Grassley Knocks Stanley Works Bermuda Move: Shareholders of tool maker Stanley Works approved relocating the company’s legal residence to Bermuda, a move that angers Sen. Chuck Grassley, ranking member of the Committee on Finance.
Grassley is the co-sponsor, with committee chairman Sen. Max Baucus, of legislation to rein in so-called corporate expatriation. The senators introduced the Reversing the Expatriation of Profits Offshore Act (S. 2119) on April 11.
"A tax partner at Ernst and Young predicted that patriotism would take a back seat to profits after the emotion surrounding the events of Sept. 11 began to fade. It looks like she was right. Here’s a company pulling up stakes when the clean-up at Ground Zero is barely done. That’s too bad," Grassley said.
"In March, Senator Baucus and I warned Stanley Tools and other companies considering this move to reconsider. We promised to fight corporate expatriation and we introduced legislation to stop it. Now, Stanley Works is setting up a showdown with Congress."
Grassley added, "Company officials might say that our international tax rules are flawed, and they’re right. Congress needs to fix those rules so companies can compete better in the global marketplace. But the solution isn’t to pull up stakes and set up a filing cabinet someplace that doesn’t charge taxes. The solution is to stay here and pay your share and work with Congress to fix what’s unfair about the tax system."
Options, Deferred Payments Transferred In Divorce Taxable Only To Transferee: The Internal Revenue Service has ruled that interest in non-statutory stock options and nonqualified deferred compensation transferred due to a divorce qualify are taxable only to the person they’re transferred to.
Revenue Ruling 2002-22 concludes that only the transferee is liable for tax on any gain when the options are later exercised. Notice 2002-31, issued along with the revenue ruling, requests comments by July 15 on a proposed revenue ruling identical to Rev. Ruling 2002-22.
According to the IRS, the application of the assignment of income doctrine in divorce cases "to tax the transferor spouse when the transferee spouse ultimately receives income from the property transferred in the divorce would frustrate the purpose of Section 1041 with respect to divorcing spouses."
"That tax treatment would impose substantial burdens on marital property settlements involving such property and thwart the purpose of allowing divorcing spouses to sever their ownership interests in property with as little tax intrusion as possible," said the IRS.
New Tax Scams Page Debuts On IRS.gov: Keeping taxpayers alerted to the latest scams, the Internal Revenue Service has created an updated Criminal Investigation Web page on schemes and cons. The redesigned page on Tax Fraud Alerts is the latest IRS effort to combat tax schemes. The site is available by visiting www.irs.gov and using the home page link Tax Scams/Fraud Alerts.
"Identifying and combating actively promoted tax schemes is our highest compliance priority," said IRS commissioner Charles O.
Rossotti. "Nothing undermines confidence in the tax system more than the impression that the average honest taxpayer has to pay his or her taxes while unscrupulous taxpayers are allowed to get away with not paying."
The IRS warns taxpayers to beware of tax-savings pitches that sounds too good to be true. Taxpayers should seek expert advice before they subscribe to any scheme that offers promises of instant wealth or exemption from taxes.
"The IRS wants taxpayers to be aware of these schemes, scams and cons," said Mark Matthews, IRS Criminal Investigation chief. "This new page will help protect taxpayers by keeping them informed. We don’t want taxpayers to get caught up in these schemes, which are costly to all Americans."
Grants Offered for Low-Income Taxpayer Clinics: Organizations providing low-cost or no-cost representation to people involved in tax disputes can apply for grants worth up to $100,000 for the 2003 grant cycle, the Internal Revenue Service announced. Grants are also available for programs that inform taxpayers for whom English is a second language of their tax rights and responsibilities.
"Our matching grant program encourages the creation and growth of low-income taxpayer clinics across the nation," said IRS commissioner Charles O. Rossotti. "These clinics are an important resource for taxpayers who may have nowhere else to turn."
The Low-Income Taxpayer Clinic program, now in its fifth year, continues to expand. In 1999, the IRS awarded $1.5 million in grants to 34 groups across the nation. In 2002, $7 million was awarded to 127 organizations. LITC applications must be received by July 1, 2002. The grants will be awarded by November 1 for the period commencing in January 2003.
