Daily Tax Update - February 16, 2007

IRS CRACKS DOWN ON ABUSIVE TELEPHONE TAX REFUND PREPARERS: Today, the IRS announced that it has served search warrants at tax preparation businesses in Atlanta, Georgia; Dallas, Tyler and Athens, Texas; Riverside, California; Miami, Florida; and New Orleans, Louisiana. All of these businesses are suspected of preparing returns on behalf of clients requesting inflated amounts involving this year’s special telephone excise tax refund.

  • The IRS said that some tax-return preparers are requesting thousands of dollars of refunds for their clients in instances where clients are entitled to only a tiny fraction of that amount. The IRS further stated, "Taxpayers who request more of a refund than they are entitled to receive will have their refunds held and be subject to an audit. To make the refund easier to figure, the government established a standard refund amount, based on personal exemptions, ranging from $30 to $60. If taxpayers have phone bills and other records, they can request the actual amount of excise tax paid."
  • IRS Commissioner Mark Everson said, "We want everyone who is eligible for the telephone tax refund to claim it but not to inflate the amount requested. We have seen limited but serious instances of abuse, and we’ve sent in criminal investigators to pursue the matter accordingly."
  • Additional information can be accessed via: http://www.irs.gov/newsroom/article/0,,id=164032,00.html

TAX BILLS INTRODUCED FEBRUARY 15TH CAN BE ACCESSED VIA:
http://www.steptoe.com/assets/attachments/2870.pdf

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE
Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.