Credit/debit card tax payments.

In TD 8969, the IRS adopted final regulations authorizing the IRS to accept payment of taxes by credit or debit card and to limit the use and disclosure of information on such payments. The final rules apply to payments of taxes made after Dec. 13, 2001.

Under the final rules, only IRS-approved credit or debit cams may be used to make tax payments. The IRS has entered into contracts with third-party service providers to process such transactions. The Service cannot impose a fee on taxpayers making credit or debit card payments; however, other persons participating in the program (including third-party service providers) are not prohibited from charging fees.

The final regulations ensure that disputes on the merits of a tax liability will be resolved in the traditional administrative and judicial forums and not raised in any dispute with the card issuer, financial institution or other person participating in the credit or debit card transaction. Further, the IRS can return funds erroneously received due to errors in the credit or debit card account by arranging for a credit to the taxpayer's account. Returns of funds through account credits are available only to correct errors relating to the account, not to refund tax overpayments.

As to the use and disclosure of payment information, the final rules provide that information received by any person as to the payment of tax by credit or debit card is to be treated as confidential by all persons who receive the information. IRS personnel can disclose to card issuers, financial institutions and other persons information necessary to process a tax payment or to bill or collect a charged or debited amount. Selling the information, sharing it with credit bureaus or using it for any marketing purpose is prohibited.

The final regulations clarify that sending receipts or confirmation of a transaction to a taxpayer (including secured electronic transmissions and faxes) is permissible. Further, the disclosure of information necessary to complete a transaction by the taxpayer with a state or local government agency is permissible when explicitly authorized by the taxpayer.

Most important future international tax issues

                                        Parents:    Subsidiaries
                                         overall       overall
                                       importance    importance
                                           (%)           (%)

Item                                   1999   2001   1999   2001

Transfer pricing                        61     61     97     66
Controlled foreign corporation rules     4     14     --      6
Foreign tax credits                      4     13      7      8
Double tax relief                       18     10     19      9
Value-added taxes                        8      9     --      8
Customs duties                           5      8     11      9
Expansion of a tax treaty network       --      4     --      3
Taxation of expatriate employees         2      2     --      5

Multiple selections allowed.
Source: Ernst & Young Transfer Pricing 2001 Global Survey