Issue Number: 2005-04
Inside This Issue:
- IRS Announces 2005 "Dirty Dozen"
- TIGTA Report on IRS Review of Alleged Political Campaign Intervention
- IRS Unveils Redesigned Employment Tax Return
- Indian Ocean Tsunamis Designated as Qualified Disaster
1. IRS Announces 2005 "Dirty Dozen"
The 2005 "Dirty Dozen", an annual listing of notorious tax scams, includes several new scams that manipulate laws governing charitable groups to improperly shield income or assets from taxation, abuse credit counseling services or rely on refuted arguments to claim tax exemptions.
IRS Commissioner Mark Everson warns taxpayers, "Don't be fooled by false promises peddled by scam artists. They'll take your money and leave you with a hefty tax bill."
2. TIGTA Report on IRS Review of Alleged Political Campaign Intervention
The Treasury Inspector General for Tax Administration (TIGTA) finds the IRS properly operated its program for investigating claims of inappropriate political campaign intervention by tax-exempt organizations.
The TIGTA report finds that the IRS followed a consistent process when reviewing allegations of political activity and that political considerations played no role in decisions to further investigate allegations of political activity.
The full report, as well as the Commissioner's response to TIGTA's findings, are available on the IRS website.
3. IRS Unveils Redesigned Employment Tax Return
Form 941, Employer's Quarterly Federal Tax Return, which is used to report wages, tips and other compensation paid to employees, as well as Social Security, Medicare and income taxes collected, has been redesigned and simplified to avoid common errors and reduce the burden of compliance.
The redesigned form and instructions feature an improved layout, plain language instructions, simplified deposit reporting and paid preparer identification. The form is also scannable, which the IRS expects will reduce transcription errors.
4. Indian Ocean Tsunamis Designated as Qualified Disaster
With the designation of the December 26, 2004 Indian Ocean tsunamis as qualified disasters under Internal Revenue Code section 139(c)(3), employer-sponsored private foundations may provide disaster relief to employee victims of the tsunamis.
Like all section 501(c)(3) organizations, however, foundations should exercise due diligence when providing disaster relief, as explained in Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations.