Woodland Hills CPA, Accounting Services

Eight Facts on Penalties For Filing Late Tax Returns – Tax Year 2010

When it comes to filing a tax return – or not filing one – the IRS can assess a penalty if you fail to file, fail to pay or both. Here are eight important points the IRS wants you to know about the two different penalties you may face if you do not file or pay timely.

1. If you do not file by the deadline, you might face a failure-to-file penalty. If you do not pay by the due date, you could face a failure-to-pay penalty.
2. The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return on time and explore other payment options in the meantime. The IRS will work with you.
3. The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.
4. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
5. If you do not pay your taxes by the due date, you will generally have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.
6. If you timely filed a request for an extension of time to file and you paid at least 90 percent of your actual tax liability by the original due date, you will not be faced with a failure-to-pay penalty if the remaining balance is paid by the extended due date.
7. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.
8. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.

Additional Link: Avoiding Penalties and the Tax Gap

Source: http://www.irs.gov/newsroom/article/0,,id=205326,00.html

The EEOC is beginning a new, periodic retrospective review of its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed, to make the EEOC’s regulatory program more effective and/or less burdensome in achieving its regulatory objectives. The EEOC is acting pursuant to Executive Order 13563, which applies across the federal government. 76 Fed. Reg. 3821 (Jan. 21, 2011), http://federalregister.gov/a/2011-1385.

The EEOC’s mission is to promote equality of opportunity in the workplace and enforce federal laws prohibiting discrimination in employment. Our regulatory program supports effective enforcement of six employment nondiscrimination laws:

• Title VII of the Civil Rights Act of 1964, as amended;
• the Equal Pay Act of 1963, as amended;
• the Age Discrimination in Employment Act of 1967, as amended;
• Titles I and V of the Americans with Disabilities Act, as amended;
• Sections 501 and 505 of the Rehabilitation Act, as amended; and
• Title II of the Genetic Information Nondiscrimination Act.

Input on EEOC’s Plan for Retrospective Review of its Significant Regulations

The EEOC wants your help in designing our plan for this review.  For example, you may have suggestions about factors we should consider in doing the review, or about the process we should use to select rules for review.  Or, you may believe that the review should be focused on particular types of regulations.  Ultimately, our plan must be integrated with other existing legal requirements for regulatory reviews.  (For example, the Regulatory Flexibility Act, 5 U.S.C. § 610, requires agencies to publish in the Federal Register a plan for periodic review of the rules issued by the agency which have or will have a significant economic impact upon a substantial number of small entities. This provision calls for review of agency rules every ten years.) It also will be tailored to reflect our resources and rulemaking priorities.

Input Regarding Specific Regulations

We are interested in what you think should be included in EEOC’s initial list of regulations for review over the next two years. You can offer input on specific regulations including:

• why you believe the regulation should be modified, streamlined, expanded, or repealed;
• any available data on the costs and benefits of the regulation; and
• how we can better achieve the regulation’s objective.

We are accepting your comments from now through March 22, 2011. Late-filed comments will be considered to the extent practicable. We will not be able to acknowledge individual comments, but we value your input and will give your ideas careful consideration. We plan to post the retrospective review plan on this website.

Thank you in advance for your input on this important effort.

Please submit all public comments to Public.Comments.RegulatoryReview@eeoc.gov.

(The Accounting Today Top 100 Firms, 2011 edition)

So, when’s the rebound?

The revenue decline is the second in a row for the profession’s largest firms, prompting Accounting Today managing editor Daniel Hood to liken the conditions to a “deep freeze.”

Although the top-line shrinkage is slowing, firms continue to cut back partners and staff. Forty-four firms report flat or declining revenue in the 2011 Top 100, up from 34 in the 2010 Top 100;  and 62 report flat or declining staff numbers, against 53 the previous year.

“Staring down the often lethal combination of a rough economy and increased competition, many in the 2011 class of the T100 struggled to at least maintain flat revenues over the prior year — with mixed success,” editor-in-chief Bill Carlino says in his introduction to the 32-page special report.

The bigger the firm, the tougher the year:

• Only Deloitte, No. 1 in the rankings with $10.9 billion in revenue, could boast of revenue gains — up 2%.
• You need to go to the 14th spot on the list to find the next firm with positive results — Marcum, up 7% to $251 million. And then skip a few rungs to LarsonAllen at 18th, Reznick at 21st, and Eide Bailly at 24th.
• In all, 43 of the the top 100 suffered revenue declines; 19 of them were among the top 25.
• 37 firms cut partners; 16 of them were among the top 25 firms.
• 54 firms cut professionals; 19 in the top 25.

The biggest losers:

1. UHY Advisors, down 13%, to $205 million.
2. Mohler, Nixon & Williams, -10%, $33 million.
3. Anchin, Block & Anchin, -8%, $89 million.
4. Baker Tilly Virchow Krause, -8%, $238 million.
5. Ernst & Young, -7%, $7.1 billion
6. Aronson, -7%, $57 million.
7. SVA, -7%, $45 million.
8. Holtz Rubinstein & Reminick, -7%, $33 million.
9. Joseph Decosimo & Co., -6%, $38 million.
10. Kaufman Rossin & Co., -6%, $44 million.

Overall, the top 100 firms garnered $42.6 billion in revenue, down 2% from the year before; and total employment sank about 1%, to 184,429 partners and professionals.

Accounting Today Magazine Online, Washington, D.C. (March 15, 2011);  Written By: Michael Cohn

The Internal Revenue Service has paid a $1.1 million reward to an anonymous whistleblower for information that exposed an alleged tax fraud scheme by Enron, Bankers Trust and others before the company collapsed.

It is one of the few whistleblower rewards the new IRS Whistleblower Office has made since Congress created the IRS Whistleblower Office and a new tax whistleblower program in 2006. The IRS made the award under the previous whistleblower program (known as the IRS 211 program), which allowed the IRS to award whistleblowers nothing or up to 15 percent of the tax funds the IRS recovered as a result of the whistleblower’s information.

The whistleblower, a Wall Street banker who has chosen to remain anonymous to protect his job and career, received the maximum reward of 15 percent. The announcement of the reward was made by the law firm that represented him, Phillips & Cohn LLP.

“Enron was able to inflate its book earnings due to abusive tax shelters allegedly set up with the help of Wall Street banks,” said Erika A. Kelton, a Washington, D.C., attorney with Phillips & Cohen. “My client’s knowledge of how Wall Street operates and his unflagging persistence in convincing the IRS to investigate Enron were instrumental in the government’s recovery.”

The whistleblower first provided the IRS with detailed information in 1999 about abusive tax shelters that Bankers Trust and other Wall Street firms allegedly helped Enron create that allowed Enron to operate tax free while lying about its reported profits for years before Enron declared bankruptcy in 2001. The shelters, including one nicknamed “Project Cochise” and another called “Project Steel,” involved artificial duplication of tax deductions so that Enron would generate fictitious pre-tax income on its financial statements.

The tax fraud allowed Enron to evade taxes on more than $600 million of taxable income, resulting in more than $200 million of federal tax savings and the bogus reporting of over $300 million of financial accounting income. The IRS was able to recover only a percentage of taxes and penalties owed due to Enron’s bankruptcy.

“If the IRS had pursued this information in 1999 when my client first informed them of these abusive tax shelters, the government might have realized the depth of Enron’s problems and perhaps taken steps that might have helped avoid a total meltdown,” Kelton said.

The whistleblower testified anonymously in 2004 before the Senate Finance Committee about problems with the IRS whistleblower program at that time. He said the greatest problem was “the agency’s resistance to take seriously outside information from knowledgeable insiders.”

“There are still pockets of strong institutional resistance to whistleblowers at the IRS,” said Kelton. “The IRS Whistleblower Office works extremely hard to investigate and pursue whistleblower claims. But they are only one office in a vast bureaucracy.”

The Tax Relief and Health Act of 2006, enacted after Phillips & Cohen’s client notified the IRS about Enron’s abusive tax shelters, requires that whistleblowers receive 15 percent to 30 percent of the amount the IRS recovers if the tax fraud or tax underpayments exceed $2 million (including penalties and interest).

As first read on: http://www.accountingtoday.com/news/Enron-Whistleblower-Scores-Reward-IRS-57636-1.html?ET=webcpa:e1343:206946a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_031611

As first read on Accounting Today Magazine, Online Ed.

New York (March 14, 2011), Written By Michael Cohn

With the tax benefits of the 2009 stimulus ebbing, the tax burden is pushing slowly higher and is now at its highest level in two years, according to Deloitte. As the economy improves, more households are pushed into higher tax brackets, raising the government’s take, the firm found.

The Deloitte Consumer Spending Index rose in February, driven primarily by the slight improvements in real home prices and initial jobless claims.  The index attempts to track consumer cash flow as an indicator of future consumer spending.

“Despite the small gains in the index, the recent sharp rise in energy prices could weaken consumer purchasing power in the months ahead,” said Deloitte chief economist Carl Steidtmann, the author of the monthly index. “The stabilization in real home prices may also be temporary given the persistent strain on the housing market. On the upside, should the slow but steady improvement in employment continue, it may help offset price increases.”

The index, which comprises four components — tax burden, initial unemployment claims, real wages, and real home prices — rose to 4.02 percent, from an upwardly revised gain of 3.92 percent a month ago.

“Unsurprisingly, some retailers are concerned about rising costs and whether they can avoid passing them on to consumers,” said Deloitte LLP vice chairman and retail sector leader Alison Paul. “Retailers should consider costs across the entire supply chain, from strategic sourcing at the back end to the technologies and analysis they use for monitoring inventories and product movement at the front end.”

Initial unemployment claims continued to improve, albeit at a slower pace. The four- week average for claims is right at 400,000. Moving below this level would be a sign of significant improvement in the labor market.

Wage growth, adjusted for inflation, ticked up in February. Future gains are at risk from rising energy prices.

Inflation-adjusted prices for new homes were up slightly from a year ago. Prices for existing homes continue to be well below the replacement cost of homes, keeping a lid on home construction and new home prices.

http://www.accountingtoday.com/news/More-Households-Higher-Tax-Brackets-57614-1.html?ET=webcpa:e1341:206946a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_031411