The IRS sent notices in March to an estimated 20 million recipients of Social Security and some veteran's benefits, who were eligible to receive stimulus checks, said Shulman. Only about 15 million of them have filed returns or are listed on somebody else's return as a dependent.

As of June 13, the agency had sent out around $63.8 billion to 76 million Americans, according to Shulman. The IRS is on track to send out a total of 110 million payments by July 11. However, applying for benefits requires that individuals file an income tax return.

People whose main income is Social Security or veterans benefits may not be required to file a federal tax return.

"Communicating with this population presents a significant challenge, given the complications of age and disability:' Nina Olson, National Taxpayer Advocate, told the committee.

Olson cited lack of mobility, lack of access to or familiarity with the Internet, confusing information and fear of contact with the IRS as possible barriers to filing.

The IRS said it would continue to work with other organizations as it reaches out to veteran and retiree communities through the summer and helps coordinate free face-to-face tax preparation services for them.

Authorities are investigating some "relatively large corporations" as part of a sweeping mortgage-fraud probe.

Some 19 companies, including mortgage lenders, investment banks, hedge funds, credit-rating companies and accounting firms, are being looked at, officials said.

The Justice Department and FBI officials sought to demonstrate progress in the mortgage fraud fight announcing that roughly 400 individuals have been criminally charged for their roles in home-lending schemes, with 670 recent arrests. Real-estate developers, brokers, agents and appraisers were among those charged, along with lenders, lawyers and so-called straw buyers.

"Operation Malicious Mortgage" has swept up criminal investigations from March 1 through mid-June, and produced 144 cases nationwide. FBI officials estimate the losses from the alleged scams reached $1 billion.

A federal appeals court has made it more difficult for employers to snoop legally on e-mails and text messages their workers send from company accounts.

Under a ruling by the U.S. Circuit Court of Appeals, employers that contract an outside business to transmit text messages cannot read them unless the worker agrees.

Users of text-messaging services "have a reason able expectation of privacy" regarding messages stored on the service provider's network, Judge Kim Wardlaw wrote in the three-judge panel's unanimous opinion.

The text-message part of the ruling will affect more employers than the e-mail portion because most U.S. companies pay outside parties for text-messaging but keep e-mail on internal servers.

The judges had few precedents. The extent to which the Fourth Amendment provides protection for the contents of electronic communications in the Internet Age is an open question.

A civil liberties advocacy group called the ruling a "tremendous victory" for online privacy. The Electronic Frontier Foundation said in a posting online that the ruling helps ensure the Fourth Amendment "applies to your communications online just as strongly as it does to packages and letters:”

The ruling came in a lawsuit file by Ontario police Sgt. Jeff Quon and three other officers after Arch Wireless gave their department transcripts of Quon’s text messages in 2002. Police officials read the messages to determine whether department-issued pagers were being used solely for work purposes. There is an expected appeal.

As the economy weakens, banks are increasingly squeezing customers who overdraw their bank accounts.

For more than a year, Wachovia has been urging its employees not to refund too many overdraft fees because they "make up a big percentage of our revenue and is a HOT button among leadership;' according to an internal memo.

Bank of America and Washington Mutual, meanwhile, have jacked up their overdraft fees and made it easier for customers to be hit with multiple penalties.

In 2007, Wachovia put in place a tool that tells employees how much they can refund to customers hit by overdraft fees. The bank, in memos, also tells employees to "sell" a debit card with every account because it makes money when consumers use it.

In April, Washington Mutual raised its overdraft fee in most states to $34 from $32. Also this year, the bank increased the number of times a day that a customer can be hit with this fee, from five to seven.

This year, Bank of America raised the fee charged on the first day a customer overdraws to $25 from $20. The bank also raised the number of times a customer can be hit with this fee per day to seven from five.

We used to joke about the year 2010 as being the time to "toss grandma off the train;' but it looks more and more like we will not have to after all. With the likelihood that next year there will be a new administration and a new make-up of Congress, there are more and more signs pointing to major changes to tax policy coming in 2009 and 2010.

