Month: January 2004

Howard Bashman at How Appealing has been discussing how bloggers now can utilize the more permanent New York Times links available through the RSS feed so that links do not disappear behind the New York Times’ archive wall. You can read his remarks here and here. For those who would like to take advantage of the more permanent links but do not utilize a news aggregator, please take note of the New York Times Link Generator. Read more about Link-Rot in this post at CalPundit.

I will be utilizing the more permanent links here in the future.

UPDATE: I have added a permanent parking spot for the New York Times Link Generator in the column over on the right. (Scroll down.) For links that have already gone defunct, the only way that I know of to obtain the original link (so as to be able to insert it into the Link Generator) is to view the original source code for the blog post and extract it that way. If other techie-types know of a better way, please let me know.

The Associated Press via the SeattleTimes.com is reporting: “SEC looking at pension consulting firms.” More on this later . . .

I have added the following table, containing the 2004 Retirement Plan Limits, in a permanent location over in the right-hand column:

401(k)/403(b) Elective Deferral Limit (402(g)(1))	$13,000
Government/Tax Exempts Deferral Limit (457(e)(15))	$13,000
Catch-up Cont.’s Limit	$3,000
Annual Compensation Limit	$205,000
HCE Comp. Limit	$90,000
Key Employee Officer Comp.	$130,000
Max. Annual Benefit: DB Plan	$165,000
Max. Annual Contribution: DC Plan	$41,000
SEP Minimum Comp.	$450
SEP Compensation	$205,000
SIMPLE Employee Cont. Lmt.	$9,000
SIMPLE “Catch-Up” Deferral Lmt.	$1,500
FICA Wage Base	$87,900

AccountingWeb.com is reporting: “IRS E-Filing Directive Sparks Privacy Debate.” The article asks: “Is it unnecessary government intrusion or a way to gather routine information?” Tax preparers are debating that question since the IRS announced it would flag taxpayers who use its free electronic tax filing program, and this on the heels of the IRS trying to encourage taxpayers to file electronically in order to reduce paperwork. One commentator decries the practice, saying “Taxpayers should not have their records flagged and segregated simply because they choose to use the IRS Free File program.”

The IRS response to the outcry according to the article: “Terry Lutes, IRS e-filing chief, said flagging the returns is needed to judge the effectiveness of the program and to better market e-filing. He said the IRS is gathering routine information, and he is “flabbergasted” by privacy arguments.”

The Philadelphia Inquirer today features two good op-eds on mutual funds:

• “Mutual funds can’t justify high expenses”
• “What to look for in year’s statement”

Also, the New York Times has this: “Pressure Builds to Cut Fund Fees.”

And, this is particularly interesting from the Financial Times: “US mutuals face flak over costs.” The article discusses how “US mutual fund groups are facing mounting criticism for passing on the rising cost of their liability insurance to shareholders in the wake of the scandals plaguing the industry.” The article notes how “premiums to protect mutual funds and executives against lawsuits have risen more than 300 per cent” as a consequence of the widening mutual fund investigations.

UPDATE: Another aspect to the fee discussion from MSNBC.com: “Fund fees finance interests of lobbyists: Industry favors policies that is seen hurting investors.”

ADDITIONAL UPDATE: On a related mutual fund investigation topic, “SEC head says fund abuses detectable: Chairman Donaldson says fund directors could have seen abuses if fund flow data was monitored” from CNNMoney.com.

Previous posts here at Benefitsblog in the last couple of weeks have focused on recent pronouncements and activities at the IRS: “The IRS Scrutinizes Its Own” and “IRS Targeting ‘Abuses of Integrity’.” In the news today, there are more pronouncements from IRS Commissioner Mark Everson as discussed in this article from the New York Times: “I.R.S. to Add to Enforcement by Reducing Its Clerical Staff.” Also, from the Associated Press via Yahoo! News.com: “IRS Job Cuts to Make Way for New Hires.”

Please note the inconsistencies in these reports. The New York Times reports the IRS is cutting 6,700 jobs; the Associated Press reports only 2,400 jobs are being cut. Which is right? The IRS newswire which I received (IR-2004-3) says that the IRS will be (1) closing its Memphis tax return processing operations effective in October, 2005; (2) consolidating its back-office processing for exam, collection and insolvency cases from 92 different locations to four starting in 2005; and (3) reducing agency overhead in internal support functions, particularly through new technology gains in the human resource area, starting in 2005. The newswire goes on to say that the IRS has advised the union that these initiatives involve functions of approximately 6,700 of its 115,000 current employees, but that only about 2,400 employees may be involuntarily separated. The newswire reports that savings from the three initiatives will allow the IRS to fill 2,200 new positions.

