JEC - Income Sag Began in 2000: The strong upward movement in real cash median household income during the last half of the 1990s came to an abrupt end in 2000, not 2001, according to Joint Economic Committee Chairman Jim Saxton.

"The facts show that the big turning point in real median family income was 2000, when the progress of the 1990s ended," Saxton said. "The 2000 stagnation reflects the economic slowdown then underway."

The timing of this stagnation closely corresponds to a variety of other data on gross domestic product growth, factory employment, industrial production, stock prices and other measures reflecting a major economic slowdown beginning in 2000.

Even so, he said, "the more complete measure of real median household income, including taxes and government benefits, showed essentially no change between 2000 and 2001, at $41,533. Since most Americans do pay taxes or receive government benefits, this is probably a more relevant measure of well-being for the majority of households."

Rossotti - IRS Faces Imposing Challenges: Former Internal Revenue Service Commissioner Charles O. Rossotti said that while the agency has made progress in addressing its internal problems during his five-year tenure, a depleted IRS staff coupled with "the sheer size and complexity of the tax system" would combine to produce serious challenges in the years ahead.

In what he described as "probably my last speech as commissioner," Rossotti told the American Institute of CPAs Fall Tax Division Meeting that the IRS lacks "the resources to attack every single case" of taxpayer noncompliance. Some businesses and individuals will take advantage of the agency’s limitations, he said. "That’s what [tax shelter] promoters are all about."

Rossotti, who stepped down as tax commissioner earlier this month, took control of the IRS at a time when relations between the public and the tax service were at a low ebb. Since then, an emphasis on "customer service" has improved the agency’s relationships with taxpayers and other stakeholders "significantly," he said.

During his address Rossotti expressed appreciation for the institute’s support over the past five years. "The AICPA leadership has helped me and helped the IRS whenever we asked for it," he told the assembled accountants.

Trainor Named Liberty COO: National tax prep franchisor Liberty Tax Service named former Jackson-Hewitt chief executive Mike Trainor to the post of chief operating officer at the company based in Virginia Beach, Va.

Prior to coming aboard at Jackson Hewitt, Trainor served as executive vice president at Century 21, as well as in marketing and management posts with Snyder Communications and G.E.R. Inc.

E-Filing Agreement Signed: The Treasury Department has announced an agreement that would allow up to 78 million taxpayers to file their tax returns electronically without charge.

The agreement between the Internal Revenue Service and Free File Alliance LLC was signed by Commissioner Charles Rossotti and Free File Alliance manager Mike Cavanagh. Under the agreement, tax software companies will offer, at no charge, on-line tax return preparation and filing services to a significant portion of American taxpayers. The IRS will provide taxpayers with links to these free services through  and .

"We are one step closer to allowing millions of taxpayers free electronic filing of their tax returns," stated Treasury Secretary Paul O’Neill. "I look forward to the public launch of the Web site in January."

The Treasury Department noted that free federal electronic filing of tax returns is pro-consumer and pro-taxpayer. The initiative was launched as part of the President George W. Bush’s budget last year. The president has also proposed a 15-day filing extension for all taxpayers who file electronically, including those who are eligible for free filing under this initiative.

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