New White House proposals on simplification and taxpayer rights.The Treasury Department announced the Clinton Administration's package of tax simplification and taxpayer rights initiatives. The package includes proposals on global interest netting and alternative minimum tax relief of small companies. Treasury Secretary Robert E. Rubin said the package contained more than 60 measures designed to simplify tax law and enhance taxpayer's rights. "Our goal is clear: We want to make life easier for the American taxpayer," said Rubin. He said the proposals represented everything the administration could do to simplify the tax code so it would be, in the aggregate revenue neutral. Highlights of the tax simplification proposals include * An increase of the standard deduction The name given to a fixed amount of money that may be subtracted from the adjusted gross income of a taxpayer who does not itemize certain living expenses for Income Tax purposes. for the unearned income of dependent filers to the amount of the filer's earned income, plus $700 of unearned income. * The elimination of the household maintenance test for the child-and dependent-care tax credit. * An exclusion from the corporate alternative minimum tax (AMT See vPro. ) for companies with gross receipts that average less than $5 million for the prior three years. * Independent contractor rules allowing businesses that have misclassified their workers and fail to meet the requirements for the Internal Revenue Code The Internal Revenue Code is the body of law that codifies all federal tax laws, including income, estate, gift, excise, alcohol, tobacco, and employment taxes. These laws constitute title 26 of the U.S. Code (26 U.S.C.A. § 1 et seq. section 530 safe harbor to reclassify Verb 1. reclassify - classify anew, change the previous classification; "The zoologists had to reclassify the mollusks after they found new species" class, classify, sort out, assort, sort, separate - arrange or order by classes or categories; "How would you their workers prospectively with no employment tax liability for prior years. * An exemption from the foreign tax credit limitation for taxpayers with no more than $300 of creditable foreign tax paid that were reflected on an information return and with no foreign income other than passive income. Drafting more rights Along with the simplification package are plans to add more taxpayer protections and safeguards. Here's a look at the highlights of the president's Taxpayer Bill of Rights A federal or state law that gives taxpayers procedural and substantive protection when dealing with a revenue department concerning a tax collection dispute. Perceived abuses by the federal Internal Revenue Service (IRS) during tax audits led to the enactment of the 3: * Global interest netting for the period that an underpayment and an overpayment o·ver·pay v. o·ver·paid , o·ver·pay·ing, o·ver·pays v.tr. 1. To pay (a party) too much. 2. To pay an amount in excess of (a sum due). v.intr. To pay too much. overlapped, irrespective of whether they were both still outstanding. * A uniform "reasonable cause" exception for all penalties relating to failure to meet a statutory filing requirement or to pay or deposit required taxes. * A clarification on the statute of limitations A type of federal or state law that restricts the time within which legal proceedings may be brought. Statutes of limitations, which date back to early Roman Law, are a fundamental part of European and U.S. law. for all adjustments relating to distributions from pass-through entities. * An extension for the statute of limitations on refund claims for individuals with mental or physical disabilities. The Clinton administration expects that many of these proposals will be included as part of the five-year balanced budget agreement; however, the precise content of the tax package will not be certain until the members of the House Ways and Means WAYS AND MEANS. In legislative assemblies there is usually appointed a committee whose duties are to inquire into, and propose to the house, the ways and means to be adopted to raise funds for the use of the government. This body is called the committee of ways and means. and Senate Finance committees agree on a bill. |
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