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Text File | 1996-12-06 | 45KB | 915 lines

            ┌───────────────────────────────────────┐
            │ UPDATE INFORMATION--CHANGES IN RECENT │
            │ QUARTERLY RELEASES OF THIS PROGRAM:   │
            │                                       │
            │ (Numbers in brackets indicate YEAR/QTR│
            │  when update or new feature was added)│
            └───────────────────────────────────────┘


        HIGHLIGHTS OF FEDERAL DEVELOPMENTS IN THIS RELEASE:
        ───────────────────────────────────────────────────

  .  NEW 1997 TAX PLANNING MODULE RELEASED.  Version 96/4
     of this program, after November 1, 1996, now includes
     both a 1996 and a 1997 tax planning module, for doing
     individual and corporate income tax calculations and
     estate tax planning calculations.  [96/4]

  .  UPDATED FOR 1997 INDIVIDUAL TAX RATE BRACKET CHANGES.
     The IRS has announced 1997 tax brackets, as indexed
     for inflation, for the individual income tax.  These
     are now reflected in the text, throughout the program.
     [96/4]

  .  IRS ANNOUNCES NEW MODEL PLAN FORM FOR SIMPLE PLANS.
     The IRS has released Form 5305-SIMPLE, Savings
     Incentive Match Plan for Employees of Small Employers
     (SIMPLE), a model plan that certain small employers
     may adopt as part of a retirement plan, in combination
     with SIMPLE IRAs set up on behalf of each participating
     employee.  While some customization of the plan is
     permitted, it cannot be used if employee IRAs are not
     all to be with a single financial institution.  [96/4]

  .  NEW FEDERAL LAW PREEMPTS MANY STATE BLUE-SKY LAWS.
     Under the National Securities Markets Improvement Act
     of 1996, enacted in October, most state blue-sky laws
     regulating issuance of securities, by registration or
     qualification, have been effectively preempted.  The
     new Act will primarily benefit exchange-listed and
     other large issuers, however, and allows the states
     to continue to regulate most small or intrastate
     offerings of securities, and certain issuances that
     are exempt from federal securities laws.  Thus, it
     will not significantly affect or simplify life for
     most small businesses.  [96/4]

  .  UPDATED FOR INCREASE IN FICA AND SELF-EMPLOYMENT TAX
     WAGE BASE IN 1997.  The program has been updated
     throughout to reflect the 1996 inflation-adjusted
     amounts of income subject to the full rate (15.3%)
     of FICA or Self-employment tax, which was increased
     from $62,700 in 1996 to $65,400 in 1997.  Amounts
     in excess of $65,400 are subject only to the 2.9%
     Medicare portion of the social security taxes. [96/4]

  .  CONGRESS INCREASES MINIMUM WAGE.  Effective October 1,
     1996, the federal minimum wage will increase to $4.75
     an hour, further increasing to $5.15 on September 1,
     1997.  The new legislation permits a subminimum wage
     of $4.25 to be paid to employees under the age of 20
     for the first 90 days after they are hired.  Certain
     computer professionals, including those paid on an
     hourly basis at a wage of at least $27.63 an hour,
     are now exempted from minimum wage coverage.  [96/3]

  .  NEW TAX LAWS CHANGES INCLUDED IN MINIMUM WAGE BILL.
     The new minimum wage bill signed into law by President
     Clinton on August 20, 1996, called the "Small Business
     Job Protection Act of 1996," contained a number of
     significant business-related tax provisions, including:

     . An increase in the $17,500 first year expensing
       deduction for business equipment, which gradually
       will rise to $25,000 over a period of several years.

     . A number of favorable S corporation changes were
       made, including an increase in the maximum number
       of S corporation shareholders from 35 to 75, and a
       provision allowing an S corporation to own 100% of
       the stock of a "qualified Subchapter S subsidiary"
       corporation.

     . Various expiring or expired income tax credits
       were extended again, including the education credit
       for employees, the former "Targeted Jobs Tax Credit"
       (now the "Work Opportunity Credit," as modified,
       with the credit reduced from 40% to 35% of first
       year wages), and the research and experimental tax
       credit (reinstated from July 1, 1996 to May 31, 1997
       only).

     . The spousal IRA deduction was increased from $250 to
       $2,000, beginning in 1997.

     . A new simplified kind of pension plan, called a
       "Simple Savings Plans" was approved under the new Act.

     . Excise tax changes, including a phasing out of the
       10% tax on luxury automobiles (which is reduced to 9%
       for the rest of this year), and the reinstatement of
       the 10% airport tax on air travel, which had expired
       January 1, 1996.

     . A delay of 6 months in the January 1, 1997 deadline
       for beginning EFT (electronic funds transfer) deposits
       of withheld federal income taxes, for small employers
       with $50,000 or more of withheld taxes during calendar
       year 1995.  The new deadline will be July 1, 1997, for
       those employers newly subject to the EFT tax deposit
       requirements.  [96/3]

  .  NEW HEALTH CARE BILL ENACTED.  President Clinton has
     signed into law a new health care bill which, among
     other things, creates "portability" of health insurance
     coverage for employees who change jobs and adopts, on a
     limited and experimental basis, "medical savings
     accounts."  The new law also increases the percentage
     of health insurance that is deductible by a self-employed
     person, from 30% in 1996 to 40% in 1997, 45% in 1998,
     to 50% in 2003, 60% in 2004, 70% in 2005, and finally to
     80% in 2006 and subsequent years.  [96/3]

  .  IRS PROPOSES REGULATIONS TO SIMPLIFY TAX TREATMENT OF
     UNINCORPORATED BUSINESSES.  In a revolutionary move
     towards tax simplification, the IRS has proposed new
     regulations that would allow all unincorporated business
     entities with two or more owners to be taxed as
     partnerships, unless they affirmatively elect ("checking
     the box") to be taxed as corporations.  This would remove
     a great deal of complexity from the tax code for entities
     such as limited partnerships and limited liability
     companies.  Under current law, if such entities have too
     much of a resemblance to corporations under detailed
     tests in the tax regulations, they may be reclassified as
     corporations by the IRS, for tax purposes.  As a result,
     it is quite easy for an attorney who lacks tax expertise
     to prepare articles of organization for a limited liability
     company that may inadvertently cause the LLC to be taxed
     as a corporation, rather than as the owners intended, as
     a partnership.  In addition, in a change of heart, the new
     IRS regulations will allow one-person LLCs to also gain
     noncorporate treatment, being treated the same as sole
     proprietorships for tax purposes.  But note that these
     regulations are only in PROPOSED form at present,
     although they are expected to go into effect before the
     end of 1996.  However, because these regulations promise
     to revolutionize the process of choosing a legal entity
     for your business, we have completely rewritten the
     program segments that discuss LLCs and choice of legal
     entity, to reflect the new realities.  [96/3]

  .  NEW SECTION ADDED ON INTERNET BUSINESS SITES.  This new
     release of the program includes a listing of various
     Web and Internet sites that provide business information
     or links to such information, with summaries of what
     they contain, including federal, state government, and
     privately supported sites, with URL addresses.  These
     helpful sites include everything from where you can
     download IRS tax forms, to obtaining SBA loan application
     documents, to ordering books on doing business in any
     state.  To view this new file on Internet business sites,
     use the index feature of this program, and look for the
     key word "INTERNET".  The same section also includes an
     expanded list of telephone hot-line services, and BBS
     (electronic bulletin board) sites. [96/3]

   . NEW SECTION ADDED ON ENTERPRISE ZONE ("EMPOWERMENT
     ZONE") TAX CREDITS.  A new section has been added
     regarding the 20% (of first $15,000 qualified wages
     per employee) tax credit allowed to enterprise zone
     employers for wages paid to certain qualified zone
     employees, for businesses based in a number of
     designated urban and rural "empowerment zones" in
     various parts of the country.  [96/3]

  .  IS EDI IN YOUR FUTURE?  A new section has been added to
     this new release of the program, on Electronic Data
     Interchange ("EDI"), systems in which trading partners
     are linked together for ordering, inventory control, and
     payment purposes by electronic data links, taking the
     place of paper invoices and other types of transactional
     documentation which, prior to EDI, had to be re-keyed
     manually into the computer system of the recipient.
     Many government agencies and large wholesalers or retail
     firms are now requiring their contractors or suppliers
     to use EDI if they wish to continue to be contractors
     or suppliers with those agencies or large companies, so
     you will need to know about EDI, and how to implement
     this capability, soon.  [96/3]

  .  EXPANDED SEC COVERAGE.  New material has been added on
     securities law compliance for "public" companies, plus
     coverage of SEC exemptions for intrastate offerings
     (Regulation A) and Rule 147 exemptions. [96/3]

  .  NEW TAX PLANNING SECTION ADDED ON THE TAX BENEFITS OF
     HIRING CHILDREN OR OTHER FAMILY MEMBERS AS EMPLOYEES.
     This new segment discusses a number of income, Social
     Security, and unemployment tax advantages of hiring
     minor children, and in some cases a spouse or parent,
     as an employee in your small business.  [96/3]

  .  CONGRESS ENACTS LIMIT ON STATE TAXATION OF PENSIONS
     OF NON-RESIDENTS.  On January 10, 1996, President
     Clinton signed new legislation that prohibits states,
     such as New York and California, from attempting to
     impose state income taxes on non-residents who formerly
     lived in such states.  This prevents, for example,
     California from taxing the pension of a former resident
     who moves to Nevada or Florida, where there is no
     income tax, and is a major win for taxpayers.  [96/1]

  .  IRS ANNOUNCES NEW STANDARD MILEAGE ALLOWANCE FOR 1996.
     In 1996, you may deduct business mileage at the rate of
     31 cents a mile, if you use the optional standard mileage
     rate, instead of depreciation and actual automobile
     operating expenses.  The rate for 1995 was 30 cents per
     mile.  The rate for rural mail carriers increased to 46.5
     cents per mile, from 45 cents in 1995.  [96/1]

  .  NEW TELEMARKETING RESTRICTIONS IMPOSED.  Effective 1/1/96,
     new FTC Regulations went into effect, imposing new
     restrictions and limitations on companies that engage
     in telemarketing activities.  Use the "INDX" feature of
     this program, and select the "TELEMARKETING RESTRICTIONS"
     item for details.  [96/1]

  .  COURT INVALIDATES EXECUTIVE ORDER IMPOSING STRIKER
     REPLACEMENT BAN.  On February 2, 1996, the U.S. Court
     of Appeals invalidated an Executive Order that had been
     issued by President Clinton in 1995, which had imposed
     a ban on the hiring of replacement workers during
     strikes by government contractors, after attempts to
     pass such a ban in Congress had twice failed, in 1993
     and 1994.  [96/1]

  .  LUXURY TAX ON AUTOS -- THRESHOLD INCREASED FOR 1996.
     The 10% excise on automobiles only applies to the
     portion of the purchase price in excess of $34,000
     in 1996 (vs. $32,000 last year). [96/1]

  .  IRS FINALLY INCREASES AMOUNT OF UNSUBSTANTIATED T&E
     EXPENDITURES TO $75.  Effective after September 30, 1995,
     the IRS has amended its regulations so that amounts spent
     for lodging, meals, entertainment, gifts, or so-called
     "listed property" in amounts under a $75 threshold need
     not be evidenced by documentary evidence (such as receipts
     or invoices).  For several decades, this threshold amount
     had been set at $25 for such items, until this recent
     action by the IRS, announced in Notice 95-50, IRB 1995-42.
     [96/1]

  .  IRS EXCLUSION FOR EMPLOYER PROVIDED TRANSPORTATION
     FRINGE BENEFITS INFLATION INDEXING ANNOUNCED FOR 1996.
     The amounts allowed as tax-free "qualified transportation
     fringes" are increased from $160 to $165 for qualified
     free parking, and from $60 to $65 for transit passes,
     in 1996. [96/1]

  .  NEW 1996 TAX CALCULATION MODULE NOW INCLUDED.  Our new
     1996 tax planning module, fully updated for 1996 tax
     rates and brackets and for tax law changes (as known as
     of January 1, 1996) and our updated module for 1995, are
     both included with this Version 96.1 and subsequent
     releases of the program. [96/1]

  .  INDEXING FOR ANNUAL DEPRECIATION LIMITS ON "LUXURY
     AUTOMOBILES" ACQUIRED IN 1996 ANNOUNCED BY IRS.  The
     IRS has announced that, because of modest inflation in
     the last year, and the fact that the indexing of luxury
     auto depreciation limits only goes up in $100 increments,
     the 1996 limits will be unchanged from those for
     acquisitions of automobiles made in 1995. [96/1]

  .  UPDATED FOR 1996 PENSION PLAN LIMITS INDEXING.  Release
     95.4 and subsequent releases have been updated to
     reflect IRS indexing of various dollar limits applicable
     to employee pension benefit plans for 1996, such as the
     increase in the maximum deferral allowed per employee
     for a 401K plan, from $9,240 in 1995 to $9,500 in 1996.
     [95/4]

  .  OTHER WITHHELD TAXES NO LONGER REPORTED ON FORM 941.
     Taxpayers required to withhold certain taxes other
     that wage withholding and FICA (such as "backup
     withholding on interest or dividends) will now report
     such withholdings on new IRS Form 945.  However,
     these rules were recently liberalized, so that a
     taxpayer only has to file Form 945 in years when
     taxes have been withheld that must be reported on
     the Form 945.  Previously, a taxpayer was required
     to continue filing the form every calendar year after
     the initial year it was filed, even if no taxes were
     withheld for such year. [95/4]

  .  BILL INTRODUCED IN CONGRESS TO ALLOW STATES TO FORCE
     OUT-OF-STATE SELLERS TO COLLECT USE TAX.  A bill has
     been introduced in the Senate by Sen. Dale Bumpers of
     Arkansas, which would authorized states to require
     out-of-state sellers, such as mail order companies,
     to collect sales or use tax on sales of tangible
     property shipped into a state, at a single uniform
     state wide rate (even if the state has varying local
     rates) for each state.  Certain small sellers would
     be exempt, if unless they have either $3 million of
     total sales of such items or $100,000 of such sales
     in the particular state, in the 12 months ending in
     September of the preceding calendar year.  Couched
     as a "tax fairness" bill to "help main street
     businesses" who compete against out-of-state mail
     order firms that are not currently required to
     collect use tax or sales tax from in-state buyers,
     the proposed legislation may have a good chance of
     passing, particular since it is sponsored by
     President Clinton's Democratic colleague from
     Arkansas, a powerful member of the Senate.  We
     will keep you advised of the status of the proposed
     legislation in future updates of this program. [95/3]



              HIGHLIGHTS OF RECENT STATE LAW CHANGES:
              ───────────────────────────────────────

  .  UPDATED THROUGHOUT FOR NOVEMBER 5, 1996 ELECTION
     (REFERENDUM) RESULTS IN NUMEROUS STATES.  The text
     files in this program have been updated fully to
     reflect various voter referenda in many states on
     issues such as proposals to increase the state
     minimum wage and various tax increase or decrease
     proposals.  [96/4]

  .  REDUCING STATE UNEMPLOYMENT TAX THROUGH VOLUNTARY
     CONTRIBUTIONS.  Coverage has been added of provisions
     in 23 states that allow employers to reduce their
     unemployment tax rate by making a voluntary contribution
     of tax to their account.  [96/1]

  .  ALASKA ADOPTS LLP LAW.  Effective January 1, 1997,
     Alaska will recognized registered limited liability
     partnerships (LLPs).  Any domestic or foreign partnership
     doing business in Alaska will be able to register with
     the Department of Commerce and Economic Development,
     appoint an agent for service of legal process, and
     establish a registered office in the state, and thereby
     become an LLP.  To maintain such status, it will be
     necessary to file a biennial report every other year
     and pay a renewal fee.  LLPs will be taxed as either
     partnerships or corporations, depending upon their
     federal treatment.  This is preferable to LLCs, which
     are taxable as corporations under Alaska's corporate
     income tax.  [96/4]

  .  CALIFORNIA BAR SETS ANNUAL LLP FILING FEES.  The Board
     of Governors of the State Bar, in September, 1996, set
     annual renewal fees for law firm LLPs at $75 for a
     2-partner law firm, and $75 plus a $25 fee for each
     additional partner in excess of 2, with a maximum annual
     fee of $2500.  Only certain law and accounting firms
     are allowed to operate in LLP form under California law.
     [96.4]

  .  CALIFORNIA RAISING FILING THRESHOLD FOR BUSINESS
     PERSONAL PROPERTY TAX.  New (1996) legislation has
     changed the threshold amount from $30,000 to $100,000
     for taxpayers required to file a business personal
     property tax statement.  No such statement need be
     filed, generally, if the value of such property owned
     by the taxpayer does not exceed the threshold amount.
     [96/4]

  .  CALIFORNIA ENACTS NEW ENTERPRISE ZONE LAWS.  The
     Legislature has repealed the former Enterprise Zone
     Act and the Employment and Economic Incentive Act and
     replaced both with a new, and generally more favorable,
     Enterprise Zone Act that goes into effect on January 1,
     1997.  [96/4]

  .  CALIFORNIA ADOPTS UNIFORM PARTNERSHIP ACT.  California
     has enacted the "Uniform Partnership Act of 1994,"
     adopted in 1996, despite the title, which makes major
     changes in the state's partnership laws, effective as
     of January 1, 1997.  Existing partnerships will remain
     subject to previous law until January 1, 1999, unless
     they elect otherwise.  [96/4]

  .  CALIFORNIA VOTERS APPROVE INCREASE IN STATE MINIMUM
     WAGE.  By a wide margin, voters approved an increase
     in the state minimum wage, previously the same as
     the federal minimum wage, to $5.00 per hour in 1997
     and to $5.50 an hour in 1998, in the November 5, 1996
     general election.  [96/4]

  .  CALIFORNIA REDUCES MINIMUM FRANCHISE TAX ON CERTAIN
     NEW BUSINESSES.  New tax reduction legislation will
     reduce the minimum franchise tax on corporations,
     which is currently $800 a year, to $600 a year for
     new businesses with under $1 million in gross receipts,
     for years beginning on or after January 1, 1997.  The
     reduction will not apply to corporations if 50% or
     more of their stock is owned by another corporation.
     [96/4]

  .  CALIFORNIA ANNOUNCES NEW SDI RATE FOR 1997.  The rate
     of tax to be withheld from employee wages for State
     Disability Insurance drops from 0.8% in 1996 to 0.5%
     in 1997, still computed only on the first $31,767 of
     an employee's wages. [96/4]

  .  CALIFORNIA CUTS FRANCHISE TAX RATE.  The California
     franchise tax on banks and corporations, currently a
     tax of 9.3% on taxable income, has been reduced to
     8.84%, for tax years beginning on or after January 1,
     1997.  In addition, the corporate alternative minimum
     tax rate will decline from 7% to 6.65%, beginning in
     1997. [96/3]

  .  CALIFORNIA HIGH INCOME TAX BRACKETS ELIMINATED FOR
     1996.  The temporary 10% and 11% tax rate brackets on
     high income taxpayers are scheduled to expire this
     year, and would not apply for 1996.  However, there
     is an initiative on the November, 1996 ballot to
     restore these high brackets, if passed.  [96/3]

  .  CALIFORNIA WITHHOLDING TAX THRESHOLD DECREASED IN 1996.
     For California employers required to make federal
     deposits of withheld income and FICA taxes, California
     requires that withheld state income tax and SDI must
     be paid by in the same date as the federal deposit,
     if total withheld California taxes exceed $400.  In
     1995, this threshold amount was $500 of accumulated
     withheld taxes. [96/1]

  .  CALIFORNIA TIMBER YIELD TAX RATE FOR 1996 UNCHANGED.
     The State Board of Equalization announced that this
     tax rate, which was 2.9% in 1995, will remained
     unchanged again for 1996. [96/1]

  .  CALIFORNIA REDUCES, RAISES CERTAIN FILING FEES.  The
     state of California has reduced the qualification
     filing fee for a foreign corporation from $350 to
     $100, and has reduced the fee for filing articles of
     organization for a limited liability company (LLC)
     from $80 to $70.  However, the annual report filing
     fee for domestic and foreign corporations and LLCs is
     now increased from $5 to $10 a year. [96/1]

  .  SMALL CALIFORNIA EMPLOYERS CAN PROVIDE PAYROLL TAX
     INFORMATION BY PHONE IN 1996.  Starting in April of
     1996, the E.D.D. began to allow California employers
     with 1-4 employees to provide payroll tax information
     by telephone, instead of filing a quarterly DE-6 wage
     report. [96/1]

  .  INCOME TAX FILING BY TELEPHONE.  Starting with the
     1996 tax filing season, certain individual California
     taxpayers who file Form 540EZ returns are permitted
     to file their tax returns by telephone. [95/4]

  .  CALIFORNIA--California has adopted a Limited Liability
     Partnership (LLP) law, allowing certain types of
     professional services firms to operate as LLPs.  In
     general, professionals are not allowed to operate as
     LLCs in California.  Under the new LLP law, only
     certain law and accounting firms will be allowed to
     set up LLPs under California law.  Firms that qualify
     must file Form LLP-1 with the Secretary of State.
     [95/4]

  .  COLORADO VOTERS REJECT ATTEMPT TO TAX CHURCH PROPERTY.
     By a 5-to-1 margin, Colorado voters in the November 5,
     1996 general election voted against a ballot initiative
     that would have ended the property tax exemption for
     property owned by churches and certain other nonprofit
     organizations.  Church property has always been exempt
     from property taxes, in every state.  [96/4]

  .  CONNECTICUT PHASING OUT TAX ON S CORPORATIONS.  Under
     new legislation enacted May 31, 1996, Connecticut will
     eventually phase out the entity-level income tax on
     the income of S corporations by the year 2000, making
     the state tax treatment of S corporations more like
     the federal tax treatment at that time.  [96/3]

  .  DELAWARE LOWERS PERSONAL INCOME TAX RATE.  Beginning
     in tax years after December 31, 1995, the top personal
     income tax rate in Delaware is reduced to 7.1%.
     [95/4]

  .  DELAWARE ADOPTS FURTHER REDUCTION IN PERSONAL INCOME
     TAX RATE.  The maximum personal income tax rate, which
     was lowered to 7.1% for 1996, is reduced to 6.9% for
     tax years beginning after December 31, 1996. [96/3]

  .  DELAWARE CUTS GROSS RECEIPTS TAX.  The Delaware gross
     receipts tax on businesses, which is imposed at varying
     rates on different classes of businesses (generally at
     rates of less than 1% of gross receipts), is reduced
     by 4% across the board, effective January 1, 1996.
     Thus, for example, the current 0.75% tax rate on retail
     companies is reduced to 0.72%.  [96/3]

  .  DISTRICT OF COLUMBIA REPEALS ANNUAL REPORT REQUIREMENT.
     In the future, domestic and foreign corporations will
     only be required to file reports every 5 years, on the
     15th of April every 5th year after the date of
     incorporation or admission to do business in the
     District, effective after 9-8-95.  The annual fee
     remains $100 a year, but payment will now be in the
     form of one $500 payment every five years.  [96/2]

  .  GEORGIA REPEALS TAX ON INTANGIBLE PROPERTY.  Effective
     as of January 1, 1997, Georgia has repealed its personal
     property tax on intangible property.  If Georgia voters
     approve the actions of the legislature in a November,
     1996 referendum, the repeal will become effective as of
     January 1, 1996 instead.  [96/2]

  .  HAWAII ADOPTS LLC AND LLP LAWS.  Hawaii, which was the
     last state without a limited liability company law,
     finally joined the rest of the states by enacting laws
     in 1996 to permit formation of both LLCs and limited
     liability partnerships (LLPs) by April, 1997.  [96/4]

  .  HAWAII INTRODUCES NEW INDIVIDUAL TAX RETURN FORM FOR
     1995 RETURNS.  Hawaiian residents who file federal
     income tax returns will now generally file a new
     tax return form, N-11, beginning with the 1995 tax
     return.  Part-year residents and certain other filers
     will continue to use form N-12. [96/2]

  .  KENTUCKY GAS TAX RATE UPDATED FOR 3RD QUARTER.  The
     Kentucky Revenue Cabinet has announced that the gasoline
     tax rate for the 3rd quarter of 1996 will remain at
     15 cents per gallon.  The petroleum storage tank
     environmental assurance fee is 1.4 cents per gallon.
     [96/3]

  .  LOUISIANA REPEALS INTANGIBLE PROPERTY TAX.  The voters
     of the state of Louisiana, in the congressional primary
     election of September 21, 1996, amended the state's
     constitution to exempt virtually all intangible property
     from property taxation, except for bank stocks, public
     service properties and other narrowly limited types of
     property.  The amendment became effective on November
     5, 1996.  [96/4]

  .  MASSACHUSETTS REQUIRES WRITTEN POLICY ON SEXUAL
     HARASSMENT.  A new law in Massachusetts requires all
     employers with 15 or more employees to adopt, in
     writing, a policy on sexual harassment, by November
     6, 1996.  By January 1, 1997, all employers with
     more than 5 employees must adopt such a written policy.
     [96/4]

  .  MASSACHUSETTS ADOPTS LIMITED LIABILITY COMPANY LAW.
     Massachusetts has joined 47 other states and the
     District of Columbia in enacting a limited liability
     company (LLC) law, leaving Vermont and Hawaii as the
     only two states that have not adopted LLC laws.  The
     new law, effective 1-1-96, also provides for creation
     of limited liability partnerships (LLPs).  A filing
     fee of $500 is required for both LLCs and LLPs.  An
     LLC is required to file an annual report.  State tax
     treatment of LLCs and LLPs will follow the federal
     law.  [96/1]

  .  MICHIGAN PHASING OUT INTANGIBLES TAX.  Michigan has
     repealed its tax on intangible property, effective
     as of 1998.  It is being phased out gradually over
     the years 1994-1997.  [96/2]

  .  MICHIGAN SINGLE BUSINESS TAX CHANGES.  New (1996)
     legislation will drastically increase the importance
     of the sales factor, for businesses required to
     apportion their income between Michigan and other
     states, for SBT purposes, after 12-31-96.  Small
     business exemptions and credits under the SBT have
     also been modified. [96/1]

  .  MISSISSIPPI ENACTS LIMITED LIABILITY PARTNERSHIPS LAW.
     Mississippi, which already has an LLC law, has now also
     enacted a limited liability partnership (LLP) law,
     providing similar limited liability to partners in an
     LLP.  However, a partner in an LLP is not protected
     by the LLP law from his or her own negligence or
     malpractice, or for that of a person under his or
     her direct supervision.  There is a $250 filing fee,
     payable to the Secretary of State, for either a
     domestic or foreign LLP.  [96/1]

  .  MISSOURI VOTERS REJECT INCREASE IN STATE MINIMUM WAGE.
     In the November, 1996 general election, Missouri voters
     rejected, by a 72% to 28% margin, a ballot proposal
     that would have greatly increased the state minimum
     wage, to $6.75 an hour, by 1999.  [96/4]

  .  MISSOURI REINSTATES LOCAL USE TAX.  In 1994, the
     Missouri state supreme court invalidated the state's
     uniform local 1.5% use tax, which was higher than
     the local sales tax in some counties.  The state has
     now enacted a new local use tax law, on May 21, 1996,
     which allows local governments to impose a use tax
     equal to the local sales tax rate.  [96/3]

  .  MONTANA VOTERS REJECT INCREASE IN STATE MINIMUM WAGE.
     By a substantial margin, Montana voters rejected a
     ballot initiative in the November, 1996 general election
     that would have increased the state minimum wage to
     $6.25 an hour.  [96/4]

  .  NEBRASKA ADOPTS LLP LAW.  Effective July 19, 1996, the
     state of Nebraska allows partnerships to register with
     the Secretary of State, by filing an application form
     and a $200 fee, to become limited liability partnerships
     ("LLPs").  Like LLCs, LLPs offer the dual benefits of
     corporate-like limited liability from the claims of
     creditors, and the pass-through tax treatment of a
     partnership. [96/3]

  .  NEW JERSEY TAX CUTS ENACTED.  Effective as of January
     1, 1996, the maximum individual income tax rate in
     New Jersey is reduced from to 6.37%.  The top rate
     of 7% before 1994 was reduced in stages in 1994 and
     1995.  In addition, the tax rate on income of C
     corporations with $100,000 or less of net income are
     reduced from 9% to 7.5%, effective July 1, 1996. [95/4]

  .  NEW MEXICO AUTHORIZES LIMITED LIABILITY PARTNERSHIPS.
     Effective June 16, 1995, limited liability partnerships
     (LLPs) are authorized in New Mexico.  To elect LLP
     status, a partnership must file a notice and a $50 fee
     with the Secretary of State.  Thereafter, the LLP must
     file an annual registration and $50 fee.  Foreign LLPs
     must also file a notice and $50 fee, then re-register
     every two years.  The name of an LLP must contain the
     words "Registered Limited Liability Partnership," or
     "L.L.P." or "LLP".  Every LLP must maintain at least
     $500,000 insurance (per occurrence) for errors,
     omissions, negligence, wrongful acts, misconduct or
     malpractice for which limitation of liability is
     granted.  [96/3]

  .  NEW MEXICO UNEMPLOYMENT TAX RATES FOR 1996.  For both
     1995 and 1996, Schedule 2 (rates ranging from 0.3% to
     5.4%) is in effect.  The wage base subject to tax in
     1996 is $13,900.  [96/3]

  .  NEW MEXICO TO REQUIRE ESTIMATED TAX PAYMENTS.  Starting
     in 1997, individual taxpayers in New Mexico will be
     required to make quarterly estimated income tax payments,
     on the same dates as they are required to make federal
     estimated tax payments.  No estimated tax need be paid
     if less than $500.  [96/2]

  .  NEW MEXICO REDUCES GAS TAX RATE TEMPORARILY.  The state
     excise tax on gasoline and certain special fuels,
     previous 20 cents a gallon, is reduced to 17 cents
     a gallon as of July 1, 1995.  The rate will drop to 16
     cents on July 1, 2003 (or earlier, if certain funding
     levels are attained earlier for highway debentures).
     [95/4]

  .  NEW YORK REPEALS PROPERTY GAINS TAX.  Effective for all
     transfers occurring on or after June 15, 1996, the New
     York state real property transfer gains tax, a special
     transfer tax on appreciated real property, is repealed.
     [96/3]

  .  NORTH CAROLINA CUTS UNEMPLOYMENT TAXES AGAIN.  The
     state of North Carolina has reduced the new employer
     unemployment tax rate from 1.8% of covered wages to
     1.2% in 1996, which should benefit some 26,000 new
     employers.  In addition, some 95,000 other businesses
     with credit balances in their experience rating account
     will see their tax rate reduced to zero.  [96/2]

  .  NORTH CAROLINA MOTOR FUEL TAX RATE INCREASES.  For the
     first half of 1996, the tax rate on gasoline and other
     motor fuels is increased from 21.6 cents to 22 cents
     per gallon.  [96/1]

  .  NORTH DAKOTA FUEL TAX RATE INCREASE.  Effective January
     1, 1996, the gasoline and fuel tax rate increased from
     18 cents to 20 cents per gallon.  The rate is scheduled
     to drop back to 17 cents on January 1, 1998.  [96/1]

  .  OHIO GASOLINE TAX RATE TO REMAIN UNCHANGED FOR FISCAL
     YEAR ENDING 6/30/96.  The state's motor fuel tax will
     remain at the previous level of 22 cents per gallon
     for the fiscal year July 1, 1995 through June 30, 1996.
     [95/3]

  .  OKLAHOMA ADOPTS LIMITED LIABILITY PARTNERSHIP LAW.  On
     or after November 1, 1996, Oklahoma will allow domestic
     or foreign partnerships to register as limited liability
     partnerships (LLPs), which will protect partners from
     the debts or liabilities of the partnership or other
     partners, like a corporation or LLC.  Oklahoma had
     previously adopted an LLC law.  [96/3]

  .  OREGON MINIMUM WAGE TO BE INCREASED.  In the November
     5, 1996 general election, Oregon voters approved a
     ballot initiative that calls for an increase in the
     state minimum wage to $5.50 an hour in 1997, $6.00 an
     hour in 1998, and to $6.50 by 1999.  [96/4]

  .  PENNSYLVANIA LOCAL TAX CHANGES.   Effective in 1996,
     the tax rate for the Philadelphia Wage and Net Profits
     Tax is reduced to 3.36% for residents and to 4.2256%
     for nonresidents. [96/1]

  .  PENNSYLVANIA CUTS CORPORATE INCOME TAX RATES.  Corporate
     tax rates in Pennsylvania, previously 12.25%, have been
     reduced to 9.99%, starting in 1995.  State inheritance
     tax on spousal transfers has also been eliminated, for
     deaths occurring on or after January 1, 1995. [95/3]

  .  PENNSYLVANIA ENACTS JOB CREATION TAX CREDIT.  Effective
     July 1, 1996, Pennsylvania has enacted a job creation
     tax credit for employers who create 25 or more new jobs
     in the Commonwealth.  The tax credit, which applies only
     to full time jobs paying at least 150% of the federal
     minimum wage, is $1,000 per new job created, for
     employers who qualify for the credit.  [96/3]

  .  RHODE ISLAND ADOPTS 4TH QUARTER FUEL TAX RATE.  The
     Rhode Island fuel tax rate, which is set quarterly,
     remains at 28 cents per gallon for the 4th quarter of
     1996.  [96/4]

  .  RHODE ISLAND ADOPTS LLP LAW.  Rhode Island has now
     adopted a Limited Liability Partnership law, under
     which a domestic partnership can become an LLP by
     registering with the Secretary of State and paying
     a filing fee of $100 per partner ($2,500 maximum),
     or a foreign partnership can register and pay a
     flat fee of $1,000.  [96/4]

  .  UTAH LOWERS PERSONAL INCOME TAX RATES.  For 1996 and
     subsequent years, the maximum individual income tax
     rate under the Utah income tax is lowered from 7.2%
     to 7%.  Beginning in 1997, the tax rate on the lowest
     taxable income bracket is lowered from 2.55% to 2.3%.
     [96/2]

  .  VERMONT SALES TAX 5% RATE EXTENDED ANOTHER YEAR.  The
     Vermont sales tax, which dropped back to 4% on July
     1, 1993, was temporarily increased to 5% again, until
     July 1, 1995, at which time it was due to drop back to
     4%.  However, the 5% rate has now been extended for
     another year, through 6-30-96.  [95/3]

  .  VERMONT MINIMUM WAGE INCREASED.  The Vermont minimum
     wage, currently $4.75 an hour in 1996, increases to
     $5.00 on January 1, 1997, and to $5.15 when the federal
     minimum wage goes to $5.15 on September 1, 1997.  [96/4]

  .  VERMONT ENACTS LLC LAW.  Vermont, one of the last two
     states without a limited liability company law (Hawaii
     was the other), enacted such a law just before Hawaii
     did so, effective July 1, 1996.  One or more persons
     can form a Vermont LLC by filing articles of organization
     with the Secretary of State and paying a $75 filing fee.
     Foreign LLCs may register for $100.  Like partnerships,
     LLCs will be subject to a $150 annual minimum tax, and
     will be required to make estimated tax payments on
     behalf of nonresident members, beginning in 1997. [96/4]

  .  WASHINGTON ELECTRONIC AUTHENTICATION ACT.  The Governor
     has, in April, 1996, just signed into law a new bill
     providing for a secure method of using electronic
     "signatures" for documents that are transmitted
     electronically, and making such signatures legally
     binding.  [96/2]

  .  WASHINGTON B & O TAX ON INSURANCE AGENTS AND INSURANCE
     BROKERS REDUCED.  Effective July 1, 1995, the Business
     & Occupations Tax on insurance agents, brokers, and
     solicitors was reduced to 0.55% plus a surtax equal to
     4.5% of the base rate, or a total rate of 0.575%.  The
     surtax is due to expire after June 30, 1997.  [95/3]

  .  WASHINGTON B & O TAX CREDITS, REDUCTIONS.  B&O credits
     have been increased for employers, creating new
     manufacturing and research jobs in Washington, after
     January 1, 1996.  In addition, effective January 24,
     1996, the Business and Occupation tax rates have been
     reduced for various types of service businesses.  For
     example, "selected business services" (including
     lawyers, business consultants, accountants, advertising
     services) now pay a rate of 2.0%, reduced from 2.5%;
     financial services pay 1.6%, reduced from 1.7%; and
     most other "miscellaneous" services are now subject to
     a total tax rate of 1.829%, reduced from 2.09%.  [96/2]

