Based on the data provided by the Bureau of Labor Statistics in December 2003 total number of unemployed in the U.S. has decreased to 8,398,000 compare to 8,653,000 of unemployed in November. Based on preliminary data from the Bureau of Labor Statistics average hourly earnings of non-supervisory workers on private non-farm payrolls have increased in December to $15.50 compare to $15.47 in November.

http://www.whitehouse.gov/fsbr/employment.html

Federal "High-Low" Per Diem Rates Issued

As part of the Revenue Procedure explaining the rules for determining whether an employee's travel expenses have been adequately substantiated, the IRS has released the optional "high-low" per diem rates that may be used instead of the General Services Administration's "actual" per diem rates for travel to locations within the continental U.S.<./p>

High-low rates
TThe "high" rate increases to $207 (from $204) for travel to any high-cost locality and the "low" rate increases to $126 (from $125) for travel to any other locality within continental U.S.

Some of the high-cost localities are Washington DC, Baltimore, Ocean City, Montgomery and Prince George's Counties, MD, Arlington, Fairfax, and Loudoun Counties, Alexandria, Fairfax, Falls Church and Wintergreen, VA.

Meal and Incidental Expense (M&IE) rates for purposes of the employer's income tax deduction when using the high-low substantiation method increase to $46 (from $45) for a high-cost locality and $36 (from $35) for any other locality.

Transportation industry rates
The federal M&IE rates for the transportation industry have increased to $41 (from $40) for any locality of travel within continental U.S. and $46 (from $45) for any locality of travel outside the continental U.S. These rates simplify record keeping for employers whose employees routinely travel overnight to many different locations.

Incidental expenses
IInstead of using actual expenses in computing the amount allowable as a deduction for ordinary and necessary incidental expenses paid or incurred for travel away from home, an employee or self-employed individual may use an amount computed at the rate of $3 (from $2) per day for each calendar day an employee is away from home.

W-4 and Excess Withholding

General Accounting Office Report 03-913R expresses concern to the IRS about the type of information the Service maintains on taxpayers who claim more than 10 withholdings allowances or exemptions from federal tax withholding. The report points out that some of the information may not be current and may not reflect the present withholding status of some taxpayers.

Practical Accountant, November 2003

State Tax Developments

Maryland is targeting nonresidents
Ehrlich has proposed raising an estimated $38.6 million in FY 2005 by targeting nonresidents-including entertainers and athletes-who currently pay less overall income tax than residents.
At present, nonresidents who owe tax for income earned in Maryland pay state's 4.75% tax rate, but do not pay the additional "piggyback" income tax that residents pay based on the locality in which they reside.
Ehrich's proposal would impose on nonresidents an additional tax equivalent to the lowest local tax rate in the state-the 1.25% currently levied in Worchester County. But, unlike other "piggyback" taxes which are returned to localities, the state would retain all additional income tax revenue collected from nonresidents.

Rhode Island amends its UI law regarding its taxable wage base
The Rhode Island Employment Security Act has been amended as follows.
For tax years beginning on or after January 1, 1999, if the employment security fund, not including any federal disbursements made to the states pursuant to 42 U.S.C. section 1103, is more than $225,000,00, then the taxable wage base will be $12,000.

Oklahoma amends its UI law on various subjects
- Filing claims
- Representation in proceedings
- Work of a limited duration of time
- Good cause for leaving work
- Employer's benefit wages
- Disclosure of information

Daily Tax, BNA January, 2004

IRS permits electronic delivery of some payee statements

The IRS has issued guidance to sponsors or administrators of retirement plans or qualified tuition programs (QTPs), or trustees, custodians or issuers of traditional individual retirements accounts (IRAs), Roth IRAs, Coverdell education savings accounts (CESAs) or Archer medical savings accounts (Archer MSAs) on the electronic delivery of payee statements to recipients.

Part H of the 2003 General Instructions for Forms 1099, 1098, 5498 and W-2G is modified to permit issuers of Form 1099 or Form 5498 relating to the contributions and distributions of pensions, traditional IRAs, Roth IRAs, QTPs, CESAs and Archer MSAs to provide payee statements electronically beginning after December 21, 2003. (IRS Notice 2004-10, IRB 2004-6.)

CCH, 1/28/04

In 2002, 18% of all eligible workers have signed up for health-care flexible spending accounts.

Journal of Financial Planning, January 2004

Only 400 pages were necessary to print out the first U.S. tax code and related documents in 1913.

Journal of Financial Planning, January 2004

55,000 pages are required to print today's tax code and related documents.

Journal of Financial Planning, January 2004