news & noteworthy August 1, 2004

Alerts, Updates and Other Tax and Accounting Tidbits for Business and Home

Presented electronically by Norman, Johnson & Co., PA Certified Public Accountants

Sales tax holiday – For South Carolinians August brings a special holiday – a sales tax holiday. This year the “sales tax holiday” begins at 12:01 a.m. Friday, Aug. 6 and continues through midnight, Sunday Aug. 8.  An exemption from the 5% state sales tax and all other local sales tax is applied to traditional back-to-school purchases such as clothes, shoes and school supplies.  The exemption also applies to big-ticket items such as computers, computer software and printers. 

            This is the fifth year of the sales tax holiday, which became law in 2000 and, by law, the event is held annually the first weekend in August.  The Department of Revenue estimates that shoppers saved more than $2.3 million in sales and use tax exemptions last year.

Presidential tax returns – Individual income tax returns – including those of public figures – are private information, protected by law from unauthorized disclosure. Indeed, the Internal Revenue Service is barred from releasing any taxpayer information whatsoever, except to authorized agencies and individuals.

Like all other citizens, U.S. presidents enjoy this protection of their privacy. Since the early 1970s, however, most presidents have chosen to release their returns publicly. In the hope of making this information more widely available, the Tax History Project at Tax Analysts has compiled an archive of presidential tax returns. Click on the link if you would like to peruse recent presidents as well as John Kerry’s tax returns.

Worthy Quote: “In times like these, it helps to recall that there have always been times like these.” – Paul Harvey 

IRS increases audit efforts – IRS Commissioner Mark Everson says that the era of decline in enforcement actions is now over and that the Service will begin ramping up its enforcement efforts, especially for high-income individuals and corporations “so that Americans know that when they pay taxes, their neighbors and competitors are doing the same.”

Everson points out those enforcement results last year show that audits, criminal investigations, and collections are all up. “In particular, the number of high-income taxpayer audits again increased by 24 percent. Audits of taxpayers with incomes over $100,000 were up over 50 percent from two years ago.”

UBI – Not-for-profit organizations often are tax exempt under certain IRS guidelines and approvals. Tax exempt that is, except for Unrelated Business Income (or UBI for short). Unrelated business income is the income from a trade or business that is regularly carried on by an exempt organization and that is not substantially related to the performance by the organization of its exempt purpose or function, except that the organization uses the profits derived from this activity. Providing business services to the general public instead of their target service group would be one way to fall into this category.

Savings in the USA – The personal savings rate is currently 2.2%. Twenty years ago in 1984, the personal savings rate in the USA was 10.3%. Four out of every 10 American workers today are not saving anything for retirement. (source: Dept of Commerce. Employee Benefit Research Institute)

LIBOR? – The London Interbank Offered Rate (or LIBOR for short) is the rate of interest at which banks borrow funds from other banks, in marketable size, in the London interbank market. LIBOR is the most widely used benchmark or reference rate for short term interest rates. Most US banks now quote commercial loans in reference to LIBOR instead of the old favorite, Prime Rate.

Bare facts: Employer match – The average employer match in 401(k) plans in 2003 was 2.9%. Online payments – The percentage of consumers paying at least one of their bills online rose to 57% in 2003 from 17% in 2000. Fly the crowded skies - The average number of people airborne over the US at any given hour: 61,000.

Watching the Calendar – Extended individual 1040 returns are due August 16^th; extended corporate returns are due in 46 more days, September 15^th; and there are just 94 more days until the Presidential election.

Where’s Cindy? – If you have missed Cindy lately it may be because she is spending two weeks in Hawaii where she was married and spent her honeymoon. Congratulations to Cindy and Raj Walia.

Got a friend or associate that needs help with accounting, taxes, or financial planning? We appreciate your referrals. Invite your referral to call for a complimentary conference to review their situation.

Jim Norman and Gary Johnson

Norman, Johnson & Co., PA is a Spartanburg, SC based CPA firm which was founded in 1990. The firm offers a wide range of audit, accounting, tax, business consulting, and financial planning services for individuals, businesses, governmental entities, and not-for-profit clients.

This newsletter is published monthly on the first of each month and alerts and special topics as they are deemed informative. Information contained in this newsletter is derived from sources believed to be accurate. You should discuss any legal, tax, or financial matters with the appropriate professional before applying them to your specific situation.

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