Congress could decide next year to extend the Estate Tax provision levels now scheduled for 2009 into 2010, while it continues to develop a permanent estate tax structure, or it could do the entire change of tax legislation in 2009.

Ken Keis, an AALU tax counsel, has calculated that $4 trillion of tax provisions will be expiring on December 31, 2010. That is more expiring on December 31, 2010. That is more expiring tax provision than have ever expired before.

In addition to the estate tax, we can expect changes in the alternative minimum tax, capital gain taxes, and limitations on non-qualified deferred compensation plans. Limits on DQDC could also occur in the context of the need for Congress to extend certain tax benefits that expire at the end of the year.

The level of estate taxes is a critical one for the insurance industry and for financial planners, particularly for advanced life underwriters who design tax strategies that help the wealthy reduce their tax burden, especially estate taxes. It would appear that freezing the law at the 2009 levels might be the best considered solution for Congress.

Under current law, the estate tax exemption for 2009 is $3.5 million per person with a 45% maximum tax rate for all estates above that. But, under the Economic Growth & Tax Relief Reconciliation Act, the estate tax is phased out for 20120, returning in 2011 with a $1 million per person exemption and a 55% maximum tax rate. It is interesting to note that in past history, 3 out of 4 new presidents have been able to get a major tax bill passed in Congress in their first six months in office.

Norman W. Kamerow - Capital Financial Group

Taxpayers may now offset 100% of their AMT liability with foreign tax credits, up from 90%.

Despite a statutory provision by Congress prohibiting the Internal Revenue Service from labeling taxpayers as "illegal tax protesters;' the IRS is still using the term, according to a new report.

The Treasury Inspector General for Tax Administration "TIGTA" said the IRS has eliminated most uses of this and similar designations, but in some instances IRS employees continued to refer to taxpayers by these labels in the case narratives it compiles on accused tax evaders. TIGTA said the label could stigmatize taxpayers and cause bias among IRS employees in future contacts with the taxpayers.

Congress enacted Section 3707 of the IRS Restructuring and Revenue Reform Act of 1998 to prohibit the use of the term "illegal tax protester" and similar labels by the IRS. Before the law was enacted, the IRS used the Illegal Tax Protester Program to identify individuals and businesses that used methods to protest against tax laws the IRS did not consider legally valid. IRS employees referred taxpayers to the program when they used such protest arguments.

Congress enacted the law because it was concerned that some taxpayers were being permanently labeled and stigmatized by the designation, even when they subsequently complied with the tax laws. TIGTA found that the IRS had not reintroduced the codes or similar designations on taxpayer accounts and the Internal Revenue Manual no longer contained any illegal tax protester references.

Nevertheless, TIGTA found that out of approximately 65.2 million records and cases, there were 430 instances in which 349 employees had referred to taxpayers as illegal tax protesters or similar designations in IRS case narratives.

The IRS said in response to the report that it continues to discourage the use of such designations in its casework. Still, the IRS has continued to vigorously pursue tax protest schemes and punish taxpayers who use them. The most recent high-profile case has been actor Wesley Snipes, who was sentenced to three years in prison.

The Internal Revenue Service is falling short on inspecting the international tax transactions of small businesses for compliance problems, according to a new report.

Large companies are much more likely to be examined for their international tax transactions, said a report from the Treasury Inspector General for Tax Administration. The Large and Mid-Sized Business Division of the IRS has procedures in place to automatically route many corporate tax returns to examination specialists via the IRS intranet if the returns include international transactions.

At the Small Business/Self-Employed Division, however, the process relies to a great extent on managers who need to request the assistance of specialists to look at issues such as transfer pricing and foreign tax credits. As a result, the assistance of a specialist was not requested for 91 percent of the tax returns handled by the SB/SE Division during the period covered by the report.

The tax ramifications can be serious. TIGTA noted the record-breaking $3.4 billion settlement of a transfer-pricing dispute in 2006 with drug maker GlaxoSmithKline over inter-company transactions with some of GSK's foreign affiliates. A high-ranking SB/SE Division official advised TIGTA that plans are underway to improve the way in which corporate tax returns with international transactions are identified and selected for examination.

