With the advent of the 1999 tax-filing season, many key provisions in US tax law will create planning opportunities (and some pitfalls) for taxpayers.

The United States Congress has promised us for years that there would be tax simplification, but unable to help themselves, they continue to add revisions, provisions and technical corrections to this most massive collection of mind-boggling, mind-numbing set of rules called the Internal Revenue Code.

`Technical corrections' is a government phrase that means `we screwed up and have to fix all the errors, misstatements and omissions from the year before'.

In fact during the last fifteen years, 11,410 tax code subsections have been changed.

Sometimes, it is just plain ridiculous. What were these lawmakers thinking when they proposed the business mileage allowance in 1999 at 32 and a half cents, for the first quarter, then dropping to 31 cents for the remainder of the year? Like we all have time to compute that answer (or pay a tax preparer).

Naturally, they raised the allowance back to 32 and a half cents for tax year 2000.

One really wonders how much time these people spend putting their own lives (and finances) in order. I bet they never balance their chequebooks! Some beneficial changes (such as indexing self-employed health insurance deductions and the innocent spouse relief) were long overdue.

And some major tax loopholes were closed, but not before Charles Revson, the former owner of Revlon cosmetics, took advantage of short seller investment tax tactics to defer an estimated $335,000,000 million in capital gains realised from the sale of his stock. Yep, you read it right, that's $335 million! Did you ever wonder how the very wealthy hold onto the family fortune? Guess what happens when he dies. All of his stock will receive a step-up in basis and his heirs, if they liquidate the stock immediately will pay little or no capital gains. Even legitimate tax avoidance creates job security for legions of tax accountants, lawyers and financial planners! Taxes can be tedious in the best of times; here is a cursory look at some of the most significant revisions in the tax law ever. And some others with less impact, but important none the less.

This has truly been a triumphant year for Taxpayer Rights.

A. Internal Revenue Service Can be Sued. Taxpayers may now institute lawsuits against Internal Revenue Service for blatant abuse of Service power and egregious acts by the Service and /or their Revenue Agents. Plaintiffs, if successful, can be awarded up to, but not to exceed $1,000,000 in damages. One particular case took place in New Hampshire. An attorney with a small, successful solo practice took certain deductions on his tax return on the advice of his very well-respected accredited, licensed tax practitioner (who was also a tax attorney). Internal Revenue Service disagreed with his tax position and assessed significant additional taxes and penalties.

After several years of meetings, appeals and pleas, Internal Revenue Service acknowledged that they had made a mistake; however, during resolution of his case, now dragging on for about five years, Revenue Agents continued to harassed him unmercifully. His law practice clients were called by IRS agents and dunned for his `supposed tax liabilities'. His spouse had her wages garnished. Exposed to such abnormal scrutiny, his clients fled; his practice foundered; nearly bankrupt and lacking the means to continue to defend his reputation, the attorney committed suicide. After his death, in precedent setting testimony, his widow appeared before a US Congressional Committee investigating alleged abuses within the IRS toward citizen taxpayers.

American? Tips for filing your taxes Continued from page 8 In the ultimate bittersweet victory, she subsequently sued IRS for willful abuse and gross negligence, and was considered in line to be awarded the maximum settlement of one million dollars.

B. Civil Damage Recovery. Taxpayer can receive reasonable costs and fees as a prevailing party in a civil damage recovery up to $100,000 if an IRS employee negligently disregards the Tax Code or Regulations.

C. Burden Of Proof Is Now On IRS in Court Proceedings -- Burden of proof on a factual issue relevant to determining taxpayer's income tax liability is shifted to the government if the taxpayer presents credible evidence on the issues and satisfies record keeping requirements.

D. Taxpayers have attorney-client privilege with non-lawyers (federally authorised tax practitioners -- Fats) And finally, in perhaps the most stunning victory of all, taxpayers now have client confidentiality privilege.

Martha Myron CPA CA is a Bermudian and a licensed (Series 7 NASD) Senior Financial Advisor with First Bermuda Securities. The opinions expressed in this article are her own. Questions regarding this article may be sent to her at 295-1330 X 241 or Email: mmyron y fbs.bm