larryk@tektronix.UUCP (07/21/84)
Because the DEFICIT REDUCTION ACT was signed into law July 18, 1984 the
$32,800,000 accrued over the past 12 years for my company's Domestic Inter-
national Sales Corporations are no longer owed. This is great for earnings,
but does anyone know how the DRA will reduce the federal deficit?
Considering how many companies have DISC's, this act must involve billions!
Perhaps I'm confused - the DRA isn't supposed to reduce the federal deficit?
tektronix!larryk (Larry Kohn)claus@inuxd.UUCP (David Claus) (07/24/84)
Another question about the new tax bill: When will the new law on income averaging go into effect? If it goes into effect in '84 I have this question: Can the government change the tax law in the middle of a tax year and penalize you if you owe more taxes at the end of the year than you thought you would under the old law? My guess is that they can probably do whatever they want. Does anyone know? Dave Claus AT&T-CP Indy
wildbill@ucbvax.UUCP (William J. Laubenheimer) (07/26/84)
> Can the government change the tax law in the middle of a tax > year and penalize you if you owe more taxes at the end of > the year than you thought you would under the old law? > Dave Claus > AT&T-CP Indy They most certainly can. I am in the middle of a mild hassle with the IRS right now which was created by the ill-fated dividend and interest withholding measure which was proposed in 1982 and voted down in 1983. Since I am an RA (tax-exempt), a substantial majority of my income comes from dividend and interest income. The instructions for the 1983 Form 1040-ES specified that in figuring your 1983 taxable income, you were to assume that 10% of your dividend and interest payments were to be withheld. On this basis, my tax liability was below the cutoff of $300. When the House finally decided not to pass the measure in June, I paid two installments (since this change occurred after June 1, which was the last date for which income could affect the June 15 estimate) covering the amount I had expected to earn from interest and dividends. OK, now comes April 15, 1984. I file, showing a small overpayment which I apply to the next year's return. The IRS comes back and says "Because you didn't pay at least 20% of your tax liability each quarter, we are going to hit you with penalties and interest unless you can produce a Form 4612 [I think that was it - wjl] explaining why we shouldn't". On this form you are allowed to reduce your first and second quarter underpayments by 5% of the dividends and interest subject to withholding. That's right - 5%, not the 10% they told you to assume when you were filling out your 1983 1040ES. Only the fact that all the amounts were small enough that I hadn't earned my zero-bracket amount by June 1 saved me. (Not that the penalties were all that big - we were only talking about $20 or so - but it's the principle of the thing.) So yes, they can change the rules in the middle of the game. And no notification was given until the 1983 forms were sent out, either. Foo on the IRS (again!). ____ Bill Laubenheimer ___ / \ ___ UC-Berkeley Computer Science / \ | o o | / \ ucbvax!wildbill ------+++----------()----------+++------ ...Killjoy was here!