Tag: IRS

On Top of Everything Else, the IRS Isn’t Green Enough

The IRS’ nagging mother-in-law, the Treasury Inspector General for Tax Administration (“TIGTA”) has once again managed to come down on the Service for something else it doesn’t do well – conserve energy.

According to TIGTA’s report, the IRS is implementing environmental management systems at 11 facilities, which will increase operating efficiency, improve environmental performance and reduce environmental impacts.

TIGTA also identified several steps the IRS should take to improve energy efficiency in its data centers, including eliminating gaps between computer room floor tiles that allow hot and cold air to mix, spacing servers in rows to maximize the efficiency of air conditioning, and using occupancy sensors to control lights in computer rooms.

The IRS does not have policies and procedures for improving energy efficiency in its data centers or for implementing data-center energy-efficiency best practices, TIGTA found. This affects the IRS’s ability to minimize energy consumption and costs, resulting in the inefficient use of resources and taxpayer funds.

“It is imperative that the IRS become more energy efficient to save taxpayer dollars and reduce the nation’s consumption of oil, coal, and other natural resources,” said J. Russell George, the Treasury Inspector General for Tax Administration.

The details of the improvements that are quite impressive – gaps in the floor tiles; spacing of servers, etc. Impressive in the sense that if your performance coach/manager was giving you those kinds of suggestions for performance improvement, you’d give them an eyeroll that would cause you to fall backwards in your chair.

Despite the endless stream of criticism, Chief Nag, J. Russell George managed to stop short of asking the IRS to help BP get all that oil out of the Gulf of Mexico.

TIGTA: IRS Can Improve Energy Efficiency at Data Centers [TIGTA PR]
Full Report [TIGTA]

IRS Ruling Gives Same-sex Couples Equal Tax Treatment

Specifically, under a feature of California law that recognizes domestic partnerships gay couples must now combine their income and report half of it on each of their respective returns.


The ruling marks the first time that the IRS has recognized same-sex couples as equal to their heterosexual counterparts for tax purposes. Of the community-property states (i.e. all property and debt is owned equally by a couple) Nevada and Washington also recognize domestic partnerships, so couples there may also be affected.

Gay Couples Get Equal Tax Treatment [WSJ]

New Healthcare Tax Credit Should Help Small Businesses, Nonprofits

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

The Internal Revenue Service recently released some information to help companies take advantage of a tax credit provided by the health reform law.

The IRS estimates that about 4 million businesses qualify, and is sending out notices to as many as possible advising them of the tax break. If you haven’t received anything but believe your company may qualify, here’s what you should know:


The credit is available to companies with fewer than 25 employees with average wages of $50,000 or less. The full credit goes to companies with 10 or fewer employees and average annual wages of $25,000 or less. It is not available to self-employed individuals.

The credit covers 35 percent of an employer’s contribution to employee health premiums, so long as that doesn’t exceed 35 percent of the average cost of a health plan in the small group market. For a tax-exempt organization, the credit is 25 percent. Once the health exchanges are set up, the credit increases to 50 percent for businesses and 35 percent for nonprofits. At that time, the credit will only be available to companies purchasing insurance through the exchange.

A company can use the credit to reduce income tax owed and can carry the credit forward 20 years or back one year after 2010. Nonprofits can use the credit against withholding and Medicare taxes owed on behalf of their employees.

A key caveat is that employers must pay for half of the premium. For most workers, especially low-wage employees, a company that does not pay for at least half the premium is offering insurance that is essentially unaffordable. Even 50 percent is most likely not enough to do low-wage workers much good, especially at small companies where health care premiums are more expensive.

The amount of the credit is based on the premiums an employer pays for, so the more generous the coverage, the greater the credit. While premiums paid for owners and their families cannot be counted, those paid for seasonal workers can be. And the IRS has defined “premiums” broadly: not only does it cover premiums for standard medical insurance but it also applies to dental, long-term care and vision insurance-though again, an employer must pay 50 percent of each premium to count it toward the credit.

Calculating the credit probably requires any small employer to consult an accountant to see if the benefits are worth the cost of providing insurance. The tax credit is in effect, allowing employers who are already thinking about health insurance for their employees to factor in the savings as they plan ahead.

As an observer, I think the key issue is whether the credit is enough to offset the rising cost of health insurance. Those costs have hit small employers the hardest. We’ll see if the tax credit makes a difference in reversing the trend among small employers of dropping health insurance for their employees altogether.

