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Some spammers are targeting the wildly popular, do-it-yourself tax software giant TurboTax with an e-mail message telling the recipient to download software updates in order to comply with new IRS requirements. But the URL provided doesn't take you to TurboTax's official Web site. According to Symantec Security, you are delivered to a URL made up of a blank page with a pop-up window instructing you to download a file, which is really a virus. The IRS describes suspicious e-mails, commonly known as phishing, as "the act of sending an e-mail to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft." Intuit's TurboTax spokesman Scott Gulbransen told AccountingWEB that as tax season approaches, this type of scam, which he describes as "despicable," becomes more popular. Approximately 15 million people use TurboTax to prepare their taxes, a blockbuster brand for scam artists. "These phishing scams are something we see all the time as far as tax season," Gulbransen said. "We always tell customers and we put educational information on our Web site and in our products that we'll never e-mail you and ask for personal information whatsoever. You can bet it's not from us so don't click through, don't keep those e-mails, don't do anything." The TurboTax spam e-mail message is similar to many other spam e-mails people receive daily that appear to be coming from trusted banks and financial institutions around the globe. They look legitimate but can unleash a virus or seek to obtain financial or personal information that should not be given out. Gulbransen said spammers will glom onto any major brand because they know people have trust in those brands. "If someone gets something from us that is unsolicited or if they have any questions, they should contact us. But please know we're not sending out any information that they need to update software with a link or asking for more information like a Social Security number. We never do that," he said. Taxes are a sensitive issue and with more than 70 percent of people getting a refund, Gulbransen said they see the e-mail and may be more apt to access the message than they would at any other time of the year. He urges people to visit turbotaxsupport.com for tips on how to protect your online privacy and security. FOXBusiness.com reports that taxpayers have forwarded to the IRS more than 33,000 spam e-mail messages that mimic a trusted source, representing about 1,500 different scams. The IRS doesn't contact taxpayers by e-mail and if you have received an unsolicited e-mail from the IRS, you can forward the message to phishing@irs.gov.
The personal use standards will apply for Section 1031 exchanges after March 10, 2008, but in the current real estate market, and with changes in capital gains rates on the horizon under a new administration, the Section 1031 strategy may not be as popular as it has been. The IRS had not previously published guidance for limited personal use. But in July 2007, the Tax Court upheld the IRS in Moore v. Commissioner, where taxpayers claimed that they were qualified for a Section 1031 exchange when they exchanged one lake front vacation home for another, because the properties were considered investments that were expected to increase in value. The Court held that the "mere hope or expectation that property may be sold at a gain cannot establish an investment intent if the taxpayer uses the property as a residence." Although the IRS challenge was upheld because neither home was ever rented, and the properties were held exclusively for personal use, the IRS, prodded by a report by the Treasury Department inspector general, decided that it would issue guidance on personal use, the Washington Post reports. Under the safe harbor personal use rules for the relinquished property, the property qualifies for a Section 1031 exchange if:
The same rules apply for the Replacement property except that the dwelling unit must be owned by the taxpayer for at least 24 months immediately after the exchange. Some investors in real estate, anticipating a change in capital-gains rate with a new administration, are turning away from the Section 1031 exchange strategy and choosing to pay the capital gain on the sale of their properties at current rates, The Wall Street Journal reports. Others are having difficulty finding good investment properties that qualify as like-kind for Section 1031 purposes, especially in the commercial market. In an interview with the Journal last summer, Marsha Slotten, a commercial real-estate broker in Las Vegas, said that investors looking for commercial properties to exchange are essentially "wasting their time. . . . Most of the properties that are still available are significantly overpriced." The Washington Post reports that the IRS has indicated it intends to increase audits and enforcement of Section 1031 exchanges starting this summer. The IRS discussion of the background for safe harbor for like-kind exchanges, the scope and application are published as Rev. Proc. 2008-16 (.PDF).
