Academic journal article Journal of Accountancy

AICPA Savors Success in New Tax Cut Bill

Academic journal article Journal of Accountancy

AICPA Savors Success in New Tax Cut Bill

Article excerpt

Several provisions included in the $1.35 trillion tax cut bill passed by Congress and signed into law by President George Bush are the direct result of the work done by the AICPA. Primary among the new legislation are the changes to the transfer tax system, which will ease administration of the laws that govern estates, gifts and generation-skipping transfers (GST).

The estate tax, once the concern of the very wealthy, has increasingly affected the moderately wealthy and is expected to continue to do so. The new law will particularly ease the transfer tax burden previously borne by estates containing small businesses, family farms and illiquid assets.

The generation-skipping transfer exemption had become so complex it was a pitfall for taxpayers who failed to meet its stringent rules. Although they made good faith efforts to make timely allocations, they often paid punitive taxes for their inadvertent mistakes.

The law gives the IRS statutory authority to grant relief for late allocations and, because it incorporates the AICPA's proposals, greatly simplifies the labyrinth of rules that formerly entrapped unwary taxpayers.

A second change allows employers to provide retirement education to employees on a tax-free basis. Currently employees availing themselves of this fringe benefit must pay federal income taxes on it. When it becomes effective in 2002, employers may deduct the cost of such retirement education, but employees will not be taxed on it. …

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