Table of Contents
The IRS will forgive the federal income tax liabilities of decedents who died as a result of the Oklahoma City attack, September 11 attacks, and anthrax attacks. Income tax is forgiven for these decedents whether they were killed in an attack or in rescue or recovery operations. Any forgiven tax liability owed to the IRS will not have to be paid. Any forgiven tax liability that has already been paid will be refunded. (See Refund of Taxes Paid, later.) To determine the amount of tax to be forgiven, read Years Eligible for Tax Forgiveness first. Then read Amount of Tax Forgiven.
Decedents whose total forgiven tax liability for all eligible years is less than $10,000 are entitled to $10,000 minimum relief. Even decedents who were not required to file tax returns for the eligible tax years are entitled to $10,000 minimum relief. See Minimum Amount of Relief later under Amount of Tax Forgiven.
The following paragraphs explain which years are eligible for tax forgiveness.
Example 1.
A man was killed in the bombing of the federal building in Oklahoma City on April 19, 1995. His income tax is forgiven for 1994 and 1995.
Example 2.
A woman was wounded while walking outside the federal building in Oklahoma City on April 19, 1995. She subsequently died of her wounds in 1996. Her income tax is forgiven for 1994, 1995, and 1996.
The IRS will forgive the decedent's income tax liability for all years eligible for tax forgiveness. On a joint return, only the decedent's part of the joint income tax liability is eligible for forgiveness.
To figure the tax to be forgiven, use the following worksheets.
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Use Worksheet A for any eligible year the decedent filed a return as single, married filing separately, head of household, or qualifying widow(er).
-
Use Worksheet B for any eligible year the decedent filed a joint return. See the illustrated Worksheet B near the end of this publication.
Do not complete Worksheet A or B if the decedent was not required to file tax returns for the eligible tax years. Instead, complete Worksheet C and file a return for the decedent's last tax year. See Minimum Amount of Relief, later.
If you need assistance, call the IRS at 1–866–562–5227 Monday through Friday during the following times.
In English–7 a.m. to 10 p.m. local time. |
In Spanish–8 a.m. to 9:30 p.m. local time. |
(A)
First Eligible Year (1994 or 2000) |
(B)
Second Eligible Year (1995 or 2001) |
(C)
Third Eligible Year (1996 or 2002) |
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1 | Enter the years eligible for forgiveness. | 1 | |||
2 | Enter the decedent's taxable income. Figure taxable income as if a separate return had been filed. See the instructions. | 2 | |||
3 | Enter the decedent's total tax. See the instructions. | 3 | |||
4 | Enter the total, if any, of the decedent's taxes not eligible for forgiveness. See the instructions. | 4 | |||
5 | Subtract line 4 from line 3. | 5 | |||
6 | Enter the surviving spouse's taxable income. Figure taxable income as if a separate return had been filed. See the instructions. | 6 | |||
7 | Enter the surviving spouse's total tax. See the instructions. | 7 | |||
8 | Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. | 8 | |||
9 | Subtract line 8 from line 7. | 9 | |||
10 | Add lines 5 and 9. | 10 | |||
11 | Enter the total tax from the joint return. See Table 1 on page 5 for the line number for years before 2002. | 11 | |||
12 | Add lines 4 and 8. | 12 | |||
13 | Subtract line 12 from line 11. | 13 | |||
14 | Divide line 5 by line 10. Enter the result as a decimal. | 14 | |||
15 | Tax to be forgiven. Multiply line 13 by line 14 and enter the result. | 15 | |||
Note. If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on
line 5 of Worksheet A) is less than $10,000, also complete Worksheet C.
|
(A)
First Eligible Year (1994 or 2000) |
(B)
Second Eligible Year (1995 or 2001) |
(C)
Third Eligible Year (1996 or 2002) |
|||
1 | Enter the years eligible for forgiveness. | 1 | |||
2 | Enter the decedent's taxable income. Figure taxable income as if a separate return had been filed. See the instructions. | 2 | |||
3 | Enter the decedent's total tax. See the instructions. | 3 | |||
4 | Enter the total, if any, of the decedent's taxes not eligible for forgiveness. See the instructions. | 4 | |||
5 | Subtract line 4 from line 3. | 5 | |||
6 | Enter the surviving spouse's taxable income. Figure taxable income as if a separate return had been filed. See the instructions. | 6 | |||
7 | Enter the surviving spouse's total tax. See the instructions. | 7 | |||
8 | Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. | 8 | |||
9 | Subtract line 8 from line 7. | 9 | |||
10 | Add lines 5 and 9. | 10 | |||
11 | Enter the total tax from the joint return. See Table 1 on page 5 for the line number for years before 2002. | 11 | |||
12 | Add lines 4 and 8. | 12 | |||
13 | Subtract line 12 from line 11. | 13 | |||
14 | Divide line 5 by line 10. Enter the result as a decimal. | 14 | |||
15 | Tax to be forgiven. Multiply line 13 by line 14 and enter the result. | 15 | |||
Note. If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on
line 5 of Worksheet A) is less than $10,000, also complete Worksheet C.