The IRS also announced the availability of a new online calculator on IRS.gov to help people determine the amount of their stimulus payments. Stimulus payments will be made by direct deposit to people who choose to receive their 2007 income tax refunds through direct deposit. All others will receive their economic stimulus payments in the form of a paper check. "To receive an economic stimulus payment, people just need to file their tax returns as they usually do," said IRS Acting Commissioner Linda E. Stiff. "The payments will be automatic for the vast majority of taxpayers. Some lower-income workers and recipients of certain Social Security and veterans benefits who don't normally need to file a tax return will need to do so in order to receive a stimulus payment. IRS.gov has all the information people need to help them obtain a stimulus payment." Stimulus payments will be sent out in the order of the last two digits of the Social Security number used on the tax return. Because the IRS will use the Social Security number to determine when checks are mailed, taxpayers may receive their checks at different times than their neighbors or other family members. On a jointly filed return, the first Social Security number listed will determine the mail-out time. The IRS expects to make about 34 million payments within the first three weeks after the payment schedule begins May 2. With more than 130 million households expected to receive stimulus payments, more than 25 percent of the payments will be made in the first three weeks. Taxpayers who choose direct deposit on their federal income tax returns can expect to receive their economic stimulus payments between May 2 and May 16 provided their returns were received and processed by April 15, 2008. For taxpayers who did not choose direct deposit on their tax return but whose returns were processed by April 15, the paper checks will be in the mail starting May 16, with the initial mailings completed by around July 11. The IRS is also announcing today the availability of an online calculator on IRS.gov to help taxpayers determine if they are eligible to receive an economic stimulus payment and if they are, how much they can expect. Anyone who has prepared a 2007 income tax return can use the calculator. It will ask taxpayers a series of questions, so they should have their 2007 tax returns handy. After answering the questions, the calculator will provide the projected dollar value of the payment. Below are the schedules for economic stimulus payments related to tax returns processed by April 15, 2008. Stimulus Payment Schedule for Tax Returns Direct Deposit payments
Paper Check
A small percentage of tax returns will require additional time to process and to compute a stimulus payment amount. For these returns, stimulus payments may not be issued in accordance with the schedule above, even if the tax return was processed by April 15. To accommodate people whose tax returns are processed after April 15, the IRS will continue sending weekly payments. People who file tax returns after April 15 and receive a refund can expect to receive their economic stimulus payments in about two weeks after receiving their tax refunds, but not before the date they would have received their payment if the return had been processed by April 15. To ensure taxpayers receive their stimulus payment this year, they must file a tax return by Oct. 15. Two bureaus of the Treasury Department are involved in making the payments. The IRS will calculate the amount of each economic stimulus payment based on the tax year 2007 income tax returns it receives. The IRS will then forward the information to the Financial Management Service (FMS), which is the bureau of the Treasury Department that makes federal payments such as Social Security benefits, federal income tax refunds and, now, economic stimulus payments. The IRS reminds taxpayers that they can get their stimulus payments faster by using direct deposit when they file their tax return. In addition, the IRS urges taxpayers to file electronically. For people who normally don't need to file a tax return, the IRS and Free File Alliance have a special program set up to allow for free electronic filing. IRS Free File–Economic Stimulus Payment is available on the IRS Web site.
