Here you’ll find items of current interest — new programs, recent guidance, or timely reminders. Or jump to the latest news about IRS forms and publications.
IRS Strengthens Withholding Compliance Program
The IRS has stepped up its withholding compliance program by making more effective use of information reported on W-2 wage statements to ensure that employees have enough federal income tax withheld from their paychecks. At the same time, employers are no longer required to submit potentially questionable Forms W-4 to the IRS.
Health Savings Accounts
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 created a new, tax-advantaged way for certain people to save for health care expenses. You must be covered by a high-deductible health plan to open and contribute to a Health Savings Account (HSA). IRS and Treasury have provided guidance on how HSAs work.
Tax Benefits for Armed Forces Members
The Military Family Tax Relief Act of 2003 has various benefits related to military service. Several earlier tax law provisions gave breaks to those serving in combat areas. Tax Information for Members of the U.S. Armed Forces has links to these details and more.
Credit Counseling Organizations
The IRS is concerned that some organizations are using their tax-exempt status to skirt consumer protection laws. Get the details through this IRS consumer alert.
The IRS issued guidance on several tax issues related to medical care during 2003, some related to the deductibility of certain expenses, others related to Flexible Spending Arrangements (FSAs) and similar employer plans. There’s also a new Health Coverage Tax Credit program that helps pay medical insurance premiums for certain workers who lose their jobs due to the effects of international trade and for people age 55 or over who receive benefits from the Pension Benefit Guaranty Corporation. Knowing how these rules work may get you some tax benefits for your medical care dollars.
Tax Shelter Updates
Milestones in the IRS campaign against abusive tax avoidance transactions.
Why Pay Taxes? — The Truth about Frivolous Tax Arguments
The Truth About Frivolous Tax Arguments (PDF 405K) addresses some of the more common false “legal” arguments made by individuals and groups who oppose compliance with the federal tax laws. These arguments are grouped under six general categories, with variations within each category. Each contention is briefly explained, followed by a discussion of the legal authority that rejects the contention. The second section deals with frivolous arguments encountered in collection due process cases. The final section illustrates penalties imposed on those pursuing frivolous cases.
RRA 98 Joint Congressional Review
The IRS Restructuring and Reform Act of 1998 (RRA 98) required five annual reviews by the Joint Committee on Taxation of the agency’s progress in meeting its strategic and business plans, in improving taxpayer service and compliance, on technology modernization and on the latest tax filing season. Commissioner Everson testified at the final review on May 20, 2003.
See You in Court?
Why do some tax cases end up in court? How does the IRS determine which cases it will pursue? In an April 24, 2003, address to the Tax Court Judicial Conference, then-IRS Chief Counsel B. John Williams spoke on his approach to designating cases for litigation. His comments give insight into this aspect of tax administration.