WEP

Information contained in this publication should not be acted on without prior consultation with professional advisors. This material was not intended or written to be used, and cannot be used, for the purpose of avoiding any tax penalties that may be imposed on any taxpayer. Furthermore, this material was not intended or written to support the promoting, marketing, or recommendation of any of the transactions or matters it addresses.

Quote of the Week: “Spring- the time of year when the green returns to the lawns, the trees and the IRS.” – Anonymous

More Than You Imagined! The new Massachusetts Health Care Law provides more than health care coverage. The current federal provisions concerning travel and entertainment limits are adopted. In addition, all employers with 11 or more employees will be required to put in Sec. 125 Cafeteria Plans by 1/1/07 so that employees can pay for health insurance with pre-tax dollars. Starting 1/1/08, individual tax refunds may be retained to pay penalties where the individual has not acquired the required health insurance. Watch for more developments as the Governor’s veto of parts of the bill run the gauntlet on the hill.

More e-News! The Federal Office of Child Support Enforcement (OCSE) has been working for the past two years on an electronic format to issue income-withholding orders to employers. Since the start of 2006 five states have been actively participating in the program, (California, Florida, Illinois, Indiana and Massachusetts). Expect to see the list grow and for the program to become mandatory with respect to dealing with child support enforcement.

Shades of Things To Come! Japan recently released a directive concerning transfer pricing which greatly expands the concept of intangible assets to include a wider range including employee knowledge, corporate management and sales promotion. While claiming to apply the new rules on a case-by-case basis by comparing the instant company to comparables, it is doubtful a significant body of knowledge exists to make a meaningful comparison as to whether a transaction is at arms length.

Going For A Second Bite! The 2004 American Jobs Creation Act sought to limit the benefits of buying a big SUV over a passenger car for business. According to a recent Congressional Research Service report, the actual reduction in the difference is only a 7% change with the winner still being the SUV. Legislation is being introduced to eliminate the tax benefit to less than zero.

Freedom From What? The Tax Foundation has announced that “Tax Freedom Day” will fall on April 26th this year. That is the day workers have earned enough to pay their taxes for the year according to the Foundation.

William E. Philbrick, CPA/ABV, MST, CVA is a Senior Vice President and Director of Tax and Valuation Services at Greenberg, Rosenblatt, Kull & Bitsoli, P.C. of Worcester, Mass. He can be reached at wphilbrick@GRKB.com