Accounting News Roundup: AICPA vs. IRS on Uncertain Tax Positions; Accountants Involved in Haiti Recovery; Taxing Pot Could Yield $400k for D.C. | 06.02.10

AICPA Protests Disclosures of Uncertain Tax Positions [Web CPA]
The AICPA has come out against the IRS’ uncertain tax positions proposal, saying “it should withdraw its proposed rule that would require companies with more than $10 million in total assets to disclose uncertain tax positions on a new schedule.”

The AICPA is not so hot on the idea of the IRS wading into the financial reporting waters, “We understand that the UTP proposal does not change the underlying rules for financial reporting, but believe overlaying a tax disclosure construct on the financial reporting system introduces a dynamic which could work at cross purposes with the original and fundamental purpose of the financial reporting rules.”


Haitian recovery needs accountants [Accountancy Age]
Nearly five months after the Earthquake in Haiti things are recovering slowly. Financial records for the government and private business have had two considerably different experiences:

[T]he finance ministry’s financial controls and systems are now being restored after its headquarters were destroyed. The World Bank has helped this critical process, placing accounting experts with the ministry.

As for the private sector, Laforest said many companies’ financial systems had survived thanks to accounting software packages, whose data had been uploaded to cloud computing remote data sumps on the internet. But bills, receipts and other paper records vital for making tax returns had been lost where offices collapsed.

And creating proper controls around the donations process has been crucial for organizing those funds. According to one volunteer, “[W]ithout proper controls, the money that you and your friends and your government have given might as well be left in a big bucket in the middle of the market with a sign saying ‘biggest at the front, smallest at the back.’”

Pot could bring in $400K for D.C. [Post Now/WaPo]
The District’s Council is expected to vote on June 15th on a provision that would levy a 6% sales tax on ganj sold there. At an approximate price of $350 an ounce, each bag would yield $21 for DC and would be expected to raise $400k in the next 5 years.

Tweedie replacement must juggle dual roles [Accountancy Age]
The candidates for the IASB chair are dwindling but most people seem to agree that having the role split into “Chair” and “CEO” roles might benefit the Board. “Richard Sexton, head of audit at PwC, suggested the role should be split.” And BDO’s sometime blogger and International CEO Jeremy Newman chimes in, “It’s unrealistic to expect one person to cover both.”

Also, whoever fills the big chair can’t be a über double-entry geek or just a crafty political type to heavy one way or the other. Most think that it needs to be a balance of both, although the preference of which is more important is debatable, including one Deloitte partner’s point of view, “If you don’t understand the accounting, you won’t be able to do the diplomacy around the debate,” versus Grant Thornton, “At this stage in the IASB’s life, we would place political awareness ahead of technical [knowledge] for the chair, but of course the chair must be technically astute.”

Accounting News Roundup: PwC Dealt a Blow on Penn. Healthcare Bankruptcy Ruling; Zipcar Going Public; Altria Gets Smoked by IRS | 06.02.10

PwC loses ruling on big Pa. healthcare bankruptcy [Reuters]
We’re a little late to the party on this one – holiday and all – but we’ll get you caught up. Allegheny Health, Education and Research Foundation (“AHERF”), a large Pittsburgh hospital system, sought Chapter 11 bankruptcy protection in 1998 with over $1.3 billion in debt. Unsecured creditors of AHERF accused Coopers & Lybrand of “conspiring with AHERF officials in the 1996 and 1997 fiscal years to hide the increasingly dire financial health of the Pittsburgh-based system.”

In 2007, a District Court in ruled that the creditors could not recover any damages from PwC on behalf of AHERF due to “a legal doctrine governing cases of equal fault, concluding AHERF was at least as much at fault as PwC.”

The Third Circuit Court of Appeals finally got the case on their docket and unanimously overturned the ruling saying that PwC could be liable if they had “not dealt materially in good faith with the client-principal.” The Third Circuit also disagreed with the lower court’s finding that misstated financial statements could have a short-term benefit to AHERF, saying “‘a knowing, secretive, fraudulent misstatement of corporate financial information’ cannot benefit a company.”


Zipcar Files for a $75 Million I.P.O. [DealBook]
The car-sharing company announced yesterday that it has filed for a $75 million offering to pay off debt and pay for general expenses as it plans to expand its business in the U.S. and Britain. DealBook reports that the company, founded in 2000, has lost money every year and warned in its S-1 filing that it might not become profitable as it incurs significant expenses in the expansion.

