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IRS GETS OUT IN FRONT OF CONGRESS ON DIVIDEND CORRECTIONS

February 19, 2004

Congress is in no hurry to clean up its own mess, so the IRS has decided to take action.

With the tax season in full swing, the IRS today announced (IR-2004-22) that taxpayers should file their returns as if pending technical corrections to the 2003 tax law related to dividends were already in place. Specifically:

Pass-through entities (S Corporations, Partnerships, estates and trusts) on fiscal years beginning in 2003 may treat dividends received after December 31, 2002 as "qualifying dividends" eligible for the 15% top rate.

Taxpayers who bought stock the day before the ex-dividend date in 2003 will be eligible for the 15% rate on those dividends. This corrects a strange technical glitch.

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