With the tax law becoming increasingly complex, it is no surprise that there often can be several well-intentioned interpretations of a particular provision. Also no surprise is the expectation of many clients that a fee for planning advice should almost always result in an exponential decrease in overall tax liability.

The Governmental Accounting Standards Board has released Statement No. 46, Net Assets Restricted by Enabling Legislation, an amendment to its Statement No. 34.Statement 46 was drafted to help government entities determine when net assets have been restricted by the passage of enabling legislation, and to specify how those net assets should be reported in financial statements when there are changes in the circumstances surrounding said legislation. Enabling legislation is defined as a specific type of legislation that both authorizes the raising of new resources and imposes legally enforceable limits on how they may be used.

The Internal Revenue Service has released final regs totaling over 230 pages with rules for plans that permit employees to make pre-tax contributions and for plans that have employer matching contributions or employee after-tax contributions. The existing regulations covering these plans were last updated in 1994. Since then, there have been significant statutory changes. The new regs will be fully effective for plan years beginning on or after Jan. 1, 2006, although employers are permitted to use the new rules for any plan year that ends after Dec. 28, 2004. These comprehensive final rules are the result of a long effort of input gathering from retirement plan participants, sponsors, and service providers. Specifically, they address many of the concerns raised by comments submitted in response to the proposed regulations. These final regulations will make it easier for employers to sponsor plans to help employees save for their retirement and will assist administrators in keeping the plans qualified. The final regulations update and simplify many of the current rules for 401(k) plans. In addition, the new regulations strengthen the nondiscrimination rules that ensure benefits for rank-and-file employees. They require certain employer contributions to be spread over a large group of rank-and-file employees before they can boost the ability of high-paid employees to defer income under the plan.

Before the end of the year, President Bush intends to select panelists to comprise a bipartisan tax reform commission, which would be charged with reporting any and all recommendations related to reforming the tax code to the Treasury Dept. According to Tax Analysts, the panel's recommendations will be given to Treasury secretary John Snow who in turn, will refer them to the president. However, as previously reported, heading the "to-do" list on the president's second term agenda will be the overhaul of the Social Security system and non-defense spending cuts rather than tax code reform. Most Capitol Hill observers believe that any tax reform would most likely be incremental and not be addressed until 2006.

The Office of Federal Housing Enterprise Oversight, the regulator for troubled mortgage financing concern Fannie Mae, said it would examine the lavish severance packages the company plans to pay ousted chief executive Franklin D. Raines and former chief financial officer J. Timothy Howard. According to an SEC filing, Raines is entitled to receive monthly pension payments of $114,393 for life, or roughly $1.4 million a year. He is also owed $8.7 million in deferred compensation. Raines also holds vested options for 1.6 million shares of stock, plus options for another 368,800 shares. In total, Raines would be due more than $19 million. Howard, also 55, would be eligible for $36,071 in monthly pension payments and deferred compensation of $4 million. He holds vested options for 481,600 shares. Howard is also eligible for $84,000 in salary from Dec. 20, 2004 through January 2005. Both Raines and Howard were ousted last week by the Fannie Mae board. The SEC has ordered the company to restate its financials for the three-year period from 2001-2004. That would reduce earnings by roughly $9 billion.

With a planned overhaul of Social Security and pressing budget issues occupying center stage during the onset of the second Bush administration term, the president's planned reform of the tax code would most likely be pushed back at least one year. According to the Washington Post, the president plans to name a panel to examine the current tax policy but reportedly will assign the Treasury Department to monitor the panel's progress. The report said that Treasury Secretary John Snow would most likely recommend incremental changes to the tax code, rather than more dramatic reforms such as supplanting it with a "flat tax" or national sales tax. A White House spokeswoman, however, maintained that overhauling the tax code remains a priority.

Douglas Hill, managing general partner of embattled brokerage house Edward D. Jones & Co., intends to leave the company roughly one week after the firm agreed to pay $75 million to settle charges of improper disclosure of revenue-sharing payments. Hill, 60, will retire as managing general partner Dec. 31, but would remain as managing partner through 2005. In addition, Hill is expected to pay $3 million of the agreed-upon fine, while the firm's general partners are expected to shoulder an aggregate of $44 million. Last week, the brokerage firm reached a settlement with the SEC, the New York Stock Exchange and the National Association of Securities Dealers as a result of arrangements that Edward Jones entered into with seven fund groups. The firm had not disclosed the fact that it received millions from the fund families each year for selling their respective products.