Friday, 15 April 1988
THE IRS ORDERED A HALT TO HARASSMENT OF GRADUATE STUDENTS
who claimed an exemption for graduate stipends in 1984 and 1985.
When Congress appropriated funds for increased IRS enforcement
last year, it was expected that an enlarged examinations staff
would result in audits of 113,000 more tax returns, netting some
$600M in additional revenue. This assumed that the IRS would go
after the high rollers, but 17,000 of those audited turned out to
be graduate students earning an average income of $6,000. Senator
Chiles (D-FL), Chairman of the Budget Committee, made it clear to
the IRS Commissioner that that was not what Congress had in mind.
New instructions to IRS district offices spell out a three-point
test for exclusion of graduate stipends for years prior to 1987:
The student was a degree candidate. The services performed satisfied
degree requirements. Equivalent services were required of all
degree candidates. Graduate students who meet this test, but who
have been assessed additional taxes, should file an amended
return (Form 1040X), citing Revenue Ruling 75-280 on teaching or
research stipends. ALAS, 1987 TAXES ARE SUBJECT TO THE TAX REFORM ACT OF 1986,
which limits the exclusion of graduate stipends to amounts
awarded for tuition, books, fees and equipment required for
course-related instruction. Future relief is possible in the
form of an amendment to legislation for Technical Corrections to
the Tax Reform Act. It will be difficult, however, to persuade
Congress to take up any revenue legislation before the election.
3. THE SENATE PASSED ITS FY 89 BUDGET RESOLUTION YESTERDAY.
The measure left the Budget Committee's recommendation intact for
Function 250, Science, Space and Technology
(WN 1 Apr 88). It
calls for an increase in Function 250 over last year by a
pulse-quickening 27%, to $13.4B. Sen. Weicker (R-CT) introduced
an amendment to increase Function 550, Health, by raiding
Function 250, but this was defeated. The Senate version must now
be reconciled with the House, which called for a more modest
increase of 17%, to $12.2B (WN 25 Mar 88).
If Congress splits it
down the middle, as usually happens, the figure will be about
$12.8B. That's good! But, things looked good at this point last
year. It came apart after the "black Monday" market crash -- and
yesterday the Dow-Jones plunged a near-record 101 points.
4. PRESSURE ON SCIENTISTS TO SET THEIR OWN PRIORITIES
is growing. In its discussion of Function 250, the Report of the
Budget Committee calls for "substantial involvement from the
scientific community in establishing priorities within the
federal effort in research and development." The report goes on
to propose that the National Academies advise the appropriate
committees of Congress on how this should be done by 15 Nov 88.
It is often argued that if scientists don't set their priorities,
someone else will do it for them. That might well be preferable.