Business in brief: IRS job cuts worry attorneys
The Internal Revenue Service completed a round of job cuts in recent weeks that thinned nearly 100 employees from its group overseeing gift- and estate-tax returns.
The move was intended to keep pace with a shrinking number of estate-tax returns, according to the IRS, which promises to scrutinize estate-tax cases with the same care it has used in the past.
But some tax attorneys say the staff reduction will stretch the agency thin and may result in fewer or less-accurate audits. They’re concerned about the agency’s plans to handle more estate-tax audits using IRS attorneys in states far from where the audits were filed.
Eighty-four former IRS employees – most of them attorneys – recently took buyouts offered by the agency, with a Jan. 3 deadline to be off the payroll. Many left in December, according to Kevin M. Brown, deputy commissioner for services and enforcement. The buyouts shaved the estate- and gift-tax staff to 379 from 471, he said.
Overpaid taxes trial date nears
An ad hoc group of accountants and lawyers may be close to winning a federal court battle that could help millions of investors claim billions of dollars in overpaid federal taxes from the past 15 years.
Led by Charles D. Ulrich, a retired accountant in Baxter, Minn., the group charges the Internal Revenue Service overtaxed stock and cash these investors received from mutual life insurance companies when they reorganized into publicly traded corporations.
A trial is scheduled to start June 18 in the Court of Federal Claims. But the clock is ticking for anyone who seeks to claim a refund on overpaid taxes on insurance company distributions in 2003 because of a three-year statute of limitations to claim refunds.
“This is an incredibly important case,” says Robert Willens, a longtime tax analyst at Lehman Brothers, who believes the odds favor Ulrich’s group in federal court.
Insider trading of TXU alleged
Federal regulators charged Friday that unknown investors pocketed more than $5.3 million in illegal profits from insider trading before TXU Corp. announced it had agreed to be sold for $32 billion.
The Securities and Exchange Commission said the insider trading was done through foreign brokerage firms to conceal the investors’ identities.
SEC lawyers in Fort Worth filed a lawsuit in federal district court in Chicago seeking restitution and civil fines against unknown defendants who bought options on TXU shares last week. The agency said it won a court order freezing $5.4 million in assets.
The SEC said the options allowed the defendants to buy shares when they hit prices ranging from $57.50 to $62.50. At the time the options were purchased, most if not all were above the price of TXU shares at the time.
The shares jumped 13.2 percent – from $60.02 to $67.93 – on Monday, when TXU announced that its board agreed to sell to Kohlberg Kravis Roberts & Co., Texas Pacific Group and four Wall Street firms.