Man accused of ‘bomb bag’ threat at IRS office [SF Chronicle]
Lawrence Rios was charged yesterday for allegedly threatening an IRS employee after he handed the woman a note that read “bomb bag” and patted his backpack, insinuating that he had more than trail mix in there, in August of last year. This occurred after the employee had been assisting him for 10 minutes. We’d hate to see how he reacts at the post office.

SEC Is Boosting Scrutiny of Offshore Accounting, Fagel Says [Bloomberg BusinessWeek]
Shoddy accounting practices that were/are rampant in the U.S. – revenue recognition and outright fraud – have not been rooted out offshore, so the Commission is looking to tighten up the controls and practices of foreign subsidiaries. Marc Fagel, head of the SEC’s San Francisco office told Bloomberg, “They’re not doing that so much in San Jose, but they may have a Hong Kong office where they haven’t figured out they’re doing that, or that it’s a problem.” The San Fran office is looking to add a dozen attorneys and accountants to help with the Commission’s efforts.

Altria to pay $971 million in taxes, interest to IRS [Reuters]
The payment settles a dispute between the company (aka Philip Morris) and the Service over its 2000 to 2003 tax returns.

Memo to Rich People: Gird Your Loins for the IRS ‘Wealth Squads’

For those of you keeping score, the ballpark figure of “wealth” is “in the neighborhood of tens of million of dollars,” according to IRS Commish Doug Shulman’s best guess. So if this is you, the time is nigh. You peasants whose net worth falls into the seven figure range probably can rest easy but don’t get too comfortable, you’re still at risk.

And don’t think that this will be a friendly visit between you, your CPA and an IRS representative. No, this will likely be a financial strip search that will be topped off with a latex surgical glove moseying around your nether regions.

This will not be a kick-the-tires type of exam. Instead, think in terms of a major overhaul. Global High Wealth taxpayers and their representatives should expect to confront teams of revenue agents, partnership experts, and international examiners prepared to scrub not only the Forms 1040 and the attached schedules but also any and all related returns. In the background will be specialists in such areas as financial instruments; exempt organizations; retirement plans (whether individually maintained or employer sponsored) and insurance and annuity arrangements.

Granted this is just how Don Rocen, the article’s author (and former deputy chief counsel at the IRS) pictures it but…yeeesh. If you want to come out with your hands up, think they’ll go easy on you?

IRS ‘Wealth Squads’ On The Way [Forbes]

Dear Small Nonprofits, the IRS Still Wants Your 990s

In a show of understanding for nonprofits who may have been completely unaware of the Form 990 requirement in place for the last three years, IRS commissioner Doug Shulman sent out a really sweet letter encouraging smaller NFPs to go ahead and file anyway even though the deadline has come and gone.

Now that the May 17 filing deadline has passed, it appears that many small tax-exempt organizations have not filed the required information return in time. These organizations are vital to communities across the United States, and I understand their concerns about possibly losing their tax-exempt status.

The IRS has conducted an unprecedented outreach effort in the tax-exempt sector on the 2006 law’s new filing requirements, but many of these smaller organizations are just now learning of the May 17 deadline. I want to reassure these small organizations that the IRS will do what it can to help them avoid losing their tax-exempt status.

The IRS will be providing additional guidance in the near future on how it will help these organizations maintain their important tax-exempt status — even if they missed the May 17 deadline. The guidance will offer relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact.

So I urge these organizations to go ahead and file — even though the May 17 deadline has passed.

The Service assures us that the 990 e-Postcard is simple and easy to fill out, no need to drag your CPA into this mess.

Though the IRS sent friendly reminders to 600,000 charities over the 3 years this new rule has been effect, up to 215,000 charities may have missed the May 17th deadline. Seriously, it isn’t too late. Someone get on that.

There were complaints that the IRS was swamped with last-minute 990 filers (go figure) rushing to meet last week’s deadline so we’re going to guess that when Shulman says it’s okay to send those forms in anyway, he kind of means it. And perhaps that will teach everyone to file on time next year.

Adrienne Gonzalez is the founder of Jr. Deputy Accountant, a former CPA wrangler and a Going Concern contributor . You can see more of her posts here.

Accounting News Roundup: Grant Thornton Moves DC Office; CPAs Are Less Clueless on IFRS; The IRS Wins Twice | 05.25.10

Grant Thornton moves D.C. office [Washington Business Journal]
GT DC is moving from its cushy confines of 19,450-square-feet at 1900 M St. NW to 15,190-square-feet at 1250 Connecticut Ave. NW.