In 1994, a healthcare reform package was introduced that did not sufficiently address the needs of all Americans. The National Federation of Independent Business (NFIB) was a vocal opponent of those reforms and, members of Congress agreed and the legislation never became law. But according to NFIB, the problem has become a crisis. In an effort to help with the delivery of real and meaningful solutions, the NFIB announced its plans last week to embark on a nationwide campaign to engage policymakers, legislators, and the next administration on this critical issue. NFIB has launched Solutions Start Here, an aggressive healthcare reform campaign to urge policymakers to deliver real and meaningful healthcare reform for small business. Kicking off the campaign, NFIB sent a letter on March 11 to the presidential candidates challenging them to develop reform proposals that support the backbone of the U.S. economy--small businesses. To get involved with Solutions Start Here, visit www.FixedForAmerica.com. History More than 15 years ago, comprehensive reform was introduced that did not adequately consider the unique situation of small businesses. Finding real solutions requires the cooperation of diverse, bipartisan groups willing to work together for change. Over the past decade, insurance premiums have continued to increase each year, jumping 129 percent in the last eight years. Today, small business owners, a voting bloc larger than soccer moms and NASCAR dads, are insisting that action be taken to address their healthcare crisis. For comprehensive healthcare reform to become a reality, the unique needs of small business must be fully addressed. To help guide lawmakers in this effort, NFIB developed their Small Business Principles for Healthcare Reform as a framework for future healthcare reform. Small Business Principles Our current system of health insurance and health care is financially unsustainable and threatens the health and financial security of the American people. Small business owners and their employees are especially vulnerable to the weaknesses of our current system. NFIB supports policy reforms to balance the competing goals of access to quality care, affordability, predictability and consumer choice. The resulting healthcare system would be: Universal: All Americans should have access to quality care and protection against catastrophic costs. A government safety net should enable the neediest to obtain coverage. This does not mean a government-run, single-payer system. Private: To the greatest extent possible, Americans should receive their health insurance and healthcare through the private sector. Care must be taken to minimize the extent to which governmental safety nets crowd out private insurance and care. Affordable: Healthcare costs to individuals, providers, governments and businesses must be reasonable, predictable and controllable. Unbiased: Healthcare and tax laws should not push Americans into employer-provided or government-provided insurance programs and hobble the market for individually purchased policies. Small employers should be treated the same as large employers, who can already pool across state lines. A healthcare system built on employer mandates or on play-or-pay taxes is unacceptable. Competitive: Consumers should have many choices among insurers and providers. Policymakers must alleviate the limitations that state boundaries and treatment mandates place on competitiveness. Portable: Americans should be able to move throughout the United States and change jobs without losing their health insurance. Transparent: Information technology should enable all parties to access accurate, user-friendly information on costs, quality and outcomes. Providers must be able to obtain relatively complete medical histories of patients. At the same time, patients' privacy must be guarded zealously. The private sector must play a vital role in developing the new technologies. Efficient: Healthcare policy should encourage an appropriate level of spending on healthcare. Laws, regulations and insurance arrangements should direct healthcare spending to those goods and services that will maximize health. Adequate risk pools throughout the healthcare system are vital to accomplishing these goals. Evidence-based: The healthcare system must encourage consumers and providers to accumulate evidence and to use that evidence to improve health. Appropriate treatment choices and better wellness and preventive care should be key outcomes. Realistic: Healthcare reform should proceed as rapidly as possible, but not so quickly that firms and individuals cannot adjust prudently. It is important to ensure that no one’s quality of care suffers as we move to provide coverage for all Americans. About NFIB
The agency has posted a "vision draft" (.PDF) of new Form 941X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, for public review. Proposed regulations establishing the new process for making interest-free adjustments for both underpayments and overpayments, and clarifying the process for claiming refunds are in Internal Revenue Bulletin 2008-4. Comments on both the draft form and the proposed regulations are due March 27, 2008. After finalizing the new Form 941X, the IRS will continue developing additional forms for the remaining returns in the employment tax series. The entire set of forms will be available in early 2009 for use in correcting errors on employment tax returns discovered on or after Jan. 1, 2009. Background The IRS Office of Taxpayer Burden Reduction (TBR) initiated the Adjusted Employment Tax Returns (Forms 94X) Project to