On May 29, 2006 , President Bush signed the Heroes Earned Retirement Opportunities Act, a new law that will permit combat pay, which is usually nontaxable, to count as taxable income for purposes of calculating IRA contributions. The new law is expected to give military personnel an estimated $167 million in tax benefits over a ten-year period.
After numerous losses in court, the IRS is admitting defeat on the issue of telephone excise taxes. The Service will no longer collect the 3% excise tax on long-distance telephone services. In addition, the IRS will issue credits or refunds of all excise taxes paid on long-distance service billed after February 28, 2003 , along with interest.
Tax Freedom Day marks the day each year when the average American taxpayer has paid all his or her tax obligations for the year. According to the Tax Foundation, the 2005 Tax Freedom Day was April 23. This year's Tax Freedom Day fell on April 26, 2006 . Americans worked the first 77 days of 2006 to pay their federal taxes and another 39 days to pay state and local taxes.
A 2005 law requires anyone filing for bankruptcy to first seek counseling from a credit counseling agency.
Recent audits of a number of these tax-exempt organizations has revealed that many of them are “primarily sellers of debt-reduction plans, motivated by profit, and offering little or no counseling or education.” As part of its program to halt abuses within the credit counseling industry, the IRS has issued alerts about the problems in this sector.