The National Public Accountant

Making sense of the Taxpayer Relief Act of 1997.

Taxpayer Relief Act of 1997 The newly-approved Taxpayer Relief Act of 1997 features several tax breaks, simplifications, technical corrections, extensions and revenue-earning provisions. However, application of the tax law, which was signed by Pres Bill Clinton on aug 5, 1997, remains confusing. It introduces about 300 new provisions as well as 800 amendments to the Internal Revenue Code. Provisions that will most likely be encountered, including changes in tax rates, effective dates and phase-in or phase-out rules, are...

New rules for gain from sale of a principal residence.

Taxpayers may exclude up to $250,000 of gain acquired through the exchange or sale of principal residences through the Taxpayer Relief Act of 1997. The new gain rules are applicable to transactions conducted after May 6, 1997, and only for taxpayers who have resided in their principal residences for at least two years. Couples, who may exclude up to $500,000 in a joint return filing, will benefit the most from the gain rules.

NSA Federal Taxation Committee: review, recommend, represent - the role of the FTC.

National Society of Accountants The National Society of Accountants' (NSA) Federal Taxation Committee is charged with reviewing proposed tax laws, provide recommendations and represent NSA members and clients before government agencies such as the IRS. The committee was established in 1970 with Elmer F Heckinger as its first chairman. Committee members, which serve for one-year, are selected by current the NSA president.

Practitioners welcome new AMT changes, but want more.

Accountants; alternative minimum tax - Taxpayer Relief Act of 1997 Practicing accountants are calling for more changes in the proposed Internal Revenue Code alternative minimum tax (AMT) rules. The AMT provisions, which were designed to prevent corporations from avoiding corporate income tax payments, are included in the Taxpayer Relief Act of 1997. The new tax law simplifies taxation, including small business tax exemptions and AMT depreciation adjustment.

Professional liability for accountants: 'apparent authority.'

'Apparent authority' liability for accountants covers such instances wherein practitioners conduct tasks that an accounting firm does not practice or did not sanction, but which is taken by a third party as an authorized service. Claims, which are often directed against firms, are usually filed by clients who state that they would not have incurred damages if they had known that deals with agents were not approved by the firm. Principals can avoid being held liable to such claims by informing...

Tax bill errors beginning to surface.

Taxpayer Relief Act of 1997 The newly-implemented Taxpayer Relief Act of 1997 has several faults. Errors include conflicting legislative language, mismatched effective dates and missing sections. Congressional aides attribute the errors to the tax bill drafting process and stress that further legislation will address the mistakes. The Joint Committee on Taxation has already begun identifying technical corrections.

The IRS after the Senate Finance Committee hearings.

The IRS presented two fact sheets during Senate Finance Committee hearings on the service's procedures and practices. The fact sheets document the IRS' efforts to enhance customer service and address criticisms. Meanwhile, the National Society of Accountants' Federal Affairs Dept has offered to assist the committee and the IRS to develop and implement new initiatives for improving taxpayer protection.

The political agenda for 1998: budget surpluses and tax reform.

The Congress' 1998 agenda includes tax reform and budget surpluses. The focus on budget surpluses will be fueled by the country's improving economy which is expected to boost Dept of Treasury revenues. House Budget Committee members stress plans to use the surpluses for debt payments and tax deductions. Congress is also expected to push for the restructuring of the IRS as well as implement a new Internal Revenue Code.

Understanding the appropriate business form.

Business owners and professionals should exercise caution in selecting legal business forms. Accountants should help business clients to understand the tax aspects and other important factors in choosing business forms. Among those to be considered are corporate tax status classification and benefits, conversion costs and tax periods and methods. Meanwhile, the passage of the Treasury Regulation 301.7701-3 and the Small Business Job Protection Act makes the selection of appropriate business f...