Daily Tax Update - January 11, 2008

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RECONVENES ON JANUARY 22, 2008

IRS OPENS 2008 E-FILING SEASON TODAY FOR MOST TAX RETURNS:  The IRS announced (IR-2008-5) that taxpayers may file their 2007 tax returns electronically beginning January 11 but that some 13.5 million taxpayers who use five forms related to recently enacted alternative minimum tax legislation will have to delay filing until mid-February when the IRS expects to have its systems reprogrammed for the new law. 

Returns that include the following forms should not be filed until February 11, 2008:

NATIONAL TAXPAYER ADVOCATE RELEASES ANNUAL REPORT TO CONGRESS:  Earlier this week, National Taxpayer Advocate Nina Olson released her annual report to Congress. The report focuses particular attention on the consequences of changes to the tax code enacted late in the year and the need for a coordinated IRS approach to combat the cash economy portion of the tax gap. Olson also urged Congress to enact a Taxpayer Bill of Rights and to authorize symbolic “apology payments” in egregious cases where taxpayers suffer significant harm as a result of IRS errors. The report identified 30 of the most serious problems facing taxpayers, and makes recommendations to Congress in a number of areas.

  • Regarding the late enactment by Congress of the AMT patch, Olson said, “If Congress changes the law after those products have been finalized, significant problems arise.” Olson added, ”We squeaked by with the AMT patch this past year, but this is the second year in a row we have had, late in the year, very late in the year, changes or extensions of provisions passed when tax packages are printed up and most of the software is done.”
  • The report proposes a comprehensive strategy to address tax noncompliance in the cash economy, which accounts for the largest portion of the tax gap. The report stresses the need to identify new approaches to reduce the tax gap without imposing undue compliance burdens or undermining taxpayer rights. The report concludes that IRS’s current efforts are not adequately coordinated. Olson said, “It is particularly disturbing that, for the third year running, the IRS declines to create a Cash Economy Program Office to coordinate its various initiatives.  Ad hoc measures will not get the job done.” The report identifies the lack of progress in addressing cash economy noncompliance as a most serious problem, makes recommendations for legislative change, and includes a research report that proposes a comprehensive set of administrative and legislative steps to address it.
  • The report can be accessed via: http://www.irs.gov/advocate/article/0,,id=177301,00.html  

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.

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