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Showing posts from January, 2006

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…