Month: April 2004

A hearty welcome to Paul L. Caron who has started a new blog entitled the “TaxProf Blog.” Professor Caron is the Charles Hartsock Professor of Law and Director of Faculty Projects at the University of Cincinnati College of Law. The links on this new site are just outstanding, including a listing for tax professors (by name or by school) as well as a listing of tax course materials. (I have added a link to Professor Caron’s site under “Tax-Related Blogs” in the links section over in the right-hand column.)

It’s Tax Day, and time to celebrate with an article from CNNMoney.com, “It’s Tax Day, let’s party“:

If you’re one of the millions of Americans who wait until the last minute to file your taxes, you may encounter some obstacles at the post office today. . . It’s tax time again. Across the country, all sorts of people are using April 15 as a day to sell stuff and to say stuff. . . ”

The article tells of a group of women dressed up as lemons, handing out samples of the new Super Sour Lemonade. Their motto: “Life hands you lemons on Tax Day, so drink lemonade.”

Also, some tax humor from the Tax Guru here.

And on a more serious note, what do you do with that tax refund? Jonathan P. Decker for the Christian Science Monitor via ABC News.com offers a suggestion or two in this article–“Spend Wisely: Put Your Tax Refund to Work“:

“If you simply put part of your refund into your 401(k), and have a match from an employer of 50 cents for each dollar you contribute, that’s a terrific way to build a retirement nest egg,” says Marc Freedman, a financial planner at TriCapital in North Bethesda, Md. “I’d say about 70 percent of my clients invest all or a good part of their tax refund.”

Mutual funds in the news with this from the WashingtonPost.com–“Mutual Funds to Disclose Timing Policies“:

Mutual fund companies must disclose to shareholders their policies on the practice of market timing that is at the heart of many of the cases in the industrywide scandal, federal regulators decreed Tuesday. The five-member Securities and Exchange Commission voted to formally adopt rules requiring the fund companies to detail their market-timing policies in sales material and other documents given shareholders. . .The final rule backed off a plan to require detailed disclosure of efforts to police timing. Some major fund companies, including Fidelity Investments and T. Rowe Price Group Inc., had argued in written comments that the rule would provide a “road map” to those who wanted to evade detection.

From the St. Louis Post-Dispatch, “Some changes in 401(k) rules could avert disaster at 65“:

The creation of the 401(k) plan was perhaps the most revolutionary change in the American financial system in the past quarter-century. It has given millions of workers a way to finance their own retirements. But it also has led to missteps that weren’t possible in the earlier era of company-funded pensions.

Read the story behind the Crowley v. Corning case from this recent article from the New York Times, “All the Nest Eggs in One Company Basket“:

Such stories abound in this company town, where loyalty, self-interest and faith in the company led many to bet their retirement portfolios almost exclusively on the stock of their employer. Economists said what happened here offered a pristine window on the mixed fortunes and stresses that come with retirement accounts based on company stock.

Read the resulting case–Crowley et al. v. Corning–and how the company’s motion to dismiss in that case was granted. Nixon Peabody LLP has a recent article on a later case–Crowley v. Corning Incorporated, 2004 U.S. Dist. LEXIS 758 (W.D.N.Y. 1/14/04)–in which the court addresses plaintiff’s motion to reopen the prior 2002 decision. Plaintiffs had sought to reopen the case by submitting “a handful of new cases, including the Enron decision and a similar decision involving WorldCom.” However, the court distinguished all of these cases and affirmed its prior 2002 decision in this recent 2004 decision.

The 2002 Crowley decision has been cited in numerous cases by defendants in ERISA 401(k) litigation involving company stock, and was cited by the court in the case of In re: Williams Cos. ERISA Litigation as pivotal authority in an unreported decision in which the court declined to adopt the DOL’s interpretation of the law as espoused in the DOL’s Amicus Brief. (See this previous post where this unreported decision is discussed.) However, the DOL strongly notes in its WorldCom Amicus Brief that the Williams decision (which relied on Crowley) was “wrong” and “contrary to the weight of precedent.”