Effective July 24, 2008, the federal minimum wage for covered non-exempt employees will rise from $5.85 to $6.55 per hour. The Fair Minimum Wage Act of 2007, which amended the Fair Labor Standards Act, FLSA, provides for another phased increase to $7.25 per hour effective July 24, 2009. A separate provision of the bill brings about phased increases to the minimum wage in American Samoa and the Commonwealth of the Northern Mariana Islands, with the goal of bringing the minimum wage in those locations up to the general federal minimum wage over a number of years.

Many states also have minimum wage laws. Covered employers must comply with both.

The tip credit provisions of the FLSA remain the same. An employer is still only required to pay $2.13 an hour in direct wages if that amount plus the tips received equals at least the Federal minimum wage, provided the employer has informed the employed of the tip credit being taken, the employee retains all tips except to the extent they participate in a valid tip pooling arrangement, and the employee customarily and regularly receives more than $30 a month in tips.

The youth minimum wage also remains the same. Employees under 20 years of age may be paid $4.25 per hour during their first 90 consecutive calendar days of employment with an employer.

Every employer of employees subject to the FLSA's minimum wage provisions must post, and keep posted, a notice explaining the Act in a conspicuous place in all of their establishments so as to permit employees to readily read it.

Required posters and other compliance assistance materials concerning the minimum wage increase are available from the Department of Labor's Wage and Hour Division Web site at http://www.wagehour.dol.gov.

Information is also available by calling the U.S. Department of Labor’s toll-free help line at 1-866-4US-WAGE (487-9243).

Indeed, hundreds of Americans do formally renounce their US. citizenship every year, many in order to protect their wealth from income, estate and gift taxes. Congress has made life less rewarding for tax exiles.

Some exiles were born and raised in the US., such as John Dorrance III, grandson of the inventor and entrepreneur who helped found Campbell Soup Company, who renounced his citizenship in 1994 and migrated to Ireland, which has significantly lower tax rates. Others have long lived outside the US. and are seeking to avoid the unique consequences of its tax system, which taxes its citizens no matter where in the world they live and earn.

In 2007, 470 Americans renounced their citizenship to move abroad, according to a review of Federal Register notices. The list of those who relinquished US. citizenship in the past 2 months includes a London-based office-supplies magnate and the daughter of an Iraqi private-equity billionaire.

The new rules say, if you leave any of your property to a US. person, it will be taxed at the rates for US. gift tax, which are currently 45%.

The new taxes are included in legislation providing tax benefits for soldiers and military veterans and will apply only to those who renounce their citizenship after the bill becomes law.

Some of those permanently leaving the US. for tax reasons are private-equity deal makers, hedge-fund managers or entrepreneurs who have made fortunes here, whether born in the US. or elsewhere. Others are foreign-born, often academics, who have gained citizenship but are repatriating to their native countries after an extended stay.

Another former US. citizen is George Karibian, founder and chairman of UK.based online office supplier Euroffice. His biography posed on a trade-group Web site indicates that since graduating from the University of Pennsylvania's Wharton School in 1993, he has lived and done business in various European locales.

Lawmakers have been struggling for years to change a tax system for expatriates that was cumbersome yet easy to circumvent.

Under the old system, tax exiles were required to file annual US. returns for 10 years after they renounced their citizenship. For that time period, income tax was owed on all US.-source income. Estate and gift taxes also applied to US. assets transferred during that period.

The system encouraged people to hold onto their US. assets until after the 10-year period expired and then unload them. And while estate taxes still applied to intangible assets such as stock in US. companies, gifts of US.-based stock were not taxed after the 10-year period. Patience was rewarded.

Under the new law, the 10-year transition rule is abolished. US. citizens and long term residents who are terminating their status will be taxed once on their unrealized gains, at current market rates. Stock portfolios, real estate, art and most other types of assets will be captured by this new "mark to market" tax. Some experts say the new law could deter some citizens or residents from leaving the US., since the benefits of doing so will be reduced. Yet the simplicity of the new one-time tax may appeal to others.