Mary Moore Hamrick, the company’s national managing principal of public policy thinks this move is crucial saying, “Grant Thornton’s public policy group is taking a more proactive role in shaping the dialogue on accounting issues. This move will support the public policy group’s expansion as we seek to do our part in restoring confidence in the capital markets.” Better feng shui probably.


AICPA Survey Shows US CPAs Gaining in Awareness of International Financial Reporting Standards [AICPA Press Release]
CPAs are less clueless on IFRS, sayeth the AICPA:

The latest AICPA tracking survey shows a sustained shift toward greater awareness of International Financial Reporting Standards (IFRS) among U.S. accountants. Nearly half, 47 percent, of CPAs in the survey conducted April 20 to May 7 said that they already have basic knowledge of IFRS, an advancement from 39 percent who had basic knowledge in October 2008. At the same time, there has been a continuing decline in the number of CPAs who say they have no knowledge of IFRS; 16 percent in the latest survey, down from 30 percent in October 2008.

U.S. Supreme Court upholds IRS power in tax case [Reuters]
Those super secret corporate legal documents that discuss contingent liabilities? The IRS may be able to request them whenever they like, as the Supreme Court upheld a First Circuit ruling by denying certiorarit in the case.

In U.S. v. Textron, Inc., the company claimed that such documentation was privileged. The First Circuit disagreed:

[I]n its ruling against Textron, set a new test, under which every party in commercial litigation whose opponents file financial statements with contingent liabilities for litigation will be able to obtain documents detailing such exposure, according to Douglas Stransky, an attorney at Sullivan and Worchester in Boston who represents corporate clients.

“The First Circuit’s decision has eviscerated the work product protection that exists to protect exactly the type of attorney analysis that was present in this case,” he said. “It’s surprising that the Supreme Court did not recognize this.”

Florida Keys inmate pleads guilty in IRS scam [Miami Herald]
Shawn Clarke, an inmate at a Florida prison, pleaded guilty to conspiracy yesterday as the ringleader to a tax fraud scam in which he requested bogus refunds from the IRS in the amount of $115,000. It wasn’t exactly a complicated scam, as the inmates and their family members submitted 1040EZ forms along with Form 4852 to request the refunds, all for around $5,000.

Clarke was convinced that this was the best idea ever, allegedly saying, “I’m through with the street crime. I’m strictly white collar from now on. I love the IRS.” He’s looking at an additional 10 years.

Accounting News Roundup: Cassano Dodges Criminal Charges; Mary Schapiro Acknowledges Some ‘Convergence Gaps’; IRS Audits of Colleges May Look at Coaches Salaries | 05.24.10

Crisis Probes Fail to Meet High Bar [WSJ]
Late on Friday, former AIG executive Joseph Cassano learned that he wouldn’t face criminal charges for his actions as the head of the company’s Financial Products division. According to the Journal, prosecutors did come close to filing criminal charges against Cassano and others but it was felt that the high burden of proof that “there was criminal intent behind executives’ decisions and that they intentionally misled investors” could not be met.

The government isn’t quite finished with Cassano, as he still may face civil charges from the SEC, which has a lower standard of proof.


The SEC’s Mary Schapiro on the Myths of GAAP/IFRS Convergence: The Lady Doth Protest Too Much [Re:Balance]
Jim Peterson took a closer look at Mary Schaprio’s speech at the annual conference of Chartered Financial Analysts where she mentioned IFRS but also convergence efforts between the IASB and the FASB. The SEC has maintained that convergence should be the initial goal for reporting standards.

Jim is concerned that the gap between the ultimate goal of convergence and the reality of some of the key issues at stake are no small feat:

There is, indeed, no more eloquent concession of the “convergence gap” than Schapiro’s own admission that “US GAAP and IFRS are currently not converged in a number of key areas,” including “the accounting for financial assets (the very types of securities at the center of the financial crisis), revenue recognition, consolidation principles, and leases.”

Any other problems, Madame Chairman? These on her list are so comprehensively grave that they will keep the international standards standoff alive until the end of time.

Which would put IFRS on a even longer track to adoption.

