On Tuesday, September 19, Small Business / Self-Employed Division Commissioner of the Internal Revenue Service (IRS), Kevin Brown, said in remarks to the Southern Federal Tax Institute that the division plans to perform more audits in order to reduce the so-called “tax gap” (i.e., the difference between what is owed each year in taxes and what people actually pay), which the IRS claims is about $300 billion.
The IRS estimates that the self-employed population is responsible for about 75 percent of the tax gap. Brown said that the tax gap is made up of three components: non-filing, underreporting and underpayment. He estimated that 80 percent of the gap is attributable to underreporting.
But the IRS wants to target audits as carefully as possible. Brown said, "I don’t want to hassle a taxpayer for no reason. I don’t want a revenue agent spending time on something that’s going to be no change.”
The tax gap and its implications for small business were the subject of two hearings before the Small Business Committee, most recently on April 5, 2006 (see SBC Notes 109-40). The Small Business Committee will closely monitor the IRS to ensure that past abusive practices in the audit process, which led to the passage of the Internal Revenue Service Restructuring and Reform Act of 1998 (P.L. 105-206), do not re-emerge. For more information, please contact John Westmoreland, chief tax counsel.
Homebuyers flock to Internet
According to the 2005 National Association of Realtors® Profile of Home Buyers and Sellers, 77 percent of homebuyers used the Internet to search for a home in 2005, and 24 percent found the home they purchased on the Internet.
This compares to 2 percent in 1995 for both those who searched and those who found the home they bought on the Internet.
Settlement Proposed for Owens Corning Miravista Shake and Slate Roofing Products
Anyone who owns or owned a home or other property on which MiraVista was installed should visit www.miravistaclassaction.com or call 1-800-947-4460 for complete information about their rights under a proposed settlement involving these products in U.S. Bankruptcy Court in the District of Delaware.
These tiles (collectively referred to as “MiraVista”), were marketed and sold between 1996 and 2002. MiraVista was designed to replicate the look of a cedar shake or natural slate. MiraVista products are a composite-roofing product made from fiberglass resin and inorganic fillers, and are not a fiber-cement product.
An $11 million settlement has been proposed involving individuals who own or owned a home building on which MiraVista was installed, and ASHI has been asked to assist in informing potential class members of the proposed settlement.
NAHB Says Housing Downsizing Will Not Drag the Economy Into Recession
Looking a bit rougher than the soft landing housing analysts had been expecting, the current housing downswing is unlikely to lead to economic calamity. That is largely because interest rates are historically low, the overall economy still is moving ahead, and builders are stepping up efforts to get their unsold inventories under control, according to economists participating in a teleconference hosted September 28 by the National Association of Home Builders (NAHB).
NAHB Chief Economist David Seiders said that he is forecasting an 11.5 percent decline in housing starts this year, followed by another 11.7 percent drop in 2007. Housing should hit bottom by the middle of next year, and will be approaching a demographically based trend production level of about 2 million units in 2008 (including manufactured homes).
Noting that housing is now a major source of weakness for the economy, Nariman Behravesh, chief economist for Global Insight, said that the “good news is that other sectors are doing reasonably well and will continue” to do so.
Although a soft landing is “no longer in the cards” for housing, Behravesh said that type of outcome most likely awaits the U.S. economy, with the gross domestic product growing 3.4 percent for this year, 2.2 percent next year and possibly slipping below 2 percent for a few quarters ahead.
Behravesh said that housing starts will fall into the 1.5 to 1.6 million-unit range as the downturn progresses, “but nothing worse than that.” Seiders is looking for a bottom of 1.6 million in mid-2007.
Mike Moran, chief economist for Daiwa Securities America, Inc., complained about how the news media are portraying housing market conditions as the industry is “going through a correction that’s badly needed. The key issue is whether the correction is orderly or disorderly, and the correction looks orderly even though it’s portrayed as a catastrophe in the press.”