Quick IRS news:

A couple things passed over my desk recently that I thought might be noteworthy, and I am passing them along for your review…

If you have money in a foreign bank account the IRS is expanding its efforts to locate you. They are investigating Credit Suisse and other foreign banks to determine if they aided in tax evasion similar to the big UBS crackdown last year. If you have assets that are sitting in a foreign bank that you have not disclosed to the Feds the amnesty period to come clean expires August 31.

Tax preparers who do not register as such or who do not sign returns they work on are being chased by IRS. The agency is surveying tax returns they suspect may have been done by a paid preparer but not signed, and will be contacting the taxpayers about their returns in an effort to find the preparer.

And in a recent act of administrative benevolence that will be good news for those “camera ready” politicians and anyone living in Beverly Hills, IRS announced that field auditors will no longer pursue assessing the 10% tanning tax on customers of indoor tanning salons who redeem “frequent buyer” points for a free tanning session. Perhaps we can call this the Dermatological Stimulus of 2011.

The Amazon Tax

There has been a lot of news recently about the new decrease in sales tax rates here in California, but very little about a recent law signed by California Governor Jerry Brown that attempts to levy sales tax on internet sales of goods to California residents by out of state retailers. This new law, affectionately called the “Amazon Tax” actually reaches any out of state seller, not just Amazon.com, and attempts to compel them to collect sales tax if they use third part affiliates located in the state to sell or ship products.

These transactions were previously exempted, and this new attempt at taxing by the state has a very good chance of backfiring. As soon as the law went into effect, Amazon.com informed their 8000 California affiliates that they were terminating their affiliates’ contracts. Overstock .com is reported to be doing the same and it can be expected that most internet sellers of goods who previously worked through California affiliates will be sourcing those products out of state to avoid creating the “nexus” that subjects these transactions to tax.

Some sources have estimated the number of theses affiliates for all internet sellers at around 25,000! If that’s true, the potential scorecard for this new legislation would be:

Additional taxes collected - zero
California businesses damaged or destroyed - 25,000

Is it any wonder that the public wasn’t too concerned when the State Controller suspended legislator’s pay for failure to balance a budget?