|
Form | 1994 | 1995 | 1996 | 2000 | 2001 |
1040 | Line 53 | Line 54 | Line 51 | Line 57 | Line 58 |
1040A | Line 27 | Line 28 | Line 28 | Line 35 | File Form 1040 |
1040EZ | Line 9 | Line 10 | Line 10 | Line 10 | |
TeleFile Tax Record | ** | Line E | Line J | Line K | |
1040NR | Line 51 | Line 52 | Line 49 | Line 54 | Line 54 |
1040NR–EZ | N/A | Line 17 | Line 17 | Line 18 | File Form 1040NR |
* Line numbers for the 2002 forms were not available when this publication went to
print.
** File Form 4506 to get a transcript of the decedent's account. |
Form | 1994 | 1995 | 1996 | 2000 | 2001 |
1040 | Line 53 | Line 54 | Line 51 | Line 57 | Line 58 |
1040A | Line 27 | Line 28 | Line 28 | Line 35 | File Form 1040 |
1040EZ | Line 9 | Line 10 | Line 10 | Line 10 | |
TeleFile Tax Record | ** | Line E | Line J | Line K | |
1040NR | Line 51 | Line 52 | Line 49 | Line 54 | Line 54 |
1040NR–EZ | N/A | Line 17 | Line 17 | Line 18 | File Form 1040NR |
* Line numbers for the 2002 forms were not available when this publication went to
print.
** File Form 4506 to get a transcript of the decedent's account. |
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Self-employment tax.
-
Social security and Medicare tax on tip income not reported to employer.
-
Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts).
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Tax on excess accumulation in qualified retirement plans.
-
Household employment taxes.
-
Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance.
-
Tax on golden parachute payments.
The minimum amount of relief is $10,000. If the decedent's total forgiven tax liability for all eligible years is less than $10,000, the difference between $10,000 and the total forgiven tax liability for those years will be treated as a tax payment for the decedent's last tax year. The IRS will refund the difference as explained under Refund of Taxes Paid. Use Worksheet C to figure the additional tax payment. But first complete Worksheet A or B, unless the decedent was not required to file tax returns for the eligible tax years.
Example 1.
An individual who died in the September 11 attacks had an income tax liability of $-0- for 2000 and $6,400 for 2001. The $6,400 is eligible for forgiveness. The IRS will forgive $6,400 and treat the difference between $10,000 and $6,400 ($3,600) as a tax payment for 2001.
Example 2.
A child who died in the September 11 attacks had no (-0-) income tax liability for 2000 or 2001. The IRS will treat $10,000 as a tax payment for 2001.
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After the date of the decedent's death, and
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Before the end of the decedent's tax year (determined without regard to death).
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Deferred compensation that would have been payable if the death had occurred because of an event other than these attacks.
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Amounts that would not have been payable but for an action taken after September 11, 2001.
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Amounts payable from a qualified retirement plan or IRA to the beneficiary or estate of the decedent.
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Amounts payable only as death or survivor's benefits from pre-existing arrangements that would have been paid if the death had occurred for another reason.
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Income received as a result of adjustments made by the decedent's employer to a plan or arrangement to accelerate the vesting of restricted property or the payment of nonqualified deferred compensation after the date of the attack.
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Interest on savings bonds cashed by the beneficiary of the decedent.
If you are responsible for the estate of a decedent, see Publication 559. Publication 559 discusses how to complete and file federal income tax returns and explains your responsibility to pay any taxes due.
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The estate claimed an income distribution deduction on line 18 (Form 1041).
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Each beneficiary submits the information necessary to refigure the income tax payable on the exempt income received from the decedent's estate.
-
Form 1041 was not required because exempt income was received, and
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The estate would have claimed an income distribution deduction if the exempt income were taxable.
1 | Minimum relief amount.
Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. |
1 | $10,000 | ||
2 | Enter the taxable income from line 22 (Form 1041) | 2 | |||
3 | Enter the distribution deduction from line 18 (Form 1041) . | 3 | |||
4 | Add lines 2 and 3. | 4 | |||
5
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Enter exempt income received after death minus expenses allocable to exempt income. (See Income received after date of death on page 5.) | 5 | |||
6 | Add lines 4 and 5. | 6 | |||
7 | Figure the tax on line 6 using Schedule G (Form 1041). | 7 | |||
8 | Figure the tax on line 4 using Schedule G (Form 1041). | 8 | |||
9 | Tax on exempt income. Subtract line 8 from line 7. | 9 | |||
10
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Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. If the decedent was not required to file tax returns for the eligible tax years, enter -0-. | 10 | |||
11 | Add lines 9 and 10. | 11 | |||
12 | Additional payment allowed. If line 11 is $10,000 or more, enter -0- and stop here. No additional amount is allowed as a tax payment. Otherwise, subtract line 11 from line 1 and enter the result. | 12 | |||
Note. The amount on line 12 is allowed as a tax payment for the decedent's last tax
year (usually 1995 or 2001).
|
1 | Minimum relief amount.
Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. |
1 | $10,000 | ||
2 | Enter the taxable income from line 22 (Form 1041) | 2 | |||
3 | Enter the distribution deduction from line 18 (Form 1041) . | 3 | |||
4 | Add lines 2 and 3. | 4 | |||
5
|
Enter exempt income received after death minus expenses allocable to exempt income. (See Income received after date of death on page 5.) | 5 | |||
6 | Add lines 4 and 5. | 6 | |||
7 | Figure the tax on line 6 using Schedule G (Form 1041). | 7 | |||
8 | Figure the tax on line 4 using Schedule G (Form 1041). | 8 | |||
9 | Tax on exempt income. Subtract line 8 from line 7. | 9 | |||
10
|
Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. If the decedent was not required to file tax returns for the eligible tax years, enter -0-. | 10 | |||
11 | Add lines 9 and 10. | 11 | |||
12 | Additional payment allowed. If line 11 is $10,000 or more, enter -0- and stop here. No additional amount is allowed as a tax payment. Otherwise, subtract line 11 from line 1 and enter the result. | 12 | |||
Note. The amount on line 12 is allowed as a tax payment for the decedent's last tax
year (usually 1995 or 2001).
|
Worksheet D. Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C)
1 | Enter the taxable income from line 22 (Form 1041) | 1 | |
2 | Enter exempt income received after death minus expenses allocable to exempt income. (See Income received after date of death on page 5.) | 2 | |
3 | Add lines 1 and 2 | 3 | |
4 | Figure the tax on line 3 using Schedule G (Form 1041). | 4 | |
5 | Figure the tax on line 1 using Schedule G (Form 1041). | 5 | |
6 | Estate's tax on exempt income. Subtract line 5 from line 4 | 6 | |
7 | Beneficiaries' tax on exempt income. Figure the total tax that would have been payable by all beneficiaries. Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. Add the amounts by which each beneficiary's income tax is increased. | 7 | |
8 | Add lines 6 and 7. Enter this amount on line 9 of Worksheet C. | 8 |
Worksheet D. Alternative Computation of Tax on Exempt Income (Line 9 of Worksheet C)
1 | Enter the taxable income from line 22 (Form 1041) | 1 | |
2 | Enter exempt income received after death minus expenses allocable to exempt income. (See Income received after date of death on page 5.) | 2 | |
3 | Add lines 1 and 2 | 3 | |
4 | Figure the tax on line 3 using Schedule G (Form 1041). | 4 | |
5 | Figure the tax on line 1 using Schedule G (Form 1041). | 5 | |
6 | Estate's tax on exempt income. Subtract line 5 from line 4 | 6 | |
7 | Beneficiaries' tax on exempt income. Figure the total tax that would have been payable by all beneficiaries. Do this by including in each beneficiary's gross income the exempt income received from the decedent's estate and refiguring the income tax. Add the amounts by which each beneficiary's income tax is increased. | 7 | |
8 | Add lines 6 and 7. Enter this amount on line 9 of Worksheet C. | 8 |
The IRS will refund the following forgiven income tax liabilities.
-
Income tax liabilities that have been paid.
-
Income tax liabilities treated as paid because the total tax liability for all years eligible for tax forgiveness is less than $10,000. See Minimum Amount of Relief, earlier.
Example 1.
A man who died in the September 11 attacks had an income tax liability of $7,500 for 2000 and $6,500 for 2001. The total, $14,000, is eligible for tax forgiveness. However, he paid only $13,000 of that amount. The IRS will refund the $13,000 paid.
Example 2.
A child who died in the September 11 attacks had no income tax liability for 2000 or 2001. The child qualifies for the minimum relief of $10,000. The $10,000 is treated as a tax payment for 2001 and will be refunded.
Use the following procedures to claim income tax forgiveness.
The form you use depends on whether an income tax return for the eligible year was already filed for the decedent.
Also, please write one of the following across the top of page 1 of each return.
-
KITA—Oklahoma City
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KITA—9/11
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KITA—Anthrax
“KITA” means “killed in terrorist attack.”
Please attach the following documents to the return or amended return.
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You are a surviving spouse filing an original or amended joint return with the decedent.
-
You are a personal representative filing an original Form 1040 or Form 1040NR for the decedent and a court certificate showing your appointment is attached to the return.
The IRS has set up a special office for processing returns and claims for tax forgiveness. Use one of the addresses shown below. Where you file the returns or claims depends on whether you use the U.S. Postal Service or a private delivery service.
Please do not send these returns or claims to any of the addresses shown in the tax form instructions.
Internal Revenue Service
P.O. Box 4053
Woburn, MA 01888
Internal Revenue Service
Stop 661
310 Lowell St.
Andover, MA 01810
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Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, and Second Day Service.
-
DHL Worldwide Express (DHL): DHL “Same Day” Service, and DHL USA Overnight.
