Daily Tax Update - June 6, 2007

IRS ANNOUNCES NEW REPORTING COMPLIANCE STUDY FOR INDIVIDUALS:  Today, the IRS announced that it plans to launch a new National Research Program (NRP) reporting compliance study for individual taxpayers designed to provide “updated and more accurate audit selection tools and support efforts to reduce the nation’s tax gap.”  The tax gap is the difference between what taxpayers should have paid and what they actually paid on a timely basis.  The IRS estimates that the net tax gap for tax year 2001 was $290 billion.

  • The IRS said that the study will start in October 2007 and will examine about 13,000 randomly selected tax year 2006 individual returns. Similar sample sizes will be used in subsequent tax years.
  • Acting IRS Commissioner Kevin Brown said, “The new program will be a big step forward for tax research.  Our approach will reduce burden on taxpayers, improve our audit selection techniques and give us more timely information to help reduce the tax gap.”
  • The IRS also stated that it is in the “final stages of a compliance research project examining reporting compliance of S corporations.”  According to the IRS, “This research encompasses approximately 5,000 returns filed for tax years 2003 and 2004.  Since the income and expense items for S corporations flow through to individual shareholders, this study will also help refine the tax gap estimates for individual income tax.”

H.R. 2557: To amend the Internal Revenue Code of 1986 to increase and extend the alternative motor vehicle credit for certain flexible fuel hybrid vehicles.
Sponsor: Rep. Weller, Jerry [IL-11] (introduced 6/5/2007)      Cosponsors (None)

H.R. 2571: To amend the Internal Revenue Code of 1986 and the Foreign Trade Zones Act to simplify the tax and eliminate the drawback fee on certain distilled spirits used in nonbeverage products manufactured in a United States foreign trade zone for domestic use and export.
Sponsor: Rep. Pascrell, Bill, Jr. [NJ-8] (introduced 6/5/2007)      Cosponsors (None)

S.1540: A bill to amend the Internal Revenue Code of 1986 to provide a tax credit for the transportation of food for charitable purposes.
Sponsor: Sen. Dole, Elizabeth [NC] (introduced 6/5/2007)      Cosponsors (5)

S.1546: A bill to amend the Internal Revenue code of 1986 to treat gold, silver, platinum, and palladium, in either coin or bar form, in the same manner as equities and mutual funds for purposes of the maximum capital gains rate for individuals.
Sponsor: Sen. Crapo, Mike [ID]

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