IRS Announces Application Fee for Offers in Compromise
WASHINGTON — Beginning November 1, 2003, the Internal Revenue Service will charge a $150 application fee for the processing of offers in compromise. The IRS expects that this fee will help offset the cost of providing this service, as well as reduce frivolous claims.

Corporation Soles Drop-in Article
The Internal Revenue Service has become aware that promoters of abusive schemes are using Corporation Sole statutes to promote tax evasion by establishing sham nonprofit organizations.  The purpose of this article is to make you aware of a potentially abusive tax scheme targeted at individuals, including business owners.

IRS Grants Tax Relief to Power Blackout Victims
WASHINGTON — The Internal Revenue Service announced tax relief for those hit by the power blackout in the Northeastern United States. The IRS will consider as timely any tax returns or payments due from today through next Friday, Aug. 22, if they are completed by Aug. 22, 2003. However, the law does not allow the agency to abate interest on any overdue taxes during this period.

Over-the-Counter Drugs To Be Covered by
Health Care Flexible Spending Accounts
The Treasury Department and the IRS announced over-the-counter drugs can be paid for with pre-tax dollars through health care flexible spending accounts (FSA's). Treasury and IRS issued guidance clarifying that reimbursements for nonprescription drugs by an employer health plan are excluded from income. Thus, reimbursements by health flexible spending arrangements ((FSA's)) and other employer health plans for the cost of over-the-counter drugs available without prescription are not subject to tax if properly substantiated by the employee.

Tax Trends
Suddenly, What Constitutes a Dividend Makes a Great Deal of Difference
When President Bush first proposed his dividend exclusion, it quickly became very apparent that the proposal would involve a great deal of complexity in order to determine whether a dividend was being paid with respect to previously taxed income. This approach was eventually abandoned by Congress in the recently enacted Jobs and Growth Tax Relief Reconciliation Act of 2003 1 in favor of what seemed to be the relatively simple reduction in dividend tax rates without regard to whether the corporation had previously paid tax on the income. However, even this relatively simple concept of reducing the dividend tax rate is proving to be fairly complicated.

N.Y.C. Offers Tax Amnesty to Businesses
The New York City Department of Finance is offering an amnesty period for New York City business and excise taxes from October 20 through January 23, 2004.
Under the amnesty program, New York City will waive penalties and reduce interest for qualifying taxpayers. The amnesty, which is generally available for tax years or periods ending on or before December 31, 2001, includes the General Corporation Tax, the Unincorporated Business Tax, the Commercial Rent Tax and several other taxes.
The tax amnesty does not include real estate, personal income or sales and use taxes.
See the New York City Tax Amnesty 2003 Website for additional information or contact our office directly. http://www.nyc.gov/html/dof/html/txamn.html

HIPAA Protected Health Information Provisions Become Effective – Clients Need to Take Action Now
On April 14, 2003, the privacy provisions of the Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191, 45 CFR §§ 160-164, affectionately dubbed HIPAA, went into effect.  The new regulations have caused much turmoil among "covered entities" (e.g., doctors, hospitals, nursing home facilities, and insurance companies), as they will now, for the first time, be subject to federally imposed sanctions and monetary fines for unauthorized disclosure of "private health information."  The new law has caused many health care providers to clamp down on the release of medical records and other health care information to anyone other than the patient.

House Passes Internet Tax Moratorium
Accounting WEB US - Sep-18-2003 - On Wednesday, the House of Representatives passed the Internet Tax Non-Discrimination Act, the bill that imposes a permanent ban on taxes on Internet services. The current moratorium, set to expire on November 1, 2003, was a temporary fix installed two years ago, providing legislators with time to debate the issues of the permanent moratorium. The bill, H.R. 49, amends the Internet Tax Freedom Act (IFTA), to provide for a permanent moratorium on state and local taxes on all Internet access services without regard to speed, technology, or provider. Both broadband and dial-up services are covered by the bill. The bill now goes to the full Senate where it has already met with approval from the Senate Commerce Committee. President Bush has indicated that he will sign the legislation.

Updated Limits for Retirement Plans 2004