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Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, and FedEx 2Day.
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United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.
The following section discusses the tax treatment of certain amounts received by survivors.
Payments from the September 11th Victim Compensation Fund of 2001 are not included in income.
Qualified disaster relief payments are not included in income. These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). No withholding applies to these payments.
Qualified disaster relief payments include payments you receive (regardless of the source) after September 10, 2001, for the following expenses.
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Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a terrorist attack.
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Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a terrorist attack. (A personal residence can be a rented residence or one you own.)
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Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a terrorist attack.
Qualified disaster relief payments also include the following.
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Payments made by common carriers (for example, American Airlines and United Airlines regarding the September 11 attacks) because of death or physical injury incurred as a result of a terrorist attack.
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Amounts paid by a federal, state, or local government in connection with a terrorist attack to those affected by the attack.
Qualified disaster relief payments do not include:
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Insurance or other reimbursements for expenses, or
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Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation.
For tax years ending after September 10, 2001, disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies), whether outside or within the United States, are not included in income.
Payments received by an individual or the estate of a decedent from the employer of an employee who died as a result of the Oklahoma City or September 11 terrorist attacks, or as a result of the anthrax attacks, are not included in income. Only the amount that exceeds the benefits that would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack is excludable. However, the exclusion does apply to incidental death benefits paid under a qualified retirement plan even if these amounts would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack.
If you included death benefits in income on a previously filed return and they are now excludable under the above rule, file Form 1040X to amend that return. For information on the period for filing Form 1040X, see Period for filing claim for credit or refund earlier under Refund of Taxes Paid. If that period has expired, you are granted an extension. You have until January 22, 2003, to file Form 1040X to exclude the death benefits. On top of page 1 of Form 1040X, write “Extension of Limitations Under PL 107–134, sec. 102(b)(2).”
Canceled debt is not included in your income (or the income of the estate) if:
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You (or the estate) were liable, or became liable, for the debt of a decedent, and
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The debt was canceled after September 10, 2001, and before January 1, 2002, because the decedent died as a result of the September 11 attacks or anthrax attacks.
The lender is not required to report the canceled debt on Form 1099–C, Cancellation of Debt.
If you are a survivor of a public safety officer who died in the line of duty, certain amounts you receive are not included in income.
For this purpose, the term public safety officer includes police and law enforcement officers, firefighters, and rescue squad and ambulance crews.
The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a terrorist attack. The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA.
If any tax deadline is postponed, the IRS will publicize the postponement in the affected area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB).
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Any individual whose main home is located in a covered area (defined later).
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Any business entity or sole proprietor whose principal place of business is located in a covered area.
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Any individual, business entity, or sole proprietor whose records needed to meet a postponed deadline are maintained in a covered area. The main home or principal place of business does not have to be located in the covered area.
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Any estate or trust whose tax records necessary to meet a postponed tax deadline are maintained in a covered area.
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Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered area.
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The spouse on a joint return with a taxpayer who is eligible for postponements.
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Any other person determined by the IRS to be affected by a terrorist attack.
If your property was damaged or destroyed as a result of the September 11 attacks, you can choose to deduct your disaster loss on your 2000 return (or amended return) rather than on your 2001 return.
You must make this choice to deduct your loss on your 2000 return by the later of the following dates.
-
The due date (without extensions) for filing your 2001 income tax return (April 15, 2002, if you are a calendar year taxpayer).
-
The due date (with extensions) for the 2000 return.
For more information about disaster area losses, see Publication 547.
The federal estate tax is reduced for taxable estates of individuals who died as a result of the Oklahoma City attack, the September 11 attacks, and the anthrax attacks. The estate tax is computed using a new rate schedule on page 25 of the November 2001 revision of the instructions for Form 706. The estate tax is reduced by credits against the estate tax, including the unified credit and the state death tax credit. These credits may reduce or eliminate the estate tax due.
A special rule extends until January 22, 2003, the period of time allowed to file a claim for a refund of estate taxes that have been paid.
A person who acquires payment rights in a structured settlement arrangement after February 21, 2002, may be subject to a 40% excise tax unless the transfer of the payment rights was approved in advance in a qualified order. The excise tax is figured on the excess of the undiscounted amount of the payments being acquired over the total amount actually paid to acquire them. However, this tax will not apply to transactions entered into from February 22, 2002, to July 1, 2002, if certain requirements are met. For information about these requirements, see Internal Revenue Code section 5891.
