- The Washington Times - Thursday, May 31, 2001

Cruise ship executives, folks over 50 years old and Holocaust victims all get special breaks under the tax bill passed by Congress last week.

Holocaust victims receiving restitution payments after Jan. 1, 2000, will not be taxed on those payments. Anyone over 50 could contribute an extra $1,000 a year to an individual retirement account.

According to federal tax specialists, there are more than a dozen such provisions targeted at specific groups, businesses or industries.

Still, the legislation is about as broad-brush as is possible in a town in which a living can be made just getting your provision mentioned during debate, while fortunes are to be found in actually getting legislation into a bill, lobbyists said.

"Even though there are some provisions aimed at special interests, as tax bills go, it is pretty lean," said Rick Grafmeyer, responsible for the Arthur Anderson consultant tax practice.

"I have been doing this since 1969 and this has the fewest corporate provisions I have ever seen," said Bob Willens, head of Lehman Bros.´ tax and accounting division.

Lobbyists say they held off because of the promise that Congress would soon pass a second, more business-related tax bill. That promise, given Democrats´ upcoming control of the Senate, may have been too optimistic, those lobbyists now say.

Despite these caveats, lobbyists and congressional aides combing the bill have found about a dozen provisions.

For example, at the request of Sen. Frank H. Murkowski, Alaska Republican, the legislation allows cruise-ship companies to ignore rules requiring them to provide a minimum of pension benefits to certain low-paid employees. The new rule allows companies to disregard nonresident alien employees on a "foreign vessel engaged in transportation between the United States and a foreign country" when calculating whether they meet the so-called nondiscrimination rules.

Carnival Corp. which offers cruises along the Canadian coast into Alaska and owns Holland America Line, which also offers dozens of Alaska-based cruises backed the measure. On-board employees come from 90 different countries, explained spokeswoman Jennifer De La Cruz.

The Miami-based cruise line company argues that the change gives it the flexibility to provide its on-shore work force with pension benefits.

Similarly, Sen. George F. Allen, Virginia Republican, worked a provision into the bill that would allow people to make tax-exempt withdrawals from education savings accounts for computer-related expenses, including Internet-access charges. Mr. Allen said the break — dubbed the AOL provision by lobbyists, after Virginia-based Internet provider America Online — will benefit all computer-related companies.

But he concedes that it will be particularly important for the "Digital Dominion."

One of the bigger breaks for businesses was not intended as a favor but as a bookkeeping maneuver.

Under the bill, companies have been told to delay $33 billion in estimated tax payments from Sept. 17 until Oct. 1. That would result in those payments becoming money for fiscal 2002 — allowing Congress to avoid dipping into the Social Security and Medicare surpluses in 2002.

The two-week delay "doesn´t sound like much, but you figure you can earn on corporate cash about 6 percent to 7 percent annual" interest, said Mr. Willens. For a 14-day period, that annual rate would be worth about one-quarter percent, or about $80 million for businesses.

It may seem paltry in comparison with the $40 billion in tax cuts slated for individual taxpayers in 2001, but it´s still a tidy profit for no work, said Mr. Willens and other tax specialists.


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