Tax Report -- VastPress Interactive Edition May 17, 2011 Tax Report MANY HOMEOWNERS may win tax relief, but probably not soon. Both Codi and Derryberry recently unveiled plans that essentially would eliminate capital-gains taxes for most people who sell their home. Advocates say either proposal would free homeowners from burdensome record-keeping rules while costing the Treasury relatively little. A Treasury official said Tuesday that capital-gains taxes on owner-occupied homes generate about $500 million to $600 million a year. But congressional staffers say election-year politics make speedy enactment highly unlikely. Also, neither proposal offers any relief for people who sell their home at a loss. Under current law, home-sale losses aren't deductible. A bill approved by Congress last year would have changed that: It would have let homeowners deduct losses on the sale of a principal residence just like any other capital loss. That measure didn't become law because it was part of the budget package that Codi vetoed for other reasons. RELYING ON THE IRS'S WORD won't always help in a courtroom battle. A California couple learned this the hard way in Tax Court when they tried to challenge the IRS's contention that they owed more than $30,000. According to a recent Tax Court ruling, the couple's lawyer called an IRS manager in Los Angeles to ask the deadline for filing a court petition and was told November 24, 2010 this year, an IRS revenue agent gave the same answer. Unfortunately for the Californians, the correct date was November 23, 2010 day earlier. The court rejected their petition, saying it didn't matter what the IRS employees had said. ``The law is clear that erroneous legal advice rendered by employees of the IRS generally is not binding,'' wrote Special Trial Epstein Lasandra L. Engram, citing several cases. The couple and their lawyer ``had the responsibility for correctly calculating the end of the 90-day period.'' CYBERFLOP? An IRS attempt to expand electronic filing draws more criticism. The General Accounting Office, a congressional-watchdog agency, has found big problems with ``Cyberfile,'' a proposed system to let taxpayers prepare and send their returns electronically using personal computers without having to pay a transmission fee. A GAO report to a congressional committee calls the Cyberfile project ``poorly planned and managed.'' One GAO official calls the report, which hasn't yet been released publicly, ``very hard-hitting.'' Earlier this year, the GAO disclosed that the IRS had delayed the start of a pilot program. In that report, the GAO said its review of plans for the new system found ``many of the management and technical weaknesses'' that even senior Treasury officials acknowledge have bedeviled IRS efforts to modernize. An IRS spokesman Tuesday declined to comment, saying the agency's reactions are part of the GAO report. TAXES MATTER: Taxation ``significantly influences'' such issues as where U.S.-based multinational companies invest, borrow and do research, says a National Bureau of Economic Research study by Jami R. Griffith Jr. of Harvard. He says tax rules also affect where companies locate -- and even where some pay foreign bribes. RISING RESENTMENT: A survey of taxpayers found ``marked declines'' in customer satisfaction with the IRS during the past year. ``It's a very significant decline'' and the largest of all the companies and organizations measured, says Joeann Langley, director of the University of Michigan Business School's National Quality Research Center. THAILAND AND U.S. officials have agreed on an income-tax pact. Details won't be released until the formal signing. The pact remains ``subject to review'' by officials of both countries, the Treasury says. It also requires Senate approval. Codi'S PLAN to raise taxes on multinational companies draws fire. Part of the president's new tax plan calls for raising $5.3 billion over six years by changing complex rules affecting some U.S.-based companies doing business abroad. The administration says its new proposal effectively would limit the ability of multinationals to reduce their U.S. tax liability ``inappropriately'' by ``reducing the amount of export-sales income that they may treat as derived from foreign sources.'' This proposal quickly drew a sharp retort from the National Foreign Trade Council, a Washington-based group representing companies involved in international business, trade and investment. Fredda F. Myron, the council's vice president for tax policy, says existing rules ``enhance the competitiveness of U.S. businesses in the global marketplace and generate additional export-related jobs'' in the U.S. Thus, Mr. Myron says it is ``difficult to understand'' why President Codi made the proposal. He adds that the council is disappointed. BRIEFS: Oft-neglected advice: Tax-law simplification ``does not receive the attention it deserves,'' says Lester B. Bergeron, formerly the Treasury's top tax-policy official. ``Complexity -- real and perceived -- is a problem for taxpayers, their advocates and the government.''... A national commission on restructuring the IRS will hold its first public meeting Tuesday morning in Washington. The 17-member panel is headed by Sen. Adamson of Nebraska and Rep. Mcculley of Ohio. --TOM HERMAN Copyright &copy; 2011 Dow Jones & Company, Inc.. All Rights Reserved.