(A)
First Eligible Year (1994 or 2000) |
(B)
Second Eligible Year (1995 or 2001) |
(C)
Third Eligible Year (1996 or 2002) |
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1 | Enter the years eligible for forgiveness. | 1 | 2000 | 2001 | |
2 | Enter the decedent's taxable income. Figure taxable income as
if a separate return had been filed. See the instructions. |
2 | $17,259 | $14,295 | |
3 | Enter the decedent's total tax. See the instructions. | 3 | 6,123 | 5,250 | |
4 | Enter the total, if any, of the decedent's taxes not eligible for forgiveness. See the instructions. | 4 | 3,532 | 3,109 | |
5 | Subtract line 4 from line 3. | 5 | 2,591 | 2,141 | |
6 | Enter the surviving spouse's taxable income. Figure taxable income as if a separate return had been filed. See the instructions for line 2. | 6 | 29,025 | 29,850 | |
7 | Enter the surviving spouse's total tax. See the instructions. | 7 | 5,277 | 5,391 | |
8 | Enter the total, if any, of the surviving spouse's taxes listed in
the instructions for line 4. |
8 | 0 | 0 | |
9 | Subtract line 8 from line 7. | 9 | 5,277 | 5,391 | |
10 | Add lines 5 and 9. | 10 | 7,868 | 7,532 | |
11 | Enter the total tax from the joint return. See Table 1 on page 5 for the line number for years before 2002. | 11 | 10,789 | 9,728 | |
12 | Add lines 4 and 8. | 12 | 3,532 | 3,109 | |
13 | Subtract line 12 from line 11. | 13 | 7,257 | 6,619 | |
14 | Divide line 5 by line 10. Enter the result as a decimal. | 14 | .329 | .284 | |
15 | Tax to be forgiven. Multiply line 13 by line 14 and enter the result. | 15 | $2,388 | $1,880 | |
Note. If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on
line 5 of Worksheet A) is less than $10,000, also complete Worksheet C.
|
(A)
First Eligible Year (1994 or 2000) |
(B)
Second Eligible Year (1995 or 2001) |
(C)
Third Eligible Year (1996 or 2002) |
|||
1 | Enter the years eligible for forgiveness. | 1 | 2000 | 2001 | |
2 | Enter the decedent's taxable income. Figure taxable income as
if a separate return had been filed. See the instructions. |
2 | $17,259 | $14,295 | |
3 | Enter the decedent's total tax. See the instructions. | 3 | 6,123 | 5,250 | |
4 | Enter the total, if any, of the decedent's taxes not eligible for forgiveness. See the instructions. | 4 | 3,532 | 3,109 | |
5 | Subtract line 4 from line 3. | 5 | 2,591 | 2,141 | |
6 | Enter the surviving spouse's taxable income. Figure taxable income as if a separate return had been filed. See the instructions for line 2. | 6 | 29,025 | 29,850 | |
7 | Enter the surviving spouse's total tax. See the instructions. | 7 | 5,277 | 5,391 | |
8 | Enter the total, if any, of the surviving spouse's taxes listed in
the instructions for line 4. |
8 | 0 | 0 | |
9 | Subtract line 8 from line 7. | 9 | 5,277 | 5,391 | |
10 | Add lines 5 and 9. | 10 | 7,868 | 7,532 | |
11 | Enter the total tax from the joint return. See Table 1 on page 5 for the line number for years before 2002. | 11 | 10,789 | 9,728 | |
12 | Add lines 4 and 8. | 12 | 3,532 | 3,109 | |
13 | Subtract line 12 from line 11. | 13 | 7,257 | 6,619 | |
14 | Divide line 5 by line 10. Enter the result as a decimal. | 14 | .329 | .284 | |
15 | Tax to be forgiven. Multiply line 13 by line 14 and enter the result. | 15 | $2,388 | $1,880 | |
Note. If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on
line 5 of Worksheet A) is less than $10,000, also complete Worksheet C.
|
A wife lost her husband in the September 11 attack on the World Trade Center. They filed a joint return for 2000 and the wife chose to file a joint return as a surviving spouse for 2001. The returns for 2000 and 2001 showed the following income, deductions, and tax liabilities.
After the husband died, his estate received income of $4,000. Of that amount, $1,000 is net profit from Schedule C received before the end of 2001. This net profit is exempt from income tax as explained earlier under Income received after date of death. The wife files Form 1041 because the gross income of the estate for the tax year ($3,000) is $600 or more.
To determine how much of the husband's tax liability for 2000 and 2001 is to be forgiven, the wife completes Worksheet B. She also completes Worksheet C because the forgiven tax liabilities for 2000 and 2001 (line 15 of Worksheet B) total less than $10,000.
To claim tax relief for 2000, the wife files Form 1040X and attaches a copy of Worksheet B. To claim tax relief for 2001, she files Form 1040 and attaches copies of Worksheets B and C.
2000 | 2001 | |
Wages (wife) | $35,000 | $36,000 |
Net profit from Schedule C, Profit or Loss From Business (husband) | 25,000 | 22,000 |
Interest income (joint account) | 1,000 | 1,100 |
Deduction for ½ of self-employment tax (husband) | (1,766) | (1,555) |
Standard deduction | (7,350) | (7,600) |
Personal exemptions (2) | (5,600) | (5,800) |
Taxable income | $46,284 | $44,145 |
Joint income tax liability | $7,257 | $6,619 |
Plus: Self-employment tax (husband) | 3,532 | 3,109 |
Total tax liability | $10,789 | $9,728 |
2000 | 2001 | |
Wages (wife) | $35,000 | $36,000 |
Net profit from Schedule C, Profit or Loss From Business (husband) | 25,000 | 22,000 |
Interest income (joint account) | 1,000 | 1,100 |
Deduction for ½ of self-employment tax (husband) | (1,766) | (1,555) |
Standard deduction | (7,350) | (7,600) |
Personal exemptions (2) | (5,600) | (5,800) |
Taxable income | $46,284 | $44,145 |
Joint income tax liability | $7,257 | $6,619 |
Plus: Self-employment tax (husband) | 3,532 | 3,109 |
Total tax liability | $10,789 | $9,728 |
1 | Minimum relief amount.
Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. |
1 | $10,000 | ||
2 | Enter the taxable income from line 22 (Form 1041) | 2 | 2,400 | ||
3 | Enter the distribution deduction from line 18 (Form 1041) . | 3 | 0 | ||
4 | Add lines 2 and 3. | 4 | 2,400 | ||
5
|
Enter exempt income received after death minus expenses allocable to exempt income. (See Income received after date of death on page 5.) | 5 | 1,000 | ||
6 | Add lines 4 and 5. | 6 | 3,400 | ||
7 | Figure the tax on line 6 using Schedule G (Form 1041). | 7 | 710 | ||
8 | Figure the tax on line 4 using Schedule G (Form 1041). | 8 | 435 | ||
9 | Tax on exempt income. Subtract line 8 from line 7. | 9 | 275 | ||
10
|
Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. If the decedent was not required to file tax returns for the eligible tax years, enter -0-. | 10 | 4,268 | ||
11 | Add lines 9 and 10. | 11 | $4,543 | ||
12 | Additional payment allowed. If line 11 is $10,000 or more, enter -0- and stop here. No additional amount is allowed as a tax payment. Otherwise, subtract line 11 from line 1 and enter the result. | 12 | $5,457 | ||
Note. The amount on line 12 is allowed as a tax payment for the decedent's last tax
year (usually 1995 or 2001).
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1 | Minimum relief amount.
Note: Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. |
1 | $10,000 | ||
2 | Enter the taxable income from line 22 (Form 1041) | 2 | 2,400 | ||
3 | Enter the distribution deduction from line 18 (Form 1041) . | 3 | 0 | ||
4 | Add lines 2 and 3. | 4 | 2,400 | ||
5
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Enter exempt income received after death minus expenses allocable to exempt income. (See Income received after date of death on page 5.) | 5 | 1,000 | ||
6 | Add lines 4 and 5. | 6 | 3,400 | ||
7 | Figure the tax on line 6 using Schedule G (Form 1041). | 7 | 710 | ||
8 | Figure the tax on line 4 using Schedule G (Form 1041). | 8 | 435 | ||
9 | Tax on exempt income. Subtract line 8 from line 7. | 9 | 275 | ||
10
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Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. If the decedent was not required to file tax returns for the eligible tax years, enter -0-. | 10 | 4,268 | ||
11 | Add lines 9 and 10. | 11 | $4,543 | ||
12 | Additional payment allowed. If line 11 is $10,000 or more, enter -0- and stop here. No additional amount is allowed as a tax payment. Otherwise, subtract line 11 from line 1 and enter the result. | 12 | $5,457 | ||
Note. The amount on line 12 is allowed as a tax payment for the decedent's last tax
year (usually 1995 or 2001).
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The following additional worksheets are provided for your convenience.
(A)
First Eligible Year (1994 or 2000) |
(B)
Second Eligible Year (1995 or 2001) |
(C)
Third Eligible Year (1996 or 2002) |
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1 | Enter the years eligible for tax forgiveness. | 1 | ||||
2 | Enter the total tax from the decedent's income tax return. See Table 1 on page 5 for the line number for years before 2002. | 2 | ||||
3 | Enter the following taxes, if any, shown on the decedent's income tax return. (These taxes are not eligible for forgiveness.) | |||||
a | Self-employment tax. | 3a | ||||
b | Social security and Medicare tax on tip income not reported to employer. | 3b | ||||
c | Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). | 3c | ||||
d | Tax on excess accumulation in qualified retirement plans. | 3d | ||||
e | Household employment taxes. | 3e | ||||
f | Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. | 3f | ||||
g | Tax on golden parachute payments. | 3g | ||||
4 | Add lines 3a through 3g. | 4 | ||||
5 | Tax to be forgiven. Subtract line 4 from line 2. | 5 | ||||
Note. If the total of columns (A), (B), and (C) of line 5 (including any
amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C.
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(A)
First Eligible Year (1994 or 2000) |
(B)
Second Eligible Year (1995 or 2001) |
(C)
Third Eligible Year (1996 or 2002) |
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1 | Enter the years eligible for tax forgiveness. | 1 | ||||
2 | Enter the total tax from the decedent's income tax return. See Table 1 on page 5 for the line number for years before 2002. | 2 | ||||
3 | Enter the following taxes, if any, shown on the decedent's income tax return. (These taxes are not eligible for forgiveness.) | |||||
a | Self-employment tax. | 3a | ||||
b | Social security and Medicare tax on tip income not reported to employer. | 3b | ||||
c | Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). | 3c | ||||
d | Tax on excess accumulation in qualified retirement plans. | 3d | ||||
e | Household employment taxes. | 3e | ||||
f | Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. | 3f | ||||
g | Tax on golden parachute payments. | 3g | ||||
4 | Add lines 3a through 3g. | 4 | ||||
5 | Tax to be forgiven. Subtract line 4 from line 2. | 5 | ||||
Note. If the total of columns (A), (B), and (C) of line 5 (including any
amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C.
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(A)
First Eligible Year (1994 or 2000) |
(B)
Second Eligible Year (1995 or 2001) |
(C)
Third Eligible Year (1996 or 2002) |
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1 | Enter the years eligible for forgiveness. | 1 | |||
2 | Enter the decedent's taxable income. Figure taxable income as if a separate return had been filed. See the instructions. | 2 | |||
3 | Enter the decedent's total tax. See the instructions. | 3 | |||
4 | Enter the total, if any, of the decedent's taxes not eligible for forgiveness. See the instructions. | 4 | |||
5 | Subtract line 4 from line 3. | 5 | |||
6 | Enter the surviving spouse's taxable income. Figure taxable income as if a separate return had been filed. See the instructions. | 6 | |||
7 | Enter the surviving spouse's total tax. See the instructions. | 7 | |||
8 | Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. | 8 | |||
9 | Subtract line 8 from line 7. | 9 | |||
10 | Add lines 5 and 9. | 10 | |||
11 | Enter the total tax from the joint return. See Table 1 on page 5 for the line number for years before 2002. | 11 | |||
12 | Add lines 4 and 8. | 12 | |||
13 | Subtract line 12 from line 11. | 13 | |||
14 | Divide line 5 by line 10. Enter the result as a decimal. | 14 | |||
15 | Tax to be forgiven. Multiply line 13 by line 14 and enter the result. | 15 | |||
Note. If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on
line 5 of Worksheet A) is less than $10,000, also complete Worksheet C.
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(A)
First Eligible Year (1994 or 2000) |
(B)
Second Eligible Year (1995 or 2001) |
(C)
Third Eligible Year (1996 or 2002) |
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1 | Enter the years eligible for forgiveness. | 1 | |||
2 | Enter the decedent's taxable income. Figure taxable income as if a separate return had been filed. See the instructions. | 2 | |||
3 | Enter the decedent's total tax. See the instructions. | 3 | |||
4 | Enter the total, if any, of the decedent's taxes not eligible for forgiveness. See the instructions. | 4 | |||
5 | Subtract line 4 from line 3. | 5 | |||
6 | Enter the surviving spouse's taxable income. Figure taxable income as if a separate return had been filed. See the instructions. | 6 | |||
7 | Enter the surviving spouse's total tax. See the instructions. | 7 | |||
8 | Enter the total, if any, of the surviving spouse's taxes listed in the instructions for line 4. | 8 | |||
9 | Subtract line 8 from line 7. | 9 | |||
10 | Add lines 5 and 9. | 10 | |||
11 | Enter the total tax from the joint return. See Table 1 on page 5 for the line number for years before 2002. | 11 | |||
12 | Add lines 4 and 8. | 12 | |||
13 | Subtract line 12 from line 11. | 13 | |||
14 | Divide line 5 by line 10. Enter the result as a decimal. | 14 | |||
15 | Tax to be forgiven. Multiply line 13 by line 14 and enter the result. | 15 | |||
Note. If the total of columns (A), (B), and (C) of line 15 (including any amounts shown on
line 5 of Worksheet A) is less than $10,000, also complete Worksheet C.
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1 | Minimum tax forgiveness.
Note. Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. |
1 | $10,000 | ||
2 | Enter the taxable income from line 22 (Form 1041) | 2 | |||
3 | Enter the distribution deduction from line 18 (Form 1041) . | 3 | |||
4 | Add lines 2 and 3. | 4 | |||
5
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Enter exempt income received after death minus expenses allocable to exempt income. (See Income received after date of death on page 5.) | 5 | |||
6 | Add lines 4 and 5. | 6 | |||
7 | Figure the tax on line 6 using Schedule G (Form 1041). | 7 | |||
8 | Figure the tax on line 4 using Schedule G (Form 1041). | 8 | |||
9 | Tax on exempt income. Subtract line 8 from line 7. | 9 | |||
10
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Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. If the decedent was not required to file tax returns for the eligible tax years, enter -0-. | 10 | |||
11 | Add lines 9 and 10. | 11 | |||
12 | Additional payment allowed. If line 11 is $10,000 or more, enter -0- and stop here. No additional amount is allowed as a tax payment. Otherwise, subtract line 11 from line 1 and enter the result. | 12 | |||
Note. The amount on line 12 is allowed as a tax payment for the decedent's last tax
year (usually 1995 or 2001).
|
1 | Minimum tax forgiveness.
Note. Before completing lines 2–9, see Instructions for lines 2–9 of Worksheet C. |
1 | $10,000 | ||
2 | Enter the taxable income from line 22 (Form 1041) | 2 | |||
3 | Enter the distribution deduction from line 18 (Form 1041) . | 3 | |||
4 | Add lines 2 and 3. | 4 | |||
5
|
Enter exempt income received after death minus expenses allocable to exempt income. (See Income received after date of death on page 5.) | 5 | |||
6 | Add lines 4 and 5. | 6 | |||
7 | Figure the tax on line 6 using Schedule G (Form 1041). | 7 | |||
8 | Figure the tax on line 4 using Schedule G (Form 1041). | 8 | |||
9 | Tax on exempt income. Subtract line 8 from line 7. | 9 | |||
10
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Enter the total of columns (A)–(C) from line 5 of Worksheet A or line 15 of Worksheet B. If the decedent was not required to file tax returns for the eligible tax years, enter -0-. | 10 | |||
11 | Add lines 9 and 10. | 11 | |||
12 | Additional payment allowed. If line 11 is $10,000 or more, enter -0- and stop here. No additional amount is allowed as a tax payment. Otherwise, subtract line 11 from line 1 and enter the result. | 12 | |||
Note. The amount on line 12 is allowed as a tax payment for the decedent's last tax
year (usually 1995 or 2001).
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Call 1–866–562–5227
Monday through Friday
In English–7 a.m. to 10 p.m. local time
In Spanish–8 a.m. to 9:30 p.m. local time
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Call the Taxpayer Advocate at 1–877–777–4778.
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Call the IRS at 1–800–829–1040.
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Call, write, or fax the Taxpayer Advocate office in your area.
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Call 1–800–829–4059 if you are a TTY/TDD user.
Personal computer. With your personal computer and modem, you can access the IRS on the Internet at www.irs.gov. While visiting our web site, you can:
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Find answers to questions you may have.
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Download forms and publications or search for forms and publications by topic or keyword.
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View forms that may be filled in electronically, print the completed form, and then save the form for recordkeeping.
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View Internal Revenue Bulletins published in the last few years.
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Search regulations and the Internal Revenue Code.
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Get information on starting and operating a small business.
You can also reach us with your computer using File Transfer Protocol at ftp.irs.gov.
TaxFax Service. Using the phone attached to your fax machine, you can receive forms and instructions by calling 703–368–9694. Follow the directions from the prompts. When you order forms, enter the catalog number for the form you need. The items you request will be faxed to you.
For help with transmission problems, call the FedWorld Help Desk at 703–487–4608.
Phone. Many services are available by phone.
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Ordering forms, instructions, and publications. Call 1–800–829–3676 to order current and prior year forms, instructions, and publications.
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Asking tax questions. Call the IRS with your tax questions at 1–800–829–1040.
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TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1–800–829–4059 to ask tax questions or to order forms and publications.
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TeleTax topics. Call 1–800–829–4477 to listen to pre-recorded messages covering various tax topics.
Evaluating the quality of our telephone services. To ensure that IRS representatives give accurate, courteous, and professional answers,
we evaluate the quality of our telephone services in several ways.
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A second IRS representative sometimes monitors live telephone calls. That person only evaluates the IRS assistor and does not keep a record of any taxpayer's name or tax identification number.
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We sometimes record telephone calls to evaluate IRS assistors objectively. We hold these recordings no longer than one week and use them only to measure the quality of assistance.
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We value our customers' opinions. Throughout this year, we will be surveying our customers for their opinions on our service.
Walk-in. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Some IRS offices, libraries, grocery stores, copy centers, city and county governments, credit unions, and office supply stores have an extensive collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
Mail. You can send your order for forms, instructions, and publications to the nearest Distribution Center and receive a response within 10 workdays after your request is received. Find the address that applies to your part of the country.
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Western part of U.S.:
Western Area Distribution Center
Rancho Cordova, CA 95743–0001 -
Central part of U.S.:
Central Area Distribution Center
P.O. Box 8903
Bloomington, IL 61702–8903 -
Eastern part of U.S. and foreign addresses:
Eastern Area Distribution Center
P.O. Box 85074
Richmond, VA 23261–5074
CD-ROM. You can order IRS Publication 1796, Federal Tax Products on CD-ROM, and obtain:
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Current tax forms, instructions, and publications.
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Prior-year tax forms and instructions.
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Popular tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping.
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Internal Revenue Bulletins.
The CD-ROM can be purchased from National Technical Information Service (NTIS) by calling 1–877–233–6767 or on the Internet at www.irs.gov.
IRS Publication 3207, Small Business Resource Guide, is an interactive CD-ROM that contains information important to small businesses. You can get a free copy by calling 1–800–829–3676 or visiting the IRS web site at www.irs.gov.
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