August 15, 1995

IRS Errs on OBRA

          Thousands of taxpayers are being erroneously billed by the IRS for the second installment payment of the 1993 OBRA tax; you remember the unconstitutional retroactive Clinton tax increase due to the enactment of the 36% and 39.6% brackets. Taxpayers had the option of paying the higher tax in three equal installments for `93, `94, `95 or all at once with the `93 return.

          After most of the taxpayers paid their second installments earlier this year, the IRS treated it as a payment of their `94 taxes and refunded it.

          Now the IRS has sent notices to most of them demanding full payment, interest and penalties for the rest of the `93 taxes. The IRS knows it goofed and has started to send "apologies" to those mistakenly assessed . . . or thinks it has; because the IRS does not know how many taxpayers received the erroneous assessment!

          If you have received the assessment and have not already sent us the letter please do so and we can correct the matter.

Medicaid Musings

          Since Federal, New York State and New York City governments want to cut back on Medicaid we thought you would be interested in these facts instead of the usual scare statements. According to the U.S. General Accounting Office-

• Medicaid costs $131,000,000,000 and provides benefits to 33,000,000 people
• Medicaid is 56 different programs
• New York spends $7,300 per eligible person, $140 per week
• Mississippi spends $2,400 per eligible person
• Medicaid consumes 6% of all Federal outlays (3X the share devoted to Food Stamps, 5X the share devoted to Aid to Families with Dependent Children)
• Medicaid is growing faster than almost every other item in the Federal budget
• Some states (NY is not one) have instituted Medicaid managed care programs which set a limit on the per person spending.

          If you have any questions about these tax notes or any other matters, please call us.