reduce burden associated with correcting information previously reported on various types of employment tax returns. Currently, employers and payers use one form –Form 941c, Supporting Statement to Correct Information – to correct the amounts they previously reported on Forms 941, 943, 944, and 945. Form 941c (.PDF) is not a stand-alone tax return. Presently, filers must attach Form 941c to their current employment tax return when making adjustments, or to Form 843 when claiming a refund of overpaid employment taxes. Form 941c is complex and does not correspond directly to any employment tax return. Consequently, taxpayers often make mistakes completing and filing it, resulting in processing errors and delays. Additionally, because the taxpayer files Form 941c with the current employment tax return when making an adjustment, the IRS adjusts the tax for the current tax period but adjusts the wages for the calendar year being corrected. This makes it difficult for employers and the IRS to track taxpayers' account activity. Changes for 2009 A new set of dual-purpose forms for adjustments and refunds will reduce burden for employers, payers and the IRS. The IRS, with stakeholder input, is making the new forms as user-friendly as possible and implementing more accurate procedures for adjustments and refunds of employment taxes. • Forms: Each stand-alone form will correspond to, and relate line-by-line with, the employment tax return it is correcting. For example, an employer who discovers an underpayment or overpayment error on a previously filed Form 941 will use Form 941X to make a correction. Since the Form 941X is a stand-alone form, the employer will be able to file Form 941X when an error is discovered, rather than having to wait to file it at the end of the quarter with the next employment tax return. The new forms being developed will correspond with Form 941, Employer's QUARTERLY Federal Tax Return; Form 943, Employer's Annual Federal Tax Return for Agricultural Employees; Form 944, Employer's ANNUAL Federal Tax Return; Form 945, Annual Return of Withheld Federal Income Tax and Form CT-1, Employer's Annual Railroad Retirement Tax Return. Spanish versions of the new forms are being developed for Forms 941-PR, 944-PR, and 944(SP). The IRS will also revise Form 941 and other employment tax returns for the 2009 tax year to eliminate prior period adjustment lines no longer needed after the implementation of the new forms. Note: Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, is not being revised. Employers can continue to use Form 940 to file amended returns. • Process: Under the proposed regulations, Form 941X will be used to make adjustments and claim refunds. If an employer is correcting an overpayment for a Form 941, the employer will be able to either make an adjustment or claim a refund. If an adjustment is made the amount of the overpayment will be applied as a credit to the quarter in which the Form 941X is filed. Employers correcting underpayments of employment taxes that result in a balance due, can pay using EFTPS, credit card, or send a check along with Form 941X. The IRS will make both the tax and wage corrections to the actual tax period being corrected, resulting in a more accurate record. The IRS wants to hear from you! Please provide any comments you have by March 27, 2008. To comment on the vision draft of Form 941X:
To comment on the proposed regulations:
All comments on the proposed regulations will be available for public inspection and copying.
“No longer is the Fed simply pumping money into the economy to promote lending. It is now putting taxpayers on the hook for investments of uncertain value and extending federal help to Wall Street firms whose activities haven’t been regulated as closely as commercial banks,” the editorial said, calling the Fed’s actions extraordinary. The storied Bear Stearns, once the country’s fifth-largest investment bank, was in trouble because its investors no longer believed it could repay its loans, even loans for short terms including overnight, reported USA Today. Investors concluded the bank was no longer able to stand behind the complex agreements it had with other banks, investment houses, and corporations. “As far as Wall Street securities houses go, Bear Stearns wasn’t too big to fail,” Steve East, chief economist for FBR Capital Markets, told USA Today. “It was too interconnected to fail.” The housing bubble was the catalyst for Bear Stearns’ problems as banks loaned money to people who normally wouldn’t qualify for conventional mortgages. Wall Street bought these subprime mortgage loans and mixed them with other types of debt and created complex investments, which were sold to investors. That process worked until the economy worsened and people who had borrowed money began to default on payments. Bear Stearns has been described as one of the biggest underwriters of complex investments tied to mortgages. Deloitte & Touche warned investors that more than 60 percent of the net worth of two Bear Stearns’ hedge funds was tied up in exotic securities, according to Businessweek. The Deloitte & Touche 2006 audit was released in May 2007. “The hedge funds were built so they were virtually guaranteed to implode if market conditions turned south,” according to a Businessweek analysis of confidential financial statements for both funds and interviews with forensic accounting experts, traders, and analysts. The Los Angeles Times said the innovations that helped extend credit to more borrowers are now showing “a flip side that asleep-at-the-switch regulators and policymakers didn’t anticipate.”
