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Friday, January 14, 2005

Tax_news_roundup_1 New York Times:

      • Foreign-Profit Tax Break Is Outlined (1/14):  The Bush administration outlined rules on Thursday for a huge one-time tax break for companies that reinvest their overseas profits back into the United States. The tax break, which was part of last year's corporate tax bill, would allow companies to pay a fraction of the normal tax rate on hundreds of billions of dollars in foreign profits if they pledge to invest the funds in activities that may create jobs at home. In a setback for many of the biggest potential beneficiaries, the Treasury Department said companies could not use their windfalls for repurchases of stock or increases in shareholder dividends.
  • One-Room School Faces $10,000 IRS Fine (1/13):  A tax error totaling less than $40 has resulted in a $10,000 fine for the Hill Public School, a one-room schoolhouse. The IRS informed the school district of the discrepancy on June 1, 2003, and wants the fine to be paid, Rhonda Maxcy, school board secretary, said Monday. Maxcy says an accountant is to blame for the error, which he repeated a dozen times on the school's quarterly tax returns from 2000 to 2002. The school's stated amount withheld for several federal taxes was over the limit by $3.25 each quarter, she said.
  • Treasury Offers Companies Tax - Break Guide (1/13):  Companies thinking about using a new, temporary tax break to cut their tax bills on profits earned abroad can now turn to Treasury Department guidelines that explain how to use the profits brought home. A law passed last fall gives companies a one-year window to reduce the tax rate on money earned in foreign countries and brought back into the United States from as much as 35% to 5.25% if the money is reinvested at home. Companies must create a reinvestment plan to qualify for the tax break, a process detailed in the guidelines released Thursday.
  • Report Calls for Simpler Taxes (David Cay Johnston) (1/12):  Congress has made the tax code so complicated that even the Internal Revenue Service is having trouble coping, the national taxpayer advocate, Nina E. Olson, wrote in her annual report to Congress, which was presented yesterday. "Without a doubt, the only meaningful way to reduce these compliance burdens" on taxpayers, Ms. Olson wrote, "is to simplify the tax code enormously."
  • Bush Names 2 Ex-Senators to Consider Tax Changes (1/9):  President Bush on Friday named two well-known former senators to head a bipartisan advisory panel on taxes, and gave the group six months to come up with recommendations on how to make the income tax simpler, fairer and more conducive to growth.
  • Land, Taxes and a Dispute as Old as the United States (1/9):  At the SavOn convenience store in this tiny, tidy upstate city of 3,000 or so, a gallon of regular gas goes for $1.86, a pack of Marlboros goes for $3.75, and the history goes on forever. So to understand why the United States Supreme Court will hear arguments on Tuesday in the dispute between the city and the tribe, you need to sort through enough history to make your head spin: which tribes sided with the colonists and which with Great Britain in the Revolutionary War, the relative merits of the 1788 Treaty of Fort Schuyler, the 1794 Treaty of Canandaigua and the 1838 Treaty of Buffalo Creek. The core issue sounds simple: When the Oneidas bought land for the store in 1997 that was once part of their ancestral homelands, was the property again part of Indian country and thus exempt from local taxes, as the Oneidas claim? Or was it subject to taxes, as it had been under its previous owner, as the city claims? Within that simple question are all the ancient and contemporary grievances roiling upstate.

Wall Street Journal:

  • Treasury Gives Corporations Latitude on Overseas Profits (1/14): The Treasury Department is giving U.S. companies a broad interpretation of how they can repatriate and spend overseas profits under a special one-year tax break. Though the guidance isn't everything that corporate leaders had hoped for when Congress approved the plan in the fall, the rules are likely to encourage U.S. multinationals to spend billions of dollars of their foreign profits domestically.
  • Financial-Aid Rules Sow Confusion for 529 Owners (1/13):  College savings 529 plans have become popular with investors ... because of the tax benefits: Contributions may be tax-deductible depending on your state, and withdrawals for IRS-approved higher-education expenses currently are tax free. In some plans a person can sock away as much as $300,000 per student, and unused monies can be transferred to a sibling or other student. The problem is the federal government and public colleges treat 529 accounts differently than private colleges treat them when designing aid packages. And private schools often differ from each other in how they treat the accounts. Because the rules for financial-aid eligibility are all over the map, parents and family members may limit their child's eligibility for financial aid merely by funding a 529 account.
  • Flat and Happy... (Alvin Rabushka) (1/12):  Will we ever get real tax reform? For decades, economists, journalists and politicians have been discussing the pros and cons of a flat tax , sales tax , and VAT as alternatives to our federal income tax . One commission after another has conducted hearings and one Treasury secretary after another has overseen studies. Little by way of simplification and reform has come of these efforts. Interest groups and partisan politics have blocked real reform. Every year, Congress further complicates the tax code. President Bush has just established another commission of nine distinguished members, but it will encounter the usual obstacles. A new round of hearings is not needed. A better approach is for the members to visit the eight countries in Central and Eastern Europe that have adopted the flat tax in the last 10 years and study their experience.
  • How to Deduct Tsunami Gifts for '04 (Tom Herman) (1/12):  So much for gridlock. A tax-law change designed to encourage more charitable giving to help tsunami victims won approval quickly last week in the House and Senate, and President Bush signed it into law Friday. As a result, many taxpayers who donate money this month to charities to aid tsunami victims can choose to deduct those contributions on their federal income-tax return for 2004. Previously, donors making gifts this month couldn't deduct those donations for 2004. This change will give many Americans this month "an extra incentive to support this great cause," said Sen. Max Baucus, a Montana Democrat. But even before the president signed the bill, accountants and other tax advisers were e-mailing each other with questions raised by the legislation. Among them: What types of contributions qualify for this special treatment, and which charities qualify? Here is a summary of several key issues, with answers from Internal Revenue Service officials, congressional staffers and tax advisers, as well as advice on how to take maximum advantage of the new law.
  • Bush Appoints Panel to Study Tax-Code Change (1/10):  President Bush laid the groundwork for overhauling the tax code, an effort that appears increasingly focused on simplifying rather than scrapping it.
  • Tax Reform Team (1/10):  One lesson we draw from the makeup of the tax reform advisory panel that President Bush named on Friday is that he really does intend to get something done, perhaps as early as this year. Many Beltway skeptics have assumed that Mr. Bush's very general tax reform intentions were merely a campaign talking point, or perhaps a fallback if Social Security reform failed. But Mr. Bush has selected serious people who combine political savvy with tax and economic expertise.
  • The Tsunami and Taxes (Tom Herman) (1/9/04):  Readers eager to help victims of the tsunami disaster may be wondering about the tax implications for their donations. Here are a few questions you may have, and the answers from tax specialists:

Washington Post:

  • Tax Changes That Merit Remembering This Spring (1/10): The Bush administration may want to rewrite the tax code from top to bottom, but unless and until that happens, we taxpayers still have to live with the old one. It's the tax code we've got, as they might say at the Pentagon, not the tax code we want. So the time has come once again to start getting ready for that American spring ritual, tax-return filing season.
  • Tax Experts Predict No Big Shifts (1/8):  Tax experts said yesterday they expected President Bush's new tax panel to recommend incremental change to the tax code, not a fundamental replacement. The president reiterated his intent to push wholesale changes to the tax code that would make it simpler and more conducive to economic growth, but outside experts say that is now unlikely.

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