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Learning for Extra Credit

The IRS issued proposed regulations that explain the Hope Scholarship and Lifetime Learning credits, which were introduced in 1998. The regulations provide guidance on who can claim the credits and which expenses qualify. For taxpayers with eligible dependents who are students, the proposed regulations also explain whether the taxpayer or the student is entitled to claim the credits (Reg-106388-98).

Little Guys Get Big Break

The IRS increased its fee to large companies for a private letter ruling from $3,650 to $5,000 to offset processing costs. At the same time, the IRS reduced its fee to $500 for requests for such rulings from small business owners with a gross income of less than $1 million. The purpose of the fee reduction was to encourage small companies to seek assistance when faced with complex tax issues (IR-1999-04).

Relief for Innocent Spouses

The 1998 IRS Restructuring and Reform Act expanded the relief for innocent spouses for joint return liability. Taxpayers requesting relief, claiming they had no knowledge of an erroneous item or that tax items were allocable to the other spouse (from whom the taxpayer is separated or divorced), should use Publication 971, Innocent Spouse Relief , and Form 8857, Request for Innocent Spouse Relief .

The IRS Slashes Group Term Rates

The IRS issued proposed new Table I rates for the taxable portion of group term-life-insurance coverage. As a result of the reduced rates, which apply to coverage provided on or after July 1, 1999, employees will be taxed on less of their income. Both employers and employees will save on FICA taxes (Reg-209103-89 and Prop. Regs. Sec. 1.79-3(d)(2)).

—Michael Lynch, CPA, Esq., associate professor of tax accounting at Bryant College, Smithfield, Rhode Island.

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QUIZ

News quiz: Senate health care bill in the spotlight

Reports related to the Republican bill to repeal many provisions of the PPACA, other tax issues, and the giant AICPA ENGAGE Conference offered a diverse reading list for June. See how much you know about recent news with this short quiz.