I have been involved in reporting federal tax legislation for well over a quarter of a century and I am amazed that Congress can still surprise me. It happened with the "American Job Creation Act of 2004," which will be the second significant election year enacted tax law, closely following the "Working Families Tax Relief Act of 2004."
This second piece of tax legislation is surprising on many levels. Rather than simply dealing with the repeal of the Foreign Sales Corporation/extra territorial income Internal Revenue Code provisions, as originally expected, it snowballed into massive tax legislation.
Once signed by President Bush, It will make a number of important changes including many that affect businesses, especially manufacturers and those with foreign income. Some other changes of note involve liberalization of the rules for S corporations, a whole new set of requirements for nonqualified compensation, and a deduction for sales taxes, which is in lieu of the deduction for state and local taxes. I am not going to try and summarize the numerous provisions here or the implications and planning possibilities because my column would then become a book, but suffice it to say those involved in taxes have their work cut out for them.
The tax publishers are already busily preparing explanations of the legislation, tax prep vendors are modifying their programs, and tax practitioners are trying to identify the various changes that affect their clients. Then, there are the various commentaries and editorials being written criticizing or justifying the so-called special interests who benefit from the new tax law.
It is going to take a while, but I think all of those involved will conclude and agree that the "American Job Creation Act of 2004" is extremely significant. What was originally thought to be a sleeper, a tax bill to deal with an adverse World Trade Organization ruling, morphed into something much bigger and that was completely missed by most who were busy following the presidential debates.
You know, I really shouldn't be that surprised because I remember when I first started out Congress enacted legislation one year at the very end of December and affected taxpayers had to act within days before the year expired to take advantage of it.