IRS audits of schools might delve into salaries of coaches [USAToday]
The IRS’ interest in the determination of the highest paid employees for colleges and universities has a few people worried. Not necessarily because anything is wrong but because the IRS is just a scary beast, “John D. Colombo, a University of Illinois law professor who has written about tax exemption and college athletics, says he doesn’t think the IRS action will fundamentally alter college athletics business. But he adds, ‘Audits are never comfortable. Just the IRS being there asking questions makes people nervous.'”

Primarily, the IRS is concerned over the business activities that higher education institutions engage in that aren’t “related to the schools’ primary purpose.” The interest in athletic coaches’ salaries is such that these individuals are often some of the highest paid employees of the school. The IRS is interested in how colleges and universities justify these salaries and to ensure that corporate sponsorships (not considered to be a business activity) are complying with certain rules so they are not considered advertising revenue.

Just So You’re Aware: An Ex-IRS Agent Has a Reality TV Show

A taste of the June 6th premiere of The IRS (+) Hitman:

And if you think that’s interesting, there’s more:

Is there a complete sentence in there somewhere? Try the next one.


You hear that? How can you live with yourselves IRS? Stealing money from this Jonas Brothers wannabe family that won’t be able to stand around the kitchen eating cheese whiz out of the jar with their hands! No mercy indeed. If you have an IRS injustice story, you better get in touch with this Hitman character.

Wanted by America, the IRS (+) Hitman Reality TV Show is Here [PR]

IRS Asked to Crack Down on Church’s ‘Troubling Tweets’

You house of worship types are probably used to hearing politically toned sermons coming from your clergy(wo)man but a nonprofit holy house flat out telling its congregation, “Get out there and vote for [candidate soon-to-be caught up in a lurid sex scandal]!” would be venturing into some tricky waters.

Well, the Americans United for Separation of Church and State seems to have caught wind of a church who ventured. The AU claims that the Oasis Church in Los Angeles was openly supporting its Director of Social Justice’s, Alex Jones-Moreno run for reelection to the Greater Wilshire Neighborhood City Council on its website and on Twitter:


Americans United was not amused by this, sending a complaint to the IRS and putting out a press release:

“Oasis Church’s appeals might have been innovative, but they still violate the law,” said the Rev. Barry W. Lynn, executive director of Americans United. “Federal law bars churches and other tax-exempt non-profits from electioneering. The IRS should crack down on these troubling tweets.”

We called the IRS in Los Angeles, who was not aware of the story and we were told the usual yarn of “we can’t comment on individual tax cases,” which we were expecting but the IRS PR folks are always nice people and we like a pleasant voice every now and again.

Anyhoo, we did stumble across the IRS Tax Guide for Churches and Religious Organizations, that says the following on page 5 (our bolding):

Churches and religious organizations, like many other charitable organizations, qualify for exemption from federal income tax under IRC section 501(c)(3) and are generally eligible to receive tax-deductible contributions. To qualify for tax-exempt status, such an organization must meet the following requirements (covered in greater detail throughout this publication):

• the organization must be organized and operated exclusively for religious, educational, scientific, or other
charitable purposes,
• net earnings may not inure to the benefit of any private individual or shareholder,
• no substantial part of its activity may be attempting to influence legislation,
• the organization may not intervene in political campaigns, and
• the organization’s purposes and activities may not
be illegal or violate fundamental public policy.

Now whether Tweeting = “intervene” we’re not sure but Americans United certainly seems to think so. We’d invite any tax-exempt experts to weigh in.

A message left at Mr Jones-Moreno’s Oasis office was not immediately returned.

Americans United Asks IRS to Investigate Los Angeles Church That ‘Tweeted’ Candidate to Victory [AU]

Who Wants to Buy John Daly’s House (Sans Kegerator)?

If you feel like nothing in life is ever certain, know this – John Daly will always be a weight fluctuating, chain-smoking, boozehound. And every once in awhile, he’ll have some serious money trouble or just go completely broke.

This is usually followed up with a major win which is then followed up by a total blow-up at the next tournament that may or may not involve Big John ending up passed out pantless on the 18th green in the middle of the night.


The guy has managed to make $9 million throughout his career yet still owes the IRS over a $1 million in back taxes for ’07 and ’08, according to a lien filed with filed by the Service with Shelby County.

His house in Memphis is apparently for sale, for just a smidge under $700k. So if you’re in the market, help the guy out.

Judging by the pics, you’ll have to schlep in your own kegerator and you’ll likely have to replace the carpet due to the ubiquitous cigarette burns but it still looks like a pretty nice pad.

IRS grips, rips golfer John Daly [Tax Watchdog]