AICPA Tax Insider

Since the early 1980s, there has been a plethora of recommendations about how to reduce the tax gap. Many changes have been enacted, yet the gap grows. Proposals requiring additional information reporting or withholding are usually overlooked despite evidence that these techniques result in a low tax gap for wage earners. However, a significant information reporting rule was enacted in 2008. Its enactment though, seems to be more a result of its revenue potential than its role in a comprehensive tax gap reduction strategy.

Below, we'll review… more

As far back as 1872, when Montgomery Ward issued its first mail-order catalog, vendors have sold to customers without being physically present in the customer’s state. Although sales taxes have existed since the 1920s, we have no effective system for collecting sales-and-use tax on sales by remote sellers.

Today we’ll look closer at the history of the remote sales tax issue, clarify New York’s law change and note possible solutions.

Interstate Sales Tax History

As a 1965 congressional report noted: “The present system of State taxation as it affects… more

A Department of Labor retirement guide notes: “For many Americans, retiring in this new century is a mystery.” They’re living longer, they’re more personally responsible for their own retirement savings and they have many more savings options than previous generations did, which exacerbate the confusion. In June 2008, a House Ways and Means Subcommittee hearing explored options for expanding IRA participation. This article presents data about the mystery and IRA participation, highlights of the hearing and considerations for reform.

For general information about… more

The 1984 Treasury Department report (PDF) that laid the foundation for the base broadening and rate reductions of the Tax Reform Act of 1986, called for complete repeal of the itemized deduction for state and local taxes. Citing similar reasons, the 2005 final report of the President’s Advisory Panel on Federal Tax Reform also called for repeal. Yet, there are also proposals to make permanent the ability to deduct either state income or sales tax (for… more

In recent years, there have been enactments and proposals for a variety of new taxes at both the U.S. state and local levels. A key impetus for these changes is the need for more revenue to fund state and local governments. While existing taxes could be increased to generate revenue, other sources have been considered for a variety of reasons. This article looks at a few recent examples and how they stack up under the principles of good tax policy.

Examples

Sources… more

While tax season tests our technical tax knowledge daily, here is an opportunity to take a break and test your knowledge about our federal tax system.

Answers to this quiz can be found at the bottom of this article.

Questions IRS tax revenue collections for fiscal year 2006 were approximately $______ trillion. The individual income tax was the largest portion of these tax collections, representing ___% of the total. For 2005, _____ million individual tax returns were filed… more

The current crop of Presidential candidates sound a lot like they did in prior years with promises of new targeted tax breaks, loophole closures, increased taxes on the rich and new spending programs. Have the candidates not read the doom and gloom budget reports from the Government Accountability Office (GAO), Congressional Budget Office (CBO) and others?

The fiscal agenda for the next President and Congress must include some very difficult decisions that go beyond just tweaking the tax system. Below,… more

The Internet has become ubiquitous for much of the population, but your clients may not be aware that their Web activities could produce tax liabilities and some may change in their individual tax status (for example, to sole proprietor). As a practitioner, you need to remind your clients to ensure that all of their Internet-related income is reported and that they are compliant with all relevant taxes. This article provides a set of questions to aid in this endeavor.

Proper classification of workers for tax purposes is important as different rules apply to employees versus independent contractors. Contractors may deduct expenses for adjusted gross income (AGI), owe self-employment tax and take advantage of tax-favored benefit plans for those who are self-employed. Employees have unemployment benefits, split payroll taxes with the employer and can be covered under employer-provided benefit plans.

Some employers misclassify workers to reduce employment tax liabilities. Tax compliance by contractors is not as high as it is for… more

On October 25, 2007, House Ways and Means Committee Chair Charles Rangel introduced H.R. 3970 (text, summary (PDF)), the Tax Reduction and Reform Act of 2007, a bill he informally calls the “mother of all tax reforms.” Based on what we have learned from the last major reform effort -- the Tax Reform Act of 1986, are we likely to see H.R. 3970 enacted?

Strategy

Briefly described below are actions and techniques that can improve the chances… more