One aspect of the new law that has practitioners concerned is that it applies not only to US. citizens but long-term residents. That means it will capture foreign executives who have been permanent residents of the US. for more than eight years. Many green card holders may now owe taxes to both their native country and to the US.

As in the old system, the new rules are triggered only for individuals with a net worth of $2 million or more, or who owed more than $124,000 in income taxes on average over the past five years, indexed for inflation. Even if one of the conditions is met, the first $600,000 in gains is not subject to the tax.

Investors who miss the deadline for moving retirement savings from one account to another are getting a new message from Uncle Sam: Tough luck.

Recent tax rulings show that the Internal Revenue Service, which had been inclined to give investors the benefit of the doubt when their retirement rollovers were botched, is cracking down on offenders. That change means that some account holders are facing big tax bills and are losing out on the tax-deferred growth.

The federal government generally lets investors roll over money from one tax deferred account to another tax-free, such as when moving an individual retirement account from one financial firm to another. That is provided that the money lands in the new account within 60 days. If an investor misses that deadline, the withdrawn funds are subject to immediate tax. Plus, those under 59 1/2 also owe a 10% penalty.

The best way to avoid undoing an IRA? Investors must keep their hands off the money. Instead of withdrawing and redepositing it personally, have the fund custodian move it directly to another financial institution in what is called a "trustee-to-trustee" transfer.

The trouble is, many investors do not know or are ill-advised. Then there is the fund management error. Sometimes you ask to have the IRA put into your taxable checking account. You need to make certain that the money is still not in your checking account the next month and that it has been sent to the right place.

Almost no exceptions to the 60-day deadline existed until 2002, when a new law went into effect to provide some wiggle room for investors who made mistakes. The moments when someone is most likely to be moving retirement savings around are typically tumultuous; when taking an early-retirement buyout, or dealing with the death of a spouse.

For several years after easing the rule, the IRS went pretty easy on offenders. If retirement-account holders could show that they intended to complete the rollover within the allotted time, but had fallen victim to a bank's error or other hardship, they usually could get more time.

But in the past year or so, the government has gotten stingier with such waivers.

For example, an April ruling involved a widower who withdrew all of the money from his dead wife's tax-deferred annuity and company retirement plan. When he later wised up, the IRS denied his belated attempt to roll the money into an IRA, finding that the widower had not originally intended to do so.

The good news is that ID theft is on the decline. The bad news is that ID theft still affected 8.1 million Americans last year, according to Javeline Strategy and Research, down 3.6 percent from 8.4 million in the previous year's study. The average amount of ID theft last year was about $5,500 for a total of $45 billion.

Five steps are recommended for preventing ID theft when online:

1. Do not fall for a phishing e-mail. Using e-mail or phone calls to pose as a trustworthy organization in order to coerce sensitive information from victims is on the rise. According to a survey for Gartner, Inc., 3.6 million U.S. adults lost money in phishing attacks in the 12 months ending in August 2007, as compared with the 2.3 million who did so the year before. The amount of money lost totaled $3.2 billion. Phishing e-mails can look legitimate with graphics and official logos of banks, government agencies, or credit card companies. The e-mails usually include hyperlinks that direct the victim to a Web site designed to install viruses and malware or solicit bank account or Social Security numbers. In order to prevent ID theft through phishing e-mails, computer users should completely delete unsolicited e-mails from banks, credit unions, investment firms and government agencies with which they do not already have an established relationship. If the recipient does have an existing relationship with the supposed originator of the e-mail, call the organization to confirm whether or not the e-mail is legitimate before taking any further action.

2. Create strong passwords and protect them. Developing a habit of regularly changing passwords makes it much more difficult for ID thieves to steal personal information. Some passwords, however, are stronger than others. Attributes of a secure password include a combination of numbers, capitalized letters and even symbols. Consumers should never use sensitive information for a password such as their Social Security number, mother's maiden name or birthday.