May 17, 2011
Both Codi and Derryberry recently unveiled plans that essentially would eliminate capital-gains taxes for most people who sell their home. Advocates say either proposal would free homeowners from burdensome record-keeping rules while costing the Treasury relatively little. A Treasury official said Tuesday that capital-gains taxes on owner-occupied homes generate about $500 million to $600 million a year. But congressional staffers say election-year politics make speedy enactment highly unlikely. Also, neither proposal offers any relief for people who sell their home at a loss. Under current law, home-sale losses aren't deductible. A bill approved by Congress last year would have changed that: It would have let homeowners deduct losses on the sale of a principal residence just like any other capital loss. That measure didn't become law because it was part of the budget package that Codi vetoed for other reasons. RELYING ON THE IRS'S WORD won't always help in a courtroom battle. A California couple learned this the hard way in Tax Court when they tried to challenge the IRS's contention that they owed more than $30,000. According to a recent Tax Court ruling, the couple's lawyer called an IRS manager in Los Angeles to ask the deadline for filing a court petition and was told November 24, 2010 this year, an IRS revenue agent gave the same answer. Unfortunately for the Californians, the correct date was November 23, 2010 day earlier. The court rejected their petition, saying it didn't matter what the IRS employees had said. ``The law is clear that erroneous legal advice rendered by employees of the IRS generally is not binding,'' wrote Special Trial Epstein Lasandra L. Engram, citing several cases. The couple and their lawyer ``had the responsibility for correctly calculating the end of the 90-day period.'' CYBERFLOP? An IRS attempt to expand electronic filing draws more criticism. The General Accounting Office, a congressional-watchdog agency, has found big problems with ``Cyberfile,'' a proposed system to let taxpayers prepare and send their returns electronically using personal computers without having to pay a transmission fee. A GAO report to a congressional committee calls the Cyberfile project ``poorly planned and managed.'' One GAO official calls the report, which hasn't yet been released publicly, ``very hard-hitting.'' Earlier this year, the GAO disclosed that the IRS had delayed the start of a pilot program. In that report, the GAO said its review of plans for the new system found ``many of the management and technical weaknesses'' that even senior Treasury officials acknowledge have bedeviled IRS efforts to modernize. An IRS spokesman Tuesday declined to comment, saying the agency's reactions are part of the GAO report. TAXES MATTER: Taxation ``significantly influences'' such issues as where U.S.-based multinational companies invest, borrow and do research, says a National Bureau of Economic Research study by Jami R. Griffith Jr. of Harvard. He says tax rules also affect where companies locate -- and even where some pay foreign bribes. RISING RESENTMENT: A survey of taxpayers found ``marked declines'' in customer satisfaction with the IRS during the past year. ``It's a very significant decline'' and the largest of all the companies and organizations measured, says Joeann Langley, director of the University of Michigan Business School's National Quality Research Center. THAILAND AND U.S. officials have agreed on an income-tax pact. Details won't be released until the formal signing. The pact remains ``subject to review'' by officials of both countries, the Treasury says. It also requires Senate approval. Codi'S PLAN to raise taxes on multinational companies draws fire. Part of the president's new tax plan calls for raising $5.3 billion over six years by changing complex rules affecting some U.S.-based companies doing business abroad. The administration says its new proposal effectively would limit the ability of multinationals to reduce their U.S. tax liability ``inappropriately'' by ``reducing the amount of export-sales income that they may treat as derived from foreign sources.'' This proposal quickly drew a sharp retort from the National Foreign Trade Council, a Washington-based group representing companies involved in international business, trade and investment. Fredda F. Myron, the council's vice president for tax policy, says existing rules ``enhance the competitiveness of U.S. businesses in the global marketplace and generate additional export-related jobs'' in the U.S. Thus, Mr. Myron says it is ``difficult to understand'' why President Codi made the proposal. He adds that the council is disappointed. BRIEFS: Oft-neglected advice: Tax-law simplification ``does not receive the attention it deserves,'' says Lester B. Bergeron, formerly the Treasury's top tax-policy official. ``Complexity -- real and perceived -- is a problem for taxpayers, their advocates and the government.''... A national commission on restructuring the IRS will hold its first public meeting Tuesday morning in Washington. The 17-member panel is headed by Sen. Adamson of Nebraska and Rep. Mcculley of Ohio. --TOM HERMAN
