(c) The Act provides, for years after 1990, that a taxpayer's itemized deductions are reduced by 3 percent of the taxpayer's adjusted gross income in excess of $100,000. The $100,000 threshold is the same for married and single taxpayers. These thresholds are indexed for inflation.

In addition, the Act increases the cap on wages subject to the Medicare hospital insurance (HI) tax. Under the Act the cap equals $125,000 for 1991. As under prior law, the $125,000 cap is indexed for growth in wages. The Act does not affect the cap on wages for Social Security payroll taxes other than the HI tax. The HI tax equals 1.45 percent on wages up to the cap, payable by both the employer and employee (for a total 2.9 percent). Both the employer and employee's share are applicable to wages up to $125,000.

2. Excise taxes

The Act establishes an excise tax on certain luxury items generally equal to 10 percent of: (i) the price of certain passenger vehicles exceeding $30,000, (ii) the price of certain aircraft, (iii) boats to the extent the price exceeds $100,000, and (iv) jewelry and furs to the extent the price exceeds $10,000. In addition, OBRA 1990 increases excise taxes on distilled spirits, wine and beer, and tobacco products. Further, the Act increases certain other excise taxes, including excise taxes on highway and motorboat fuels, and certain aviation taxes.

3. Provisions affecting businesses

The Act contains a series of business tax provisions, including provisions to (i) require the accrual of redemption premium of certain preferred stock, (ii) expand the definition of a corporate equity reduction transaction (CERT) to include the acquisition of 50 percent of more of the stock of any corporation regardless of whether the corporation was a member of an affiliated group (unless an election under sec. 338 was made to treat the acquisition as an acquisition of assets), (iii) impose corporate tax on divisive transactions in connection with certain changes of ownership, provided that a shareholder's 50 percent ownership is attributable to stock the shareholder acquired directly or indirectly in a purchase or certain similar transactions within the previous 5 years, (iv) modify the treatment of certain debt-for-debt exchanges and stock-for-debt exchanges, (v) expand and clarify reporting and allocation rules for certain asset acquisitions, and (vi) increase the rate of interest payable on large corporate underpayments.

In addition, the Act contains a provision requiring the amortization of policy acquisition expense of insurance companies, and a provision reducing the deduction allowed to property and casualty insurance companies for losses incurred, both paid and unpaid, by estimated recoveries of salvage and subrogation claims attributable to such losses.

The Act also provides several energy incentives, including extension of the credit for nonconventional fuels, a tax credit for costs attributable to enhanced oil recovery projects and qualified exploratory costs, and certain relief from the alternative minimum tax for oil and gas operations.

4. Foreign and compliance related provisions

The Act includes provisions: (i) enhancing information and reporting under sec. 6038A of the Internal Revenue Code, (ii) applying the provisions of sec. 6038A to certain foreign corporations conducting a trade or business in the United States and extending the application of such provisions, (iii) creating a limited suspension of the statute of limitations of corporations during proceedings to enforce certain summonses, (iv) modifying the accuracy-related penalty to apply more effectively to transfer price adjustments under sec. 482, and (v) clarifying that certain disclosure is permitted by the Internal Revenue Service to persons providing services to the IRS, such as expert witnesses.

5. Energy related provisions

The Act contains several energy incentive tax provisions as follows: (1) The Act extends the section 29 credit for nonconventional fuels for 2 years and makes eligible for the credit certain tight formation gas. (2) The Act extends the alcohol fuels credit until December 31, 2000; the amount of the credit is reduced from 60 cents per gallon to 54 cents per gallon, but small producers are allowed a new 10-centsper-gallon income tax credit. The alternative 6-cents-per-gallon excise tax exemption is reduced to 5.4 cents per gallon of alcohol mixture and is extended through September 30, 2000. (3) The Act creates a new 15 percent credit for qualified enhanced oil recovery costs. (4) The Act increases from 50 percent to 100 percent the net income limitation on oil and gas percentage depletion, repeals the prohibition on claiming percentage depletion on transferred proven oil and gas properties, and in

creases up to 10 percentage points for marginal production the preexisting 15 percent statutory percentage depletion rate. (5) Finally, the Act provides alternative minimum tax ("AMT") relief for oil and gas operations, by providing a special energy deduction for nonintegrated companies. Generally, the special energy deduction removes from the AMT base a portion of the AMT preferences that otherwise would apply for intangible drilling costs and marginal production depletion.

