grant extra time for filing only, not for paying any taxes due.
Taxpayers owe interest on past due taxes, and may incur late payment
penalties for late payments. The original due date for most taxpayers
was April 17.
Launching Online Payment
The IRS is
working with tax professionals to launch a new system that will allow
many individuals who owe delinquent federal taxes to pay online.
The IRS is
implementing the new Online Payment Agreement (OPA) application through
national partnerships with the tax professional community. Tax
professionals use OPA to apply for payment agreements for clients who
owe taxes, eliminating the need to write or call the IRS toll-free
number for assistance. When fully implemented, OPA will give
taxpayers—and the professionals who help them—an easier way to pay.
system reduces taxpayer burden by providing the convenience of online
service during extended hours and on weekends,” said IRS Commissioner
Mark W. Everson. “Taxpayers can set up an agreement and arrange for
payment options including automatic payments through direct debit or
estimates that 90 percent of taxpayers who qualify for a payment
agreement will be able to obtain one through OPA once the application is
available to the general public later this year.
for Professional Tax Preparers
If you prepare tax
returns for individuals, you can buy Taxsoftware.com's
package for only $199. That gives you up to 2,000 individual type
(1040/1040A/1040EZ) tax returns with all schedules and states included.
Please click here to find out more.
Returns Have Never Cost So Little
If you prepare business
returns, including corporations, partnerships, trusts, etc, we have this
special business return package
For only $625 you can prepare and e-file 100 business returns of any
There is no time frame, no expiration date.
Click here to know all the details.
Long-Distance Telephone Tax Ends
The IRS will stop collecting the federal excise tax on
long-distance telephone service.
The tax on
telephone services was first imposed in 1898. The current rate is 3% of
the charges billed for these services. The IRS decided to stop
collecting this tax following decisions in five federal appeals courts
holding that the tax does not apply to long-distance service as it is
will be eligible to file for refunds of all excise tax paid on
long-distance service billed to them after Feb. 28, 2003. Interest will
be paid on these refunds.
will claim this refund on their 2006 tax returns. In order to minimize
burden, the IRS expects to provide a simplified method that individuals
taxpayers won’t have to spend time digging through old telephone bills,
we’re designing a straightforward process that taxpayers may use when
they file their tax returns next year,” said IRS Commissioner Mark W.
Everson. “Claiming a refund will be simple and fair.”
excise tax on local telephone service remains in effect. Likewise,
various state and local taxes and fees paid by telephone customers are
Tip Reporting Made Easy
The IRS released formal guidance on its new tip reporting
procedure, the Attributed Tip Income Program (ATIP). ATIP reduces
industry recordkeeping burdens, has simple enrollment requirements, and
promotes reporting tips on federal income tax returns.
provides benefits similar to those of previous tip reporting agreements,
but does not require employers to meet with the IRS to determine tip
rates or eligibility. Employers are not required to sign agreements with
the IRS to participate, and participation by employers and their
employees is voluntary.
who participate in ATIP report the tip income of employees based on a
formula that uses a percentage of gross receipts, which are generally
attributed among employees based on the practices of the restaurant.
participating in ATIP enjoy several benefits:
ATIP is a
three-year pilot program for food and beverage employers. Employers
will participate on an annual basis. The first annual basis begins
January 1, 2007.
Canada Revenue Agency Unravel Cross-Border Tax Scheme
the Canada Revenue Agency (CRA) and the IRS have worked together to
unravel an abusive, cross-border tax scheme. This effort stems from
leads and information first developed by the Joint International Tax
Shelter Information Centre (JITSIC).
involves hundreds of taxpayers and tens of millions of dollars in
improper deductions and unreported income from retirement account
withdrawals. U.S. and Canadian promoters have been marketing the scheme
on both sides of the border to individual investors, ranging from middle
to high-income individuals.
Commissioner Michel Dorais said, “Tax administrations in many parts of
the world are working together to detect and shut down abusive tax
schemes. Promoters who believe they can play one country against another
in developing tax schemes should beware.”
time exchange of information, including the identities of promoters and
hundreds of investors has been critical to this investigation,” said IRS
Commissioner Mark W. Everson. “JITSIC is emerging as an important part
of efforts to combat abusive schemes.”
scheme, investors purchased what appear to be high-yield offshore
investments through offshore corporations and foreign bank accounts.
Typically, investors make these purchases using cash or proceeds from
withdrawals, allegedly tax free, of retirement funds (RRSPs in Canada,
IRAs in the U.S.). Investors also make purchases using tax refunds
improperly generated by alleged losses claimed for natural resource
CRA and IRS
agents continue to identify promoters, participants, and entities
involved in the scheme. Promoters and participants engaged in abusive
schemes routinely have been subjected to strict enforcement action by
both tax administrations.
established in 2004 by the tax administrations of four countries:
Australia, Canada, the United Kingdom, and the United States. Delegates
from each of the four countries work together in Washington, D.C., to
identify and curb abusive tax schemes.