidance Issued on Vehicle Depreciation Deduction Limits (Rev. Proc. 2006-18)

Tables indicating limitations on depreciation deductions for owners of passenger automobiles, including electric automobiles, trucks and vans first placed in service during calendar year 2006, have been issued by the IRS. Also provided are tables indicating the amounts to be included in income for vehicles first leased during calendar year 2006.

For passenger automobiles first placed in service in 2006, the depreciation limitations for the three tax years are $2,960, $4,800 and $2,850, respectively and $1,775 for each succeeding year. For trucks and vans first placed in service in 2006, the depreciation limitations for the three tax years are $3,260, $5,200 and $3,150, respectively. The limitation is $1,875 for each year thereafter. For electric automobiles first placed in service in 2006, the depreciation limitations for the three tax years are $8,980, $14,400 and $8,650, respectively, and $5,225 for each yea…

IRS Audits up 21%

CNNMoney.com report that just over 1.2 million individual income tax returns were audited in fiscal year 2005, according to a report released March 17, 2006 by the Internal Revenue Service.

That represents a 21 percent increase from a year earlier. That follows a 19 percent increase in audits in 2004.

The IRS also noted that the number of audits of high-income taxpayers -- defined as those with income of $100,000 or more -- reached 219,208, the highest figure in 10 years.

A table detailing individual return audits showed that the income groups with the highest percentage of audits were taxpayers who reported income under $25,000 and taxpayers who reported income between $100,000 and $200,000. Approximately 1.5 percent of returns reporting income under $25,000 were audited; while 1.41 percent of returns reporting income between $100,000 and $200,000 were audited.

IRS Hires Collection Agencies

Collection Agencies to Hassle Taxpayers

The Internal Revenue Service awarded contracts on March 9, 2006 to three firms to participate in the first phase of its private debt collection initiative.

The firms are:

The CBE Group Inc., Waterloo, Iowa.
Linebarger Goggan Blair & Sampson, LLP, Austin, Texas.
Pioneer Credit Recovery, Inc., Arcade, N.Y.

The Linebarger firm has been collecting money for the government and prides itself in tenacity. Any taxpayer contact by these collection agents should reveal nothing and hang up the telephone.

HR Block Sued by NY Attorney General

HR Block Sued by NY Attorney General

More than half a million eager savers signed up for H&R Block's Express IRA product in recent years, and plenty of them are probably wondering how to unravel that decision now.

With its steep fees and low interest rates, H&R Block's retirement-savings product generally depleted account balances instead of building nest eggs, New York Attorney General Eliot Spitzer charged in a lawsuit filed Wednesday. See full story.

The product's fees exceeded the interest paid for 85% of Express IRA customers overall, the lawsuit said.

NJ Supreme Court rules to limit rent-to-own interest rates to 30%

NJ Supreme Court rules to limit rent-to-own interest rates to 30%

The state Supreme Court ruled on March 15, 2006, that the rent-to-own industry is subject to the state's 30 percent interest rate cap.

Groups such as New Jersey Public Interest Research Group have contended the rent-to-own industry charges customers, mostly the urban poor, as much as 152 percent interest per year, though state law prohibits charging more than 30 percent interest.

The court mulled whether the rent-to-own industry was subject to that 30 percent cap and decided that based on the law's language and established principles of statutory interpretation, that Rent-A-Center's rent-to-own contracts are subject to the law.

The ruling reinstates a lawsuit filed against the company by a Camden County woman.

Supreme Court Debates Tax Giveaways for Business

The Supreme Court considered on March 1, 2006 whether taxpayers can challenge lucrative tax breaks that elected officials give businesses as incentives to expand or relocate. The Court's decision in the case brought by DaimlerChrysler could have a significant effect because nearly every state uses billions of dollars in tax breaks to attract companies. At issue is whether taxpayers who lost their homes and businesses have a right to bring a lawsuit and, if so, whether an investment tax credit is constitutional.
Click Here for the full Associate Press article.

Sole Proprietors 10 times More Likely to be Audited

Sole Proprietors 10 times More Likely to be Audited

Sole proprietors, independent contractors, self-employed workers and others accounted for $68 billion in missing taxes, the IRS said, the Associated Press reported. “That is a very significant noncompliance rate,” an IRS spokesman told reporters. “We do not have specific conclusions as to how much of this is willful or confusion.”

Sole proprietors are at least 10 times more likely to be audited this year than other business entities, dailybreeze.com says. Last year, with more enforcement personnel available, the IRS audited almost twice as many individuals as five years previously.

Alternative business entities, such as LLCs and Corporations might be considered.

Lottery Winnings are Ordinary Income and Not Capital Gains

Lottery Winnings are Ordinary Income and Not Capital Gains

Lottery winners cannot claim a "capital gain" when they sell off the rights to future annual payments, but instead must treat that lump sum as "ordinary income," the 3rd Circuit has ruled, becoming the second federal appellate court to agree with the IRS' application of the "substitute-for-ordinary-income doctrine" in such cases. However, the panel said it agreed with the result, but not the reasoning, of the 9th Circuit's decision, and instead fashioned its own test for deciding the issue Click Here for the full article.

Homeowner Associations subject to Constitutional Free Speech Guarantees

Homeowner Associations subject to Constitutional Free Speech Guarantees

The New Jersey Superior Court, Appellate Division, ruled Feb. 7 that privately owned homeowner associations may be subject to free speech and other guarantees under the state’s constitution. Committee for a Better Twin Rivers v. Twin Rivers Homeowners’ Association, No. A-4047-03T2.

The ruling is significant because it extends to private entities such as condo associations the same state constitutional mandates that would apply to the actions of government bodies. New Jersey already is on the forefront of such law by allowing free speech rights in private shopping malls.

"In the exercise of fundamental rights, we discern no principled basis for distinguishing between the general public at large and the members of a community association," the court wrote.

A committee of homeowners in the association and three residents of Twin Rivers sued the association in a nine-count complaint. Among their complaints were…

Surprise! The Tax Burden is Increasing

Surprise! The Tax Burden is Increasing

Citing the typical excuses such as rising costs in Medicaid and education which in turn led to higher spending levels and ultimately higher taxes, state taxpayer burdens rose more than 40 percent between 1994 and 2004.

According to just-released data from the Census Bureau, individual tax burdens jumped in some 43 states with residents of Hawaii shelling out the most per capita to their state government with an average of $3,050 per person.

According to the Census Bureau, the top states behind Hawaii were in order: Wyoming, Connecticut, Minnesota and Delaware. Alabama was at the bottom of the list.

Meanwhile the only state to witness a decline in its tax burden was Alaska with a scant 1-percent drop to $2,035 per resident.

Isn't about time that taxpayers revolt to lower taxes so more of your hard-earned money can be spent as you see fit? Remember, the Boston Tea Party was over the British government's 3% tax on tea.

US Supreme Court hears challeng to Ohio's Tax Break

US Supreme Court hears challeng to Ohio's Tax Break

As challenges to corporate tax breaks percolate around the country, the U.S. Supreme Court is set to hear arguments next month in a case involving a $280 million tax incentive plan for DaimlerChrysler's Ohio expansion. The case has raised to a high profile a long-running debate over the tax incentives' constitutionality and their effectiveness as an economic development tool. Businesses predict "dire ramifications" if they lose the ability to use the incentives. Click Here for the full article.

New Law Restricts Medicaid Planning

On February 1st Congress passed the Deficit Reduction Act of 2005, intended to severely limit the ability of seniors to protect their assets and qualify for Medicaid coverage of their nursing home care. It significantly changes rules on transfers of assets, protection of homes, and the use of annuities.

The new law extends Medicaid's "lookback" period for all asset transfers from three to five years and makes those with valuable houses ineligible for Medicaid long-term care coverage. But the most significant change is that it also shifts the start of the penalty period for transferred assets from the date of transfer, as is the case now, to the date when the individual would qualify for Medicaid coverage of nursing home care if not for the transfer. In other words, the penalty period would not begin until the nursing home resident was out of funds, meaning there would be no money to pay the nursing home for however long the penalty period lasts. Innocent gifts to grandch…

IRS Attacks Tax Exemption for US Territories

The Treasury Department issued rules on Monday requiring owners of companies based in U.S. territories to have set up shop and live there at least six months a year to benefit from corporate tax breaks amounting to up to 90 percent of profits.

The rules apply to Guam, Puerto Rico, American Samoa, Puerto Rico, the Northern Mariana Islands and the U.S. Virgin Islands. They went into effect Tuesday

2005 Inflation is 3.4 percent

Consumer prices rose by 3.4 percent in 2005 with 40 percent of the increase blamed on the biggest jump in energy costs since 1990. Energy was up 17.1 percent this past year, reflecting gasoline prices that for a time soared above $3 a gallon and crude oil prices that topped $70 per barrel.

There has been hope that overall inflation will slow to around 2.5 percent in 2006. But that is based on a belief that after two years of big increases, energy prices will calm down, something that has not yet occurred.

Big Tax Collections Offset Big Spending Government

Big Tax Collections Offset Big Spending Government

The federal government posted the first budget surplus for December in three years as corporate tax payments hit an all-time high, helping offset a record level for spending, the Treasury Department reported Thursday, January 12, 2006

The department said in its monthly budget report that government receipts surpassed spending by $10.98 billion last month. A year ago, the government ran a deficit of $2.85 billion in December.

The improvement reflected the fact that government receipts were up 12.1 percent from a year ago to $241.88 billion while government spending rose by a slower 5.6 percent to $230.9 billion. The figure for outlays still represented an all-time high for spending for any month.
Corporate income tax collections totaled a record $73.5 billion last month, surpassing the old record of $72 billion set in September.

Employers with less than $4000 payroll may file Form 944

Employers with less than $4000 payroll may file Form 944

Beginning January 1, 2006, certain employment tax filers will be able to file the new Form 944 (Employer’s Annual Federal Tax Return) once a year rather than filing Form 941 (Employer’s Quarterly Federal Tax Return) four times a year.

The new Form 944 will reduce burden on eligible small employers who file quarterly returns with little or no employment tax due. Most employers who file Form 944 will be able to make a single payment with their annual return.

Eligible employers are those with estimated annual employment tax liability of $1,000 or less. The IRS will begin mailing notification letters between February 1 and February 15, 2006 to eligible small employers for calendar year 2006. Employers who do not receive a letter and believe they are eligible to file the new Form 944 can call the IRS at 1-800-829-0115 to find out if they qualify. Taxpayers should contact the IRS by April 1, 2006.

New employers who expect to owe $1,000 o…

IRS Hiring Collection Agencies to Attack Taxpayers

The IRS is hiring debt collectors.

The Internal Revenue Service plans to turn over the names of people who owe $7.7 billion to debt collection agencies starting in June. If the extra heat pays off, the agency gradually will add to the list as it whittles away roughly $50.7 billion in unpaid taxes.

The move will give many Americans one more reason to hate the IRS.

"It's hard enough making it as it is, and then you're going to have a government agency hiring collectors to hound people?" said Christina Hess, 24, a catering administrative assistant who doesn't owe any back taxes. "It just seems like another way to screw us any way they can."
IRS officials say turning over the names of deadbeat taxpayers to professional collectors is necessary to slow the growing debt of the most recalcitrant taxpayers. Their overdue taxes grew 86 percent to $13 billion between 2000 and 2003.

"We believe that many of these taxpayers have simply chosen not to pay, even though…

IRS Increases Fees

IRS Increases Fees.
User fees will be effective Feb. 1, 2006, except as noted. Among the changes:
The fee for IRS Chief Counsel private letter rulings will increase from $7,000 to $10,000. Under the new fee schedule, taxpayers earning less than $250,000 can request a private letter ruling for a reduced fee of $625 while a fee of $2,500 will apply to requests from taxpayers earning from $250,000 to $1 million.

The fee for requests for changes in accounting methods for businesses will increase from the previous $1,500 to $2,500.

For corporate taxpayers, the cost of a pre-filing agreement will increase from the previous three-tiered structure, which was capped at $10,000, to a new flat fee of $50,000. Also, Advance Pricing Agreements, which previously cost from $5,000 to $25,000, will now cost from $22,500 to $50,000.

For employee plans, fees for opinion letters on prototype IRAs, SEPs, SIMPLE IRAs and Roth IRAs, which were previously $125 to $2,570, will now range from $200 to $4,500. Fees f…