Defendants sought to rely on the Crowley case in the Dynegy case, Constance K. Schied v. Dynegy, Inc., et al. but their motions to dismiss were not granted. (Read the opinion in a recent Order Denying Motion to Dismiss.) Another case where defendants sought to rely on Crowley, but did not prevail, was in the In re Sears, Roebuck & Co. ERISA Litigation. (Read the recent Memorandum Opinion and Order Denying Defendants’ Motion to Dismiss in the Sears case.) Both the Dynegy and Sears opinions were rendered in March of this year.

I had heard that the Treasury and IRS were poised and ready to act quickly once the Pension Funding Equity Act of 2004 was signed into law. Evidently they were, as the Act was only just signed by President Bush on Saturday, and the Treasury and IRS have already issued the interest rate change for pension plan funding as stated in this press release: “Treasury and IRS Issue New Pension Interest Rate For Defined Benefit Plans.” See also Notice 2004-34 and Announcement 2004-38. More on this later . . .

From Reuters via Forbes.com, “Bush signs bill giving pension aid to US companies“:

President Bush signed into law Saturday a measure aimed at saving U.S. companies more than $80 billion in pension contributions over two years, days before many firms make quarterly payments.

From the AP via the Seattle Post-Intelligencer, “Pension bill split Senate Democrats“:

To unionized machinists, autoworkers and airline pilots, an $80 billion pension relief bill making its way through Congress offered badly needed help. To construction unions and the Teamsters, it was a loser. To the quiet satisfaction of Republicans, that left unhappy Senate Democrats in the middle, forced to make a politically painful choice between reliable election-year allies on one side and those on the other.

From Yahoo! News.com, “With Tax Clock Ticking, Congress Clears Pension Plan Funding Relief.”

From CCH, the “CCH Tax Briefing on the Pension Funding Equity Act of 2004.”

Benefitslink.com now has the link to the “Text of IRS General Information Letter to Mark Iwry on Automatic Compensation Reduction Elections (PDF)” (via the American Benefits Council) referred to in this article and mentioned in a previous post.

For those who won’t make the deadline this week for filing their tax returns, RothCPA.com has some helpful info here on filing an extension, including a link to IRS Form 4868.

From CFO.com, “Malfeasance Insurance: How plan sponsors are coping with the mutual fund scandals“:

Of course, discussions about the mutual-fund scandal are occurring at plenty of companies unaffected by any revelations to date. As the scandal expands, says Jean Blackwell, CFO of Cummins Inc. and chairperson of its benefits-policy committee, “people are taking their fiduciary responsibilities much more seriously.” Blackwell—who in the past has served as the Columbus, Indiana, engine maker’s general counsel and as its vice president of HR—has observed that committee members these days “will push back and disagree,” where in the past they were more inclined to go along with the recommendations of the benefits staff.

From the New York Times, “Speaking Out Could Get Investors Sued“:

Annual meetings have long been considered an open forum where company shareholders could speak out and hope to be heard — and not worry about being sued for what they say. Until now. Just as investors are trying to step up their influence over corporate dealings in the wake of all the scandals, a recent lawsuit is raising concerns that they could face litigation when they voice ideas that companies don’t like.

For those interested in the development of the blogosphere, “A crush note to the blogosphere: Newest mode of journalism has tenacity and transparency that major media lacks.”

For those interested in the development of the blogosphere, this is a wonderful article–“A crush note to the blogosphere: Newest mode of journalism has tenacity and transparency that major media lacks“–by Arianna Huffington at WorkingforChange.com. Here’s what she has to say about blogs:

The problem isn’t that the stories I care about aren’t being covered; it’s that they aren’t being covered in the obsessive way that breaks through the din of our 500-channel universe. Because those 500 channels don’t mean we get 500 times the examination and investigation of worthy news stories. It means we get the same narrow conventional-wisdom wrap-ups repeated 500 times. . . Bloggers are armed with a far more effective piece of access than a White House press credential: passion.

She goes on to say that she loves “the open nature of the form — the links, the research made visible, the democratic back and forth, the open archives, the big professorial messiness of it all” stating further:

It reminds me of my schoolgirl days when providing the right answer wasn’t enough for our teachers — they demanded that we “show our work.” Bloggers definitely show their work. It’s why you don’t just read blogs — you experience them.

All of which has made the blogosphere such a vital news source in our country — and has made me besotted with blogs. It’s a crush that I’m betting will quickly progress to going steady.