Workers who normally do not file a tax return because their income is too low but who have at least $3,000 in wages, tips, or salary or other qualifying income may be eligible for an economic stimulus payment. However, they must file a 2007 income tax return in order to receive a payment. The IRS encouraged government and nongovernmental organizations, especially churches and charities that work with low-income Americans to help spread the word to individuals and families. Because it lacks name and address information for many low-wage workers, the IRS is unable to contact everyone who may be eligible. "Many people who don't normally file a tax return may not realize they need to take an extra step this year to receive an economic stimulus payment," said Acting IRS Commissioner Linda E. Stiff. "We are encouraging groups across the country to help us get out the word that low-income workers and others need to file a tax return in order to receive a stimulus payment." "Some low-income taxpayers may never have filed a tax return before yet qualify for an economic stimulus payment," added National Taxpayer Advocate Nina E. Olson. "Community-based organizations can play a vital role in spreading the word about the steps people must take to receive their payment. Part of that message should be to seek help from reputable sources and avoid Internet solicitations." Generally, workers who earn less than $8,750 if single, $11,250 if a single parent or $17,500 if married are not required to file a tax return. This year, however, they should file a simple tax return if they had at least $3,000 in qualifying income which is defined as earned income, nontaxable combat pay or certain Social Security, Veterans Affairs or Railroad Retirement benefits. It also can be a mix of pay and benefits. The IRS will mail 20.5 million information packages to Social Security and Veterans Affairs recipients, starting this week. In all, more than 130 million individuals and couples may be eligible for an economic stimulus payment of up to $600 ($1,200 for married couples.). Some households may qualify for an additional $300 for each eligible child younger than 17. People who normally do not file a tax return may be eligible for the minimum payment of $300 ($600 for married couples) plus the additional $300 per eligible child. Organizations with interest in providing information to Americans who may be eligible for these payments can go to IRS.gov for materials and marketing tools to help spread the word. An IRS.gov Web page, Economic Stimulus Payments: Marketing Products for Partners, has one-page flyers, envelope stuffers, and more information that can be downloaded. Also available is the Package 1040A-3, a 8-page package containing everything low-wage workers need to file a tax form immediately. The IRS also is working with a number of key national organizations such as AARP, National Community Tax Coalition/Center for Economic Progress, National Council on Aging, Center for Budget and Policy Priorities, National Disability Institute, United Way of America, Catholic Charities, Disabled American Veterans, and others. In addition, the IRS is reaching out to small business employers and employees across the nation with the help of organizations such as the United States Chamber of Commerce, the National Federation of Independent Business, and the National Association for the Self-Employed. Starting in May, the IRS will begin issuing economic stimulus payments based on the 2007 tax returns being filed this spring. Filers who have bank accounts can receive their stimulus payments faster by using direct deposit. Free help is available. For those with computer access, IRS Free File – Economic Stimulus Payment is available at IRS.gov. People can use IRS Free File to prepare returns and submit them electronically for free. People also can print out Package 1040A-3, the 8-page publication containing tips for completing a return, a sample Form 1040A and a blank Form 1040A, which people can complete and mail to the IRS. There are also thousands of free tax preparation sites staffed by volunteers nationwide. And, there are more than 400 IRS Taxpayer Assistance Centers nationwide.
"For the majority of Americans who pay their taxes willingly and on time, there must be clear guidance, accessible education, and outstanding service," Shulman said in a statement released by the IRS. "For taxpayers who intentionally evade paying taxes, there must be rigorous enforcement programs." Shulman, who President Bush nominated for the job in November and the Senate unanimously confirmed on Friday, will have to focus on distributing checks for the economic-stimulus package and collecting unpaid taxes, said Senate Finance Chairman Max Baucus (D-MT). "Millions of Americans – including our senior citizens and disabled veterans – are counting on Mr. Shulman to oversee the distribution of economic stimulus checks right and right away," Baucus was quoted as saying in the Dayton Daily News. Shulman is taking over at a time when the IRS's use of private debt collectors is coming under fire. In The New York Times, the National Taxpayer Advocate Nina E. Olson, the government-appointed watchdog of the IRS, called the collection program ineffective and recommended it be cancelled. Olson said the program, which Congress authorized in 2004 as a way to bring in "easy-to-collect tax debts," cost the government at least $81 million a year in revenue, The Times said. During the 1990s, Shulman worked as a senior policy advisor and chief of staff for the bipartisan National Commission on Restructuring the IRS. He holds an MPA from Harvard University's Kennedy School of Government and a JD magna cum laude from Georgetown University Law Center. He has replaced Mark Everson, who left the IRS last year to take the helm at the American Red Cross but later resigned, according to CQPolitics.com. In January, President Bush signed a bill allowing the next commissioner to serve a term of nearly five years instead of just finishing the remainder of Everson's term.