As stated in the first part of the newswire, the goal of it all, according to Mr. Everson, is this–to “devote more people to front-line positions and strengthen tax enforcement activities.” (Sounds like they are building a veritable army, doesn’t it?) Also, another part of the newswire says that “[s]avings from these initiatives will allow the IRS to hire more people to pursue cheating by high-income individuals and corporations, continue our attack on abusive tax shelters, bolster our criminal investigation efforts and assist with other enforcement priorities.”

How will all of this affect enforcement in the employee plans arena? Back in October, I reported on how the IRS is shifting its focus to examinations now that the determination letter application program is winding down, following completion by most plans of the GUST amendment process. You can read about it here: “From My Notes: The Mid-Atlantic Pension Liaison Group Meeting.” (This group will meet again at the end of January and updates on any previous information will be reported on then.)

Also, in the news last fall, were reports that the IRS had begun an audit initiative focusing on compensation arrangements for corporate officers, directors and other senior executives.

On a related topic, CCH has some good information today on IRS plan audit policies from Preston Butcher, Employee Plans Examinations Director: “IRS explains on-site plan audit policy.”

Finally, after all of that seriousness, it is time for some IRS audit humor (via the Tax Guru) here and here.

The Wall Street Journal today had this article: “States Publicize Late Taxpayers’ Names Online: Strapped States Collect Millions In Back Taxes.” The article notes how more and more states are resorting to “cybershame,” that is posting the names of delinquent taxpayers and the amount they owe on a state website, and that the process yields results. One state program called “Caught in the Web” warns on its website: “If you don’t want to see your name posted on our site along with other tax delinquents, be sure to keep up with your tax obligations.” (Yikes! What if they are wrong, though, as government agencies tend to be now and then?) According to the article, the following states either have a form of the program, have tried it or are going to: Louisiana, Connecticut, Minnesota, South Carolina, North Carolina, New Jersey, Washington, and Illinois.

On a more positive note, a tax quote from Tax Analysts:

“The United States has a system of taxation by confession. That a people so numerous, scattered and individualistic annually assesses itself with a tax liability, often in highly burdensome amounts, is a reassuring sign of the stability and vitality of our system of self- government. What surprised me in once trying to help administer these laws was not to discover examples of recalcitrance, fraud or self- serving mistakes in reporting, but to discover that such derelictions were so few.” —Robert H. Jackson

The Dow Jones Newswire has this article (via the Wall Street Journal): “Companies Find Time Is Short To Comply With New Pension Rules.” (No link available.) The article notes how companies are scurrying to comply with FASB’s new pension disclosure rules discussed in a previous post here and how some are finding compliance difficult, while others seem to say that it is not that big a deal. The article notes that “[m]ost publicly traded companies must make the new information available in upcoming annual reports – due in a matter of weeks – even though the Financial Accounting Standards Board didn’t issue the new rule until late last month.”

UPDATE: FEI has posted a good article on the new pension disclosure rules: “New Retirement-Plan Disclosures for 2003 Reports by KPMG.” (Thanks to Benefitslink.com for the pointer.)

I guess the IRS is trying to set a good example here: “IRS Employees Targeted in Tax Review.” The article from USA Today notes that the Internal Revenue Service “has identified 800 employees whose tax returns will face closer scrutiny” and that this is “part of an effort to make sure IRS employees are filing truthful returns and complying with tax laws.” In other words, the IRS hopes its employees are not engaging in this.

CFO.com has published their 2004 State Tax Survey. According to the article discussing the survey, this is the fourth time since 1996 that CFO magazine has surveyed corporate tax officials on their impressions of state tax environments. The article notes that all states are desperately in need of funds:

Although some states have already raised taxes—New York, for example, has raised both sales and income taxes—expect a wave of increases after this year’s election season. In the meantime, our survey suggests, corporations are going to have to live with tougher tax administration from states seeking to close their budget gaps. “States are out of money, and they are getting money out of audits even when the bases of their arguments are unreasonable, unfounded, and stupid,” wrote one survey respondent. “The tax department is then left with the option of fighting them or giving in.”

By the way, Pennsylvania is listed in the top 5 “Bad Boys.”