3. Be safe and secure when on the go. Computer users on the go should be wary of entering passwords or sensitive information into a computer that is not theirs, such as at an Internet cafe, library, computer lab or airport kiosk. Wi-Fi networks, either on the road or in the consumer's own house, present, even more opportunities for ID thieves. The easiest way to protect a Wi-Fi network at home is to not broadcast the Service Set Identifier. More information on this is available at www.us.bbb.org. A safe rule of thumb is to avoid exchanging sensitive information through the Internet when using a public Wi-Fi connection and to. simply wait until a trusted network can be used.

4. Guard personal computers with anti-virus, anti-spyware, and firewall protection. Opinions vary, but the amount of time it takes for an unprotected personal computer to become infected with a virus or malware can range from four to 34 minutes. That is why a computer must have good anti-virus software, as well as anti-spyware and firewall protection. Also, many operating systems already provide firewall protection so users should always make sure this protection is enabled. After acquiring security software, users must keep the programs updated. Operating systems also require patches and other additional updates that computer users need to install in order to maintain security.

5. Only transfer information over a secure server. When it comes to giving out personal information online, consumers should only do so on a secure server. On a secure server, the information is encrypted as it is being transmitted; that way, others cannot read it if they should intercept it. Consumers should make certain they are on a secure server by checking the URL of the page when asked to give any personal information. An unsecured URL will look like this: http://www.###.com. A secure service will have an "s" either in front of or following the "http" and it will look like this: https://www.###.com or shttp://www.###.com.

Structuring the trust's terms is another topic to carefully address with the tax professional, estate planner and investment advisor. GRATs provide a fixed annuity payment. This is generally a fixed percentage of the original value of the assets transferred in trust. For example, if a $500,000 asset is placed in trust and the annuity payout rate is 5%, the trust would pay $25,000 each year. If there is not enough income earned on the trust assets to cover the annuity payout amount, the payments will be made from principal. This allows steady and consistent payments.

All appreciation in excess of the required annuity payments accumulates for the benefit of the remainder beneficiaries. Therefore, it may be possible at the end of the trust term to deliver assets to the beneficiaries that have a value far exceeding that of the original assets gifted to the trust.

The gift tax value of the assets transferred to the trust is determined at the time the trust is created. The gift tax value is determined by subtracting the discounted value of your future annuity payments from the value of the trust assets contributed. How the annuity interest and any other retained interests are valued depends on the relationship of the remainder beneficiaries and who retains the annuity and other interests relative to the transferor.

A Simple hypothetical illustration can show the value of a GRAT, using the example above. Assume that $500,000 of stock, with a 7% potential growth rate, is gifted to a five-year GRAT when the federal discount rate, IRC section 7520 rate, is 3.8%, reserving a 5% annual annuity for the grantor. The gift, at the transfer to the trust is $116,176. Each year, for five years, the grantor receives $25,000 from the trust as an annuity payment. At the end of the trust term, if the grantor is still alive, the remainder interest of approximately $547,500 passes on to the remainder beneficiaries.

When looking to relocate assets, you can choose between a GRAT, which pays out at a preselected level, and the grantor-retained unitrust, GRUT, which requires a trustee to value the asset every year and to pick an appropriate payout based on investment performance.

Both primary and vacation residences are eligible for qualified personal residence trusts, QPRTs, under which a grantor may reside in a home that has been placed into the trust. Usually, such trusts also may maintain six months of property-related expenses.

In this case, your income interest is going to be the term of years of living in the house.

Spouses who own a home jointly can each put 50% of the home in separate QPRTs so that if one outlives the other, the surviving spouse will still be able to live in the home while enjoying the tax benefits. If the grantors outlive the terms of the trust, they can still rent the home from the trust, but IRS requires that the trust charge a market-rate rent.

Although grantors can set up an unlimited number of GRATs and GRUTs, they can set up only two QPRTs, and only certain residential properties are allowable, including a vacation home.