A sampling of comment includes: from the Associated Press, "At a cost of nearly $42 million, the IRS wants you to know: Your check is almost in the mail." And from the Altoona Mirror in Altoona, PA, "What would you do with $42 million? Retire? Take an extended vacation? Buy a mansion? . . . Is there anyone who hasn't heard about the rebate checks from the news over the past few months?" Apparently the sense of outrage was bipartisan. Senator Tom Coburn (R-OK) joined Senator Charles Schumer (D-NY) in criticizing the cost of the mailing, according to In-Forum. In fairness to the IRS, the letters provided information about who qualifies for the rebate, reminded people to file their 2007 returns promptly, and said that future mailings would be directed to those who receive Social Security and railroad retirement benefits. This last, however, might also lead to some head scratching, because it is not easy to understand why people who are already expected to file need this information. The IRS is making an effort to reach as many individuals who might qualify as possible, to let them know that they must file a return to receive a rebate. The next mailing, to 20 million Social Security and railroad retirement beneficiaries, is a 10-page packet containing everything the recipients will need to file a 2007 return, including information, tips, and both a sample 1040A and a blank 1040A, the Associated Press says.
“The strongest and most compelling cases made our Top 10 list of rules,” said Thomas M. Sullivan, Chief Counsel for Advocacy. “These rules, nominated by small business, need to be reviewed by federal agencies to determine if they are outdated, ineffective, duplicative, or overly complex. Streamlining and updating these regulations will help ease the disproportionate federal regulatory burden placed on small business.” Advocacy created the r3 initiative as a way to address the cumulative burden of federal regulations that now costs our economy $1.1 trillion per year, which is more per household than the cost of health insurance. The smallest of businesses bear the brunt of regulations. According to Office of Advocacy research, they annually pay 45 percent more per employee to comply with federal regulations than big businesses do. The 2008 Top 10 Rules for Review and Reform are listed in the Report on the Regulatory Flexibility Act, FY 2007, released today. The annual Regulatory Flexibility Act report will list each year’s r3 Top 10 nominations and the status of agency actions on previous nominations. In order to track agency action on the Top 10, Advocacy has posted the list to its Web site; an update on the status of agency reviews will be published twice a year. Advocacy encourages small businesses and their representatives to follow the progress of the reviews and comment to the agencies on that progress. The 2008 Top 10 rules were chosen on the basis of several factors: (1) whether the rule could reasonably be tailored to accomplish its intended objectives while reducing the impact on small businesses or small communities; (2) whether the rule being nominated has ever been reviewed for its impact on small entities; (3) whether technology, economic conditions, or other factors have changed since the rule was originally written; (4) whether the rule imposes duplicative requirements; and (5) the overall importance of the rule to small businesses and small communities. Nominations not chosen have given Advocacy valuable insight into the regulatory issues of concern to small businesses, which will help Advocacy prioritize its regulatory agenda in 2008. Top 10 Rules Ready for Review and Reform After significant review and analysis of the 82 nominations received, the Chief Counsel for Advocacy selected the following nominations as the 2008 Top 10 Rules for Review and Reform, listed here in alphabetical order by agency:
Find out more about the r3 initiative and agency progress in reviewing the Top 10 rules. The Office of Advocacy, the "small business watchdog" of the federal government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats, and it funds research into small business issues. About the Office of Advocacy Copyright
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