6. Extension of expiring provisions

The Act extends several provisions until Dec. 31, 1991. These provisions expired on Sept. 30, 1990. These provisions include the allocation of research and experimental expenditures, the research and development credit, employer-provided educational assistance, group legal service plans, the targeted jobs tax credit, the low-income housing credit, the qualified mortgage bond program, the qualified small issue bond program, and other rules.

PART VII. TAXPAYER RIGHTS

"YOUR RIGHTS AS A TAXPAYER"

[Text of Internal Revenue Service Publication No. 1 (10–90)

As a taxpayer, you have the right to be treated fairly, professionally, promptly, and courteously by Internal Revenue Service employees. Our goal at the IRS is to protect your rights so that you will have the highest confidence in the integrity, efficiency, and fairness of our tax system. To ensure that you always receive such treatment, you should know about the many rights you have at each step of the tax process.

FREE INFORMATION AND HELP IN PREPARING RETURNS

You have the right to information and help in complying with the tax laws. In addition to the basic instructions we provide with the tax forms, we make available a great deal of other information. Taxpayer publications. We publish over 100 free taxpayer information publications on various subjects. One of these, Publication 910, Guide to Free Tax Services, is a catalog of the free services and publications we offer. You can order all publications and any tax forms or instructions you need by calling us toll-free at 1-800TAX-FORM (829-3676).

Other assistance. We provide walk-in tax help at many IRS offices and recorded telephone information on many topics through our Tele-Tax system. The telephone numbers for Tele-Tax, and the topics covered, are in certain tax forms' instructions and publications. Many of our materials are available in Braille (at regional libraries for the handicapped) and in Spanish. We provide help for the hearing impaired via special telephone equipment.

We have informational videotapes that you can borrow. In addition, you may want to attend our education programs for specific groups of taxpayers, such as farmers and those with small busi

nesses.

In cooperation with local volunteers, we offer free help in preparing tax returns for low-income and elderly taxpayers through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) Programs. You can get information on these programs by calling the toll-free telephone number for your area.

Copies of tax returns. If you need a copy of your tax return for an earlier year, you can get one by filling out Form 4506, Request for Copy of Tax Form, and paying a small fee. However, you often only need certain information, such as the amount of your reported income, the number of your exemptions, and the tax shown on the return. You can get this information free if you write or visit an IRS office or call the toll-free number for your area.

PRIVACY AND CONFIDENTIALITY

You have the right to have your personal and financial information kept confidential. People who prepare your return or represent you must keep your information confidential.

You also have the right to know why we are asking you for information, exactly how we will use any information you give, and what might happen if you do not give the information.

Information sharing. Under the law, we can share your tax information with State tax agencies and, under strict legal guidelines, the Department of Justice and other federal agencies. We can also share it with certain foreign governments under tax treaty provisions.

COURTESY AND CONSIDERATION

You are always entitled to courteous and considerate treatment from IRS employees. If you ever feel that you are not being treated with fairness, courtesy, and consideration by an IRS employee, you should tell the employee's supervisor.

PROTECTION OF YOUR RIGHTS

The employees of the Internal Revenue Service will explain and protect your rights as a taxpayer at all times. If you feel that this is not the case, you should discuss the problem with the employee's supervisor. Your local Problem Resolution Officer will assist you if you are unable to resolve the problem with the employee's supervi

sor.

COMPLAINTS

If for any reason you have a complaint about the IRS, you may write to the District Director or Service Center Director for your area. We will give you the name and address if you call our tollfree phone number listed later.

REPRESENTATION AND RECORDINGS

Throughout your dealings with us, you can represent yourself, or, generally with proper written authorization, have someone represent you in your absence. During an interview, you can have someone accompany you.

If you want to consult an attorney, a certified public accountant, an enrolled agent, or any other person permitted to represent a taxpayer during an interview for examining a tax return or collecting tax, we will stop and reschedule the interview. We cannot suspend the interview if you are there because of an administrative

summons.

You can generally make an audio recording of an interview with an IRS Collection or Examination officer. Your request to record the interview should be made in writing, and must be reviewed 10 days before the interviews. You must bring your own recording equipment. We also can record an interview. If we do so, we will notify you 10 days before the meeting and you can get a copy of the recording at your expense.