National Taxpayer Advocate asks Congress to prohibit tax strategy patents

The National Taxpayer Advocate recommended in her annual report to Congress three weeks ago that Congress bar tax strategy patents and limit their enforceability.

The recommendation didn't receive much media attention at the time the report was written but was the focus of a story in today's National Law Journal. (Subscription required.)

"If Congress does not bar them, it should require the U.S. Patent & Trademark Office (PTO) to send any tax strategy patent applications to the IRS so that it can quickly address any abuse they may present and help the PTO identify obvious tax strategies that should not be eligible for patents," National Taxpayer Advocate Nina E. Olson wrote in the executive summary of the report.

Wesley Snipes goes on trial in federal court for failure to pay taxes

The trial of actor Wesley Snipes on tax charges is scheduled to start today in Ocala, Fla.

Snipes is charged with failing to file tax returns for six years, conspiring to defraud the government and filing a false claim for a $7 million tax refund.

"Tax specialists and lawyers say that the Snipes case hinges on whether he can persuade jurors that he sincerely believed that he did not have to pay taxes, while prosecutors will argue that he was just trying to avoid them," reports the New York Times.

Men arrested in multi-state tax evasion scheme

Four men were indicted and arrested for allegedly selling more than 1,000 people a tax "program" that illegally helps people avoid taxes and cost the government $7.5 million in lost taxes.

The programs were sold from 2001 through 2005 by the Freedom & Privacy Committee in Oregon, Louisiana, Virginia and Idaho, according to the indictment. A grand jury in Portland, Ore., issued one count against the men for conspiracy to defraud.

State judge overrules Wal-Mart's use of REIT for tax deduction

A state judge ruled against Wal-Mart in a dispute over whether the company could deduct from its taxes rent it paid to a real estate investment trust in which Wal-Mart had a 99 percent ownership stake.

In a decision filed Jan. 4, Emergency Special Judge of Superior Court Clarence E. Horton Jr. wrote that Wal-Mart's structure had no "real economic substance" other than cutting taxes, The Wall Street Journal reported. Wal-Mart had sought a refund of $33.5 million in taxes, interest and penalties that it paid after state tax authorities determined it had underpaid its taxes.

Church-owned businesses get tax bills

A growing number of local tax officials are scrutinizing church-owned businesses and property to determine whether they are charitable missions or for-profit enterprises, The Wall Street Journal reported today.

This has led to lengthy disputes and court fights between some tax assessors and churches. For instance, the Journal said, Christ Chapel Community Church in Macon, Ga., ended up paying $16,000 for 2005 and 2006 taxes after disputing for 18 months a tax bill for an athletic club it had purchased for $6 million that offered tennis, basketball, and roller hockey for a fee. On the weekend, church members set up seats for 1,000 worshipers.

The changing nature of churches "forces both courts and agencies and tax commissioners to decide what's a religious or charitable use," John Witte Jr., director of the Center for the Study of Law and Religion at Emory University, told the Journal.

AT&T division will pay millions to settle cellphone tax

AT&T Mobility, a unit of AT&T Inc., has agreed to pay as much as $76 million to settle a cellphone-tax lawsuit brought by Missouri municipalities against wireless carriers operating in the state, The Wall Street Journal reported.

The municipalities assert that they can levy on cellphone service a tax normally applied to utilities and traditional "landline" phone companies.

Verizon Wireless settled the lawsuit last September for $31.5 million. Both Verizon and AT&T agreed to start collecting the tax from their customers.

Security firm challenged on whether guards are contractors or employees for tax purposes

A congressional leader is looking into Blackwater Worldwide's practice of paying its guards as independent contractors and not withholding taxes, the Wall Street Journal reported today.

Rep. Henry Waxman (D-Calif.), chair of the House Oversight and Government Reform Committee, wrote in an Oct. 22 letter to Blackwater that he believes the company "may have avoided paying millions of dollars in Social Security, Medicare, unemployment, and related taxes for which it is legally responsible," according to the Journal.

Blackwater, which provides security for the U.S. government in Iraq and elsewhere, said its tax policy follows the law.