Tax News

CCH (cch.taxgroup.com) reports:

The Streamlined Sales Tax (SST) Governing Board resolved one of its two most enduring controversies, the treatment of digital products, but failed to reach agreement on the other, an alternative to the current sourcing provisions, during its meeting in Kansas City, Kansas, September 19-20, 2007. The meeting also saw the admission of two more states to full membership and leadership changes in the key constituent organizations. Kansas Secretary of Revenue Joan Wagnon is the incoming President of the Governing Board and the Council on State Taxation's Stephen Kranz is the new President of the Business Advisory Council (BAC).
With her term coming to an end, Diane Hardt, Wisconsin Department of Revenue, stepped down as chair of the State and Local Advisory Council (SLAC). Wagnon will appoint her successor. Hardt, who also co-chaired the SLAC's predecessor, the Streamlined Sales Tax Project (SSTP), from its inception over seven years ago, said the group had "set an example" for similar efforts in state government and urged participants to "keep an eye on the big picture" as they continue their work. She will continue to be involved in the SLAC and the Board as a delegate from Wisconsin.

CCH (cch.taxgroup.com) reports:

Answers to frequently asked questions (FAQs) received by the IRS about the new reporting requirements for small tax-exempt organizations are now available on the Service's website (http://www.irs.gov/charities/article/0,,id=173864,00.html). The IRS admits within these FAQs that some small tax-exempts have been confused over the new reporting requirements imposed by the Pension Protection Act of 2006 (PPA) (P.L.109-280) effective for tax years ending after December 31, 2006. It stated that the new FAQs were released to help clarify the new requirements. The FAQs review those circumstances in which small tax-exempts are required to use new electronic Form 990-N, Electronic Notice (e-Postcard) For Tax-Exempt Organizations Not Required To File Form 990 or 990-EZ, as well as the consequences of failing to file.
New Requirement
Small tax-exempt organizations, for purposes of the new filing requirements, are those tax-exempts with gross receipts of $25,000 or less. Ordinarily, these organizations are not required to file a Form 990, Return of Organization Exempt From Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt From Income Tax. However, subject to several exceptions, the PPA now requires them to file an electronic Form 990-N. The form must be filed electronically by the 15th day of the fifth month after the close of the organization's tax period. The IRS began mailing educational letters to over 650,000 small tax-exempts in July of this year to warn about this new requirement.
Exempt Status At Risk
The IRS warns small tax-exempts that the PPA
requires the Service to automatically revoke the tax-exempt status of any organization failing to meet its annual filing requirement for three consecutive years. Small tax-exempts may meet this requirement by filing the new Form 990-N or by filing either of the full-fledged Forms 990 or 990-EZ. The IRS further warns that failing to file under one of these options for three consecutive years will trigger the need for reinstatement of tax-exempt status. Reinstatement requires an application, as well as payment of user fees. The entity must make such application for reinstatement using Form 1024, Application For Exemption Under Section 501(a).
By Torie Cole, CCH News Staff

CCH (cch.taxgroup.com) reports:

The Senate Finance Committee on September 21 approved the tax titles to two separate pieces of legislation: the American Infrastructure Investment and Improvement Bill, which would reauthorize the Airport and Airway Trust Fund (AATF), and the Habitat and Land Conservation Bill of 2007, which would provide tax incentives for farmers, ranchers, and private landowners. The FAA legislation was approved 16 to 5, and the conservation measure was ordered reported by voice vote.
The FAA mark would reauthorize the AATF through 2011, adding approximately $430 million each year to fund the satellite-based NextGen air traffic system and to fill 2009 shortfalls of approximately $5 billion in the Highway Trust Fund. Approximately $250 million of the additional $400 million in funds will come from General Aviation, or private jets, with the rest provided through commercial carriers. Compensation for a shortfall in the Highway Trust Fund would come through replenishing emergency spending from the fund, suspending transfers from the fund for certain repayments and credits and anti-fuel fraud provisions.
The nearly $3.2 billion in tax provisions found in the Habitat and Land Conservation Bill of 2007 would be used to permanently extend tax incentives for farmers, ranchers and other eligible taxpayers who establish conservation easements and to establish tax credits for taxpayers who take voluntary measures to help protect and restore the habitats of threatened or endangered species. The funds would also be used to cover a tax deduction for the cost of specific actions taken by taxpayers that are recommended in habitat recovery plans approved under the Endangered Species Act.
In addition, the measure would allow taxpayers to exclude from taxable income any payments received from the federal government under certain cost-sharing conservation programs and would extend a provision to allow taxpayers to fully deduct the costs of environmental cleanups in the year the costs are incurred. The cost of the measure is offset by revenues from increasing restrictions on so-called sale-in, lease-out transactions (SILO).
Senate Finance Committee ranking member Charles E. Grassley, R-Iowa, said that, while he supports the conservation legislation, more action is needed in tax law enforcement. "While I am willing to have the committee act on this legislation today, I will not be comfortable with further action until I am confident more has been done to address the ongoing abuses that IRS and Treasury have reported in the area of conservation easements," he said.
Prior to the markup, Senate Finance Committee Chairman Max Baucus, D-Mont., consulted with Finance members on modifications to the original Chairman's Mark of the air and highways bill that was released on September 17. The changes included: authorization for the use of Highway Trust Funds specifically to address the Minnesota I-35 bridge collapse, a Truth in Passenger Tax Disclosures provision preventing airlines from presenting fuel surcharges as government-imposed taxes, a requirement that new accruals in air carrier pension plans must be funded, Liberty Zone incentives for New York City, and exemptions for some shippers from the harbor maintenance tax at U.S. ports in the Great Lakes/St. Lawrence Seaway system. Some technical corrections were included as well. The committee also accepted a fully offset amendment to provide tax credit bonds for rail infrastructure
By Jeff Carlson, CCH News Staff
JCT Description of the Chairman's Modification to the Provisions of the American Infrastructure Investment and Improvement Act, JCX-83-07
JCT Estimated Revenue, General Fund, and Trust Fund Effects of the Chairman's Modification to the American Infrastructure Investment and Improvement Act, JCX-84-07
FAA Reauthorization Act of 2007, as Passed by the House on September 20, 2007, HR 2881
Federal Aviation Administration Extension Act of 2007, as Reported by the House Ways and Means Committee, HR 3540
House Ways and Means Committee Report on the Federal Aviation Administration Extension Act of 2007, HRRepNo 110-337.

Tax Analysts report: