The IRS has released Revenue Procedure 2001-59, which includes the new 2002 tax tables as well as numerous inflation-related changes to tax deductions, credits, and exemptions.

The 2002 standard deduction is increased to the following amounts:

· 7,850 for married filing jointly and surviving spouses

· $6.900 for heads of households

· $4,700 for single

· $3,925 for married filing separately

The standard deduction for taxpayers who may be claimed as dependents by another taxpayer may not exceed the greater of $750 or the sum of $250 and the dependent's earned income.

The personal exemption for 2002 is increased to $3,000.

The phase-out ranges for personal exemptions are the following adjusted gross income amounts:

· Married filing jointly and surviving spouses: $206,000 to $328,500

· Head of household: $171,650 to $294,150

· Single: $137,300 to $259.800\

· Married filing separately: $103,000 to $164,250

The income limits for the maximum earned income credit have increased to the following amounts:

· $7,370 for a qualifying individual with one child

· $10,350 for a taxpayer with two or more children

· $4,910 for a taxpayer with no children 

The adjusted gross income amount that triggers a reduction in itemized deductions in 2002 will be $137,300 for all taxpayers except married filing separately who will use $68,650 as the ceiling.

Nearly two years ago, the IRS released guidelines requiring many businesses with revenue over $1 million to use the accrual method of accounting instead of the cash method. This was an abrupt change from a previous ruling that allowed businesses to use the cash method of accounting if revenues were under $5 million.

The IRS has changed its tune once again and now has issued rules stating that many service-related businesses with annual average gross receipts of $10 million or less may use the cash method of accounting.

The change is "a home run for small business," according to Senator Kit Bond, R-MO. "In the real world, this will free the independent home builder or repairman from having to account for every nail, board, can of paint, or shingle used over the course of a year."

It is estimated that approximately 500,000 businesses will be affected by this ruling. "This is another way in which we're making it easier for small business owners to comply with the tax laws, so that they can spend more time being successful in their businesses," said Charles Rossotti, IRS commissioner.

Certain small businesses are excluded from the new rules including manufacturers, wholesalers, retailers, miners, publishers, and sound recorders, unless they are primarily a service business or are involved in custom manufacturing.

The details of this ruling are available in IRS Notice 2001-76 (http://ftp.fedworld.gov/pub/irs-drop/n-01-76.pdf"). The new rules are effective for the entire 2001tax year. If you would like further information on how this affects you please call our offices at 781-453-8700.

The IRS has released the income tax withholding and advance earned income credit payment tables for 2002 (http://ftp.fedworld.gov/pub/irs-pdf/n1036.pdf). These are the tables that will appear in Publication 15, Circular E, Employer's Tax Guide, which will be published in late December.

IRS Notice 1036, Early Release Copies of 2002 Income Tax Withholding and Advanced Earned Income Credit Payment Tables, is available for viewing or for download, and contains income tax withholding tables for both wage bracket and percentage method income tax tables for wages paid in 2002.

The Social Security wage base for 2002 is $84,900, and the Social Security rate is 6.2%. The Medicare rate is 1.45%.

Viral outbreaks in e-mail have multiplied nearly ten times over the past year, according to e-mail security company MessageLabs, which named 2001 the "year of the virus."

In its review of the year, MessageLabs identified the following virus strains as the most common during the year, based on the number of times they were intercepted by the company's secure servers:

SirCam.A (537,523); BadTrans.B (258,242); Magistr.A (152,102); Goner.A (136,585) and Hybris.B (90,473)

The total number of e-mail viruses intercepted up to the end of the second week in December was 1,628,750, compared to 184,257 in 2000. On average, one in every 370 e-mails carries a virus, compared to one in 700 for 2000. On average throughout the year, MessageLabs identified and stopped a virus carrying e-mail every 28 seconds.

During the combined outbreak in the first week of December, one in every 30 e-mails was infected. The highest rate of infection was triggered on 4 May 2000 by the LoveBug virus, which was detected in one out of every 28 e-mails.

MessageLabs chief technical officer Mark Sunner commented: "There is no doubt that 2001 is the year of the virus. A massive increase in numbers is one thing, but of more concern is the business impact that they are having. As virus writers get more sophisticated the trouble they are able to cause is much greater. If we thought the scale of LoveBug was bad last year, then 2001 was characterized more by the sheer range and ingenuity of viruses."

Mr. Sunner warned that things would get worse in 2002 and suggested that reactive desktop virus scanners would not be able to cope. Only by attacking the problem at the Internet level, as MessageLabs does, will users be able to conquer the problem, he said.

HRnext.com, a Web site that features articles and resources about human resources, in association with a leading employment law firm, has produced a Special Report, which is available for FREE.

The white paper, entitled "Handling Employment Issues in the National Emergency," includes the following topics:

· Avoiding Employment Problems During National Emergencies

· Disaster Unemployment Insurance

· Military Leave Protected Under the Uniformed Services Employment and Reemployment Rights Act (USERRA)

· The Worker Adjustment and Retraining Notification (WARN) Act – Who is Covered

· Pay and Emergency Closing Issues

· U.S. Postal Service Tips on Handling Suspicious Packages

· Questionnaire: Emergency Planning Checklist

· Sample Policy: Uniformed Service Leave

· Links to Additional Resources/HRnext's HR Crisis Center

The report provides plain-English advice on how to handle potential human resources problems arising from the current national emergency, plus checklists and sample policies on emergencies, USERRA and military leave, unemployment, the WARN Act, handling the mail, and so on.

When you request an e-mail copy of the free white paper, you will also receive a subscription to HRnext's free weekly HR Ezine.

Download your Free Copy Today at http://www.hrnext.com/content/reports/index.cfm?source=HRC&effort=1

If you use the Internet Explorer(IE) 5.5 or 6.0 browser you need to pay an urgent visit to Microsoft.com.

IT commentators have called this download "the mother of all IE security patches." Unlike many virus and security scares, this seems to be a serious one. Microsoft itself says, "Customers using IE should install the patch immediately" and Microsoft has given it a maximum severity rating of "critical."

The worst vulnerability affects users of Internet Explorer 6.0, which could allow a hacker to alter an HTML file so that it runs an executable file - i.e. a program - without prompting the user for confirmation.

The other two problems affect both IE 5.5 and 6.0. First, a glitch in the software could allow a site operator to open two simultaneous browser sessions, one on the site domain and the other on the user's local system. Information could then be passed from the latter to the former allowing the operator to read but not alter any system file viewable within IE.

The second flaw enables a hacker to misrepresent file names in the "file download" dialogue box, duping users into accepting malignant files from a trusted site.

The patch is quick and easy to download and install - just go to http://www.microsoft.com/technet/treeview/default.asp?url=/technet/security/bulletin/MS01-058.asp now.

Give annual information statements to recipients of certain payments you made during 2001. (You can use the appropriate version of Form 1099 or other information return.) Payments that are covered include the following.

· Compensation for workers who are not considered employees (including fishing boat proceeds to crew members).

· Dividends and other corporate distributions.

· Interest.

· Amounts paid in real estate transactions.

· Rent.

· Royalties.

· Amounts paid in broker and barter exchange transactions.

· Payments to attorneys.

· Payments of Indian gaming profits to tribal members.

· Profit-sharing distributions.

· Retirement plan distributions.

· Original issue discount.

· Prizes and awards.

· Medical and health care payments.

· Debt cancellation (treated as payment to debtor).

· Cash payments over $10,000. (See the instructions for Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.)

See the 2001 Instructions for Forms 1099, 1098, 5498, and W-2G (http://ftp.fedworld.gov/pub/irs-pdf/i1099gi1.pdf) for information on what payments are covered, how much the payment must be before a statement is required, which form to use, and extension of time to provide statements.

If we can assist you please call 781-453-8700.