  .  WISCONSIN ENACTS LIMITED LIABILITY PARTNERSHIP LAW.
     Legislation effective December 11, 1995 provides that
     foreign or domestic partnerships may now register as
     "limited liability partnerships" (LLPs) in Wisconsin.
     Such registration (after payment of a $100 fee to the
     Department of Financial Institutions, which will handle
     such filings, rather than the Secretary of State, as of
     July 1, 1996), will confer limited liability on such
     partnerships, similar to an LLC, except that negligence
     or malpractice of an individual partner will not be
     shielded (as with professional corporations). LLPs will
     primarily be of interest to professional service firms.
     [96/1]

  .  WISCONSIN LLC LAW NOW ALLOWS SINGLE OWNER.  Under new
     amendments to the Wisconsin limited liability company
     laws, effective July 1, 1996, a Wisconsin LLC may now
     be formed with only one owner.  [96/3]

  .  WYOMING EXTENDS EXTRA 1% SALES TAX FOR 2 MORE YEARS.
     The 4% state sales tax, scheduled to revert to 3% on
     July 1, 1996, has now been extended until July 1, 1998.
     However, if the state makes a determination that it has
     met certain specified budget goals before that date,
     the tax will drop to 3.5% on the July 1 after the
     Governor certifies that such a determination has been
     made. [95/4]


   OTHER CHANGES AND ADDITIONS IN RECENT QUARTERLY RELEASES:
   ────────────────────────────────────────────────────────

  .  LIMITED LIABILITY PARTNERSHIPS.  A broad range of state
     information on limited liability partnerships (LLPs),
     which have now been adopted by practically every state,
     has been added.  [96/4]

  .  IS A LIMITED LIABILITY COMPANY THE BEST ENTITY FOR YOU?
     The "XPERT" module, which already included a consulting
     session on whether or not you should incorporate your
     business, or elect S corporation treatment, has been
     revised to now include a fourth entity choice:  The
     limited liability company (LLC), which will be the
     optimal legal entity choice for an increasing number
     of small businesses.  This "consulting session" will
     now compare the pros and cons of C corporation, S
     corporation, LLC, or other unincorporated entity.
     [96/3]

  .  ELECTRONIC DATA INTERCHANGE (EDI).  New section (see
     index) on electronic data interchange between trading
     partners has been added, with discussion of how it may
     impact your ability to serve as a supplier to large
     customers who are, more and more, require EDI links
     between their computer systems and those of their
     trading partners. [96/3]

  .  NEW SEGMENT ADDED ON MULTILEVEL MARKETING PROGRAMS.
     Is there an Amway or Tupperware distributorship in
     your future?  Multilevel marketing programs are
     being used to sell everything from soap to vitamins
     to telephone services.  This new segment gives you
     advice on the kinds of questions you should ask
     before you invest money and time in a multilevel
     marketing program.  [96/3]

   . INTERNET BUSINESS SITES.  A new segment has been added,
     listing and describing a number of highly useful private
     and government-sponsored business information sites on
     the Internet.  [96/3]

  .  TELEPHONE HOTLINES. Updated various telephone numbers
     of government agencies, many of which have changed or
     been disconnected in recent months.  Also added Justice
     Department information line number for information on
     the Americans with Disabilities Act, and INS immigration
     law hiring requirements for employers. [96/2]

  .  NEW SEGMENT ADDED ON TAKING DEDUCTIONS FOR A PC IN
     YOUR HOME.  This new item guides you through the IRS
     requirements for deducting a home computer used for
     business-related purposes in your home, or in your
     home office. [96/1]

─────────────────────────────────────────────────────────────
             NOTE:   Things change....Rapidly.
─────────────────────────────────────────────────────────────
The above are changes made in  the last 4 quarterly updates,
not  including earlier  revisions.  Thus,  if  you  have  an
earlier  version of the program  issued  more than 12 months
ago, there are a great many update  changes since  then that
are  NOT  listed above,  since those  have  long since  been
incorporated into  the program, and, from our point of view,
are now ancient history.
─────────────────────────────────────────────────────────────

     ┌─────────────────────────────────────────────────────┐
     │AS YOU WILL NOTE FROM THE FOREGOING CHANGES, THE LAWS│
     │AFFECTING BUSINESS TEND TO CHANGE  VERY RAPIDLY,  AND│
     │THIS  PROGRAM IS  REVISED ON ALMOST  A DAILY BASIS TO│
     │KEEP UP WITH THE FLOOD OF  TAX AND LEGAL CHANGES THAT│
     │OCCUR.   ACCORDINGLY,  IF THIS PROGRAM IS MORE THAN A│
     │YEAR OLD,  A LARGE PORTION  OF THE INFORMATION  IN IT│
     │IS LIKELY  TO BE DANGEROUSLY  OUT-OF-DATE.   WE ISSUE│
     │UPDATES OF THE PROGRAM EVERY THREE MONTHS,  AT A VERY│
     │REASONABLE PRICE.  TRY US.                           │
     └─────────────────────────────────────────────────────┘


     ┌─────────────────────────────────────────────────────┐
     │ OUR FAVORITE QUOTE OR PITHY REMARK FOR THIS EDITION:│
     │                                                     │
     │ "A banker is a person who will only lend you an     │
     │  umbrella if the sun is shining." -- Alan Abelson   │
     │                                                     │
     └─────────────────────────────────────────────────────┘