TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

Help for Child Tax Credit Available on IRS.gov The Internal Revenue Service reminds practitioners that taxpayers claiming the Child Tax Credit cannot claim the full $1,000 per child if they received an advance payment check last year. When figuring the credit, they must subtract the amount they got in advance. Failure to do so will reduce and could delay the tax refund claimed. Taxpayers can get the amount of their advance Child Tax Credit payment by visiting IRS.gov. Information is available by clicking on 1040 Central or Your 2003 Advance Child Tax Credit. Click here

Senators Push to Tax VoIP after 2 years Sens. Thomas Carper and Lamar Alexander revived the debate over taxing Internet access with the introduction of a bill that would reinstate for two-years the now-expired ban on state and local taxation of Internet access services. The senators oppose a competing bill that would make the Internet tax moratorium permanent and extend the exemption from taxation to all forms of technology used to provide Internet access, maintaining that the other bill would be too costly to already cash-strapped states. Essentially, after 2 years, the Senators want states to be able to tax internet services, especially the expanding broadband services and the use of the internet for telephone services, VoIP.

Taxation of Lottery Winnings A lump sum payment for the right to receive future installments on a winning lottery ticket is taxable as ordinary income, not capital gain, the Ninth Circuit holds.

Not Filing Tax Returns Costs Billions in Lost Refunds Nearly 2 million students, retirees and other taxpayers stand to lose $2.5 billion in refunds if they don't act quickly to claim the money. The Internal Revenue Service said Monday that anyone who should have gotten a refund for taxes paid in 2000 but didn't file a return must file and claim the money by April 15. Half of those taxpayers could claim refunds of $529 or more, the IRS estimated. That calculation does not include the earned income tax, which could make the refund even larger for some low-wage workers. Don't wait until it's too late!

IRS to Audit More Small Businesses A restructuring announced by the Internal Revenue Service recently could mean that more small businesses see audits of their income tax returns. The IRS said it would be adding 2,200 new positions to its enforcement, or audit, operations in 2005, having consolidated or cut back in other divisions. The agency noted that between 1996 and 2002, its enforcement personnel declined by more than a quarter. Expect more audits of small companies and their owners in 2005 for the 2002 and 2003 tax years. Although the staff won't be full increased until next year, agents can still look back at prior-year returns.

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.