THE INTERNAL RevIRS UPDATES WEB ITEM DEBUNKING FRIVOLOUS TAX ARGUMENTS: The Internal Revenue Service has updated its Web site item that addresses false arguments about the legality of not paying taxes or filing returns. The IRS chief counsel prepared a document addressing the most frequent arguments and posted it to the IRS Web site last summer. This is the first update of that posting. "Year after year, we hear these frivolous arguments about the legality of the income tax," said IRS Commissioner Charles O. Rossotti. "Despite consistent rejection by the courts, unscrupulous promoters try to enrich themselves at their followers’ expense. We want people to know that there’s no legal basis for this bad advice, and there’s a real danger in following it." There are links to the document from the "Newsroom" section’s "What’s Hot" page, the "News for Tax Professionals" and the "Topics for Individuals" pages of the IRS Web site, as well as from the "Tax Scams/Fraud Alerts" link on the site’s home page at www.irs.gov. The direct URL is www.irs.gov/pub/irs-utl/friv_tax.pdf. The IRS continues to investigate promoters of frivolous arguments and to refer cases to the Department of Justice for criminal prosecution. Taxpayers who file frivolous income tax returns face a $500 penalty, and may be subject to civil penalties of 20 percent or 75 percent of the underpaid tax. Those who pursue frivolous tax cases in the courts may face a penalty of up to $25,000, in addition to the taxes, interest and civil penalties that they may owe.
WEIGHT-LOSS PROGRAMS MAY BE TAX DEDUCTIBLE: The Internal Revenue Service has issued a ruling citing conditions under which expenses for certain weight-loss programs may qualify as a medical deduction. Revenue Ruling 2002-19 gives examples of two taxpayers participating in weight-loss programs. They paid fees to join the programs and to attend periodic meetings and purchased diet plans and booklets. One was diagnosed by a doctor as obese, the other as suffering from hypertension. Both participated in the programs as a treatment for their diseases. The costs related to their weight-loss programs would be deductible for these taxpayers, to the extent not reimbursed by insurance or otherwise. "This is a huge step in the direction of helping America lose weight," said Weight Watchers spokeswoman Linda Webb Carilli. "We really need a culture that supports weight management and so we look to major institutions that shape our culture to do so, and the IRS is one of them." Taxpayers may deduct qualifying medical expenses only to the extent the total of such expenses exceeds 7.5 percent of their adjusted gross income. The ruling distinguishes these cases from situations in which taxpayers participate in weight-loss programs to improve their general health or appearances. Such costs are nondeductible personal expenses. Although diet foods may also be part of a weight-loss program, these are substitutes for the food the taxpayers normally consume and satisfy their nutritional requirements. As such, they are not deductible medical expenses, even for taxpayers whose disease qualifies them to deduct weight loss program costs.
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