CRS Report Highlights Tax Law Provisions in Effect Starting in 2002
JAN. 4, 2002
RS21101
DOCUMENT ATTRIBUTES
- AuthorsMorris, Marie B.
- Institutional AuthorsCongressional Research Service
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2002-528 (5 original pages)
- Tax Analysts Electronic Citation2002 TNT 5-12
Citations: RS21101
CRS Report for Congress
Received through the CRS Web
Selected Tax Law Changes Effective
January 1, 2002
Marie B. Morris
Legislative Attorney
American Law Division
Summary
This is a brief list of tax laws changes which became effective on January 1, 2002. This list does not include inflation adjustments which occur because of administrative adjustments, unless they took effect because of a statutory change with a December 31, 2001 or January 1, 2002 effective date. For a complete listing of those administratively adjusted items, see IRS Revenue Procedure 2001-59, 2001-52 IRB 1, dated December 11, 2001. This list also excludes tax provisions expiring in 2002 and most conforming amendments, e.g., changes to credit ordering rules when a credit is amended, or changes to withholding rules when certain income is made tax-exempt.
[1] The first part of this report is a listing of the tax changes which were enacted during 2001 and effective at the beginning of 2002. The changes are listed under the statute which enacted the change by Internal Revenue Code section. Following the changes enacted in 2001 is a listing of previously enacted tax changes which became effective on January 1, 2002. They are listed by Internal Revenue Code section, but no attempt was made to identify the statutory source of the change.1
Provisions in Economic Growth and Tax Relief
Reconciliation Act of 2001, P.L. 107-16, which became
effective on January 1, 2002:
Provision Citation
Expansion of the adoption credit and adoption IRC § 23
assistance programs
Increase in the per child amount of the child tax IRC § 24
credit
Credit for deferrals and IRA contributions for IRC § 25B
certain individuals
Marriage penalty relief and simplification earned IRC § 32
income tax credit
Credit for pension plan start-up costs for small IRC §§
employers 45E, 196
Credit for employer expenses for employer-provided IRC § 45F
child care
Conforming amendments to above credit changes IRC §§
25, 26, 38,
39, 51A
Deduction for higher education expenses allowed in IRC § 62
computing adjusted gross income
Rollovers allowed among various types of pension IRC § 72
plans, new rules for computing employee
contributions to annuities
Exclusion of certain health scholarships IRC § 117(c)
Exclusion for employer-provided educational IRC § 127
assistance to include graduate education
Employer-provided retirement advice as fringe IRC § 132
benefit
Use of qualified savings bonds in qualified IRC § 135
tuition programs
Expansion of adoption assistance program and IRC § 137
adoption assistance credit
Public educational facility bonds as exempt IRC §§
facility bonds 142(a)(11)-(13);
142(k),
146(g)(3);
147(h); 148(f)
Increase in IRA contribution limits; IRC § 219
liberalization of rollover rules
Expansion of deduction for student loan interest IRC § 221
Deduction for qualified tuition expenses IRC § 222
Increase in benefit and contribution limits for IRC §§
retirement plans 401(a)(17),
401(c)
Rollovers among various types of plans liberalized IRC §
401(a)(31)
Modification of distribution rules for 401(k) IRC § 401(k)
plans
Increase in benefit and contribution limits for IRC § 401(k)
SIMPLE 401(k) plans
Liberalization of rollover, spousal rollover, IRC § 402
and hardship distribution rules
Liberalization of restrictions on distributions, IRC § 403(b)
rollovers, purchase of service credits of 403(b)
plans
Modification of employer deduction limits for IRC § 404
qualified plans
Modification of IRA, SIMPLE retirement accounts, IRC § 408
contribution limits, rollover rules
Faster vesting of certain employer matching IRC § 411
contributions
New rules permitting plan-to-plan transfers IRC § 411
New funding rules IRC § 412
Clarification of tax treatment of 457 plan IRC § 414(p)
(generally state and local plans) benefits upon
divorce
Catch-up contributions for individuals over 50 IRC § 414(v)
Increase in benefit and contribution limits for IRC § 415
defined benefit plans, multiemployer plans,
equitable treatment for defined contribution plans
Modification of top-heavy plan rules IRC § 416
Increase in benefit and contributions limits for IRC § 457
plans of state and local governments and tax-
exempt organization, minimum distribution and
income inclusion requirements, new rollover rules
Modifications to qualified tuition programs IRC § 529
Modification to education IRAs IRC § 530
Exclusion of nonresident alien income from IRC § 861
international transportation services from income
sourcing rules
Conforming certain new tax credit rules to the IRC § 1400C
DC first-time homebuyer credit
Reduction in maximum estate tax rate to 50%; IRC § 2001(c)
repeal of phaseout of graduated rates
Increase in unified credit to $700,000 exemption IRC § 2010(c)
equivalent
Reduction of credit for state death taxes IRC § 2011
Lifetime gift exemption increased to $1,000,000 IRC § 2505(a)
Increase in number of allowable partners or IRC § 6166
shareholders in closely held business to 45;
clarification of definition of non-readily
tradeable stock; qualifying lending and financial
businesses permitted to use installment payment
Reporting requirements for qualified tuition IRC § 6693
programs
Elimination of user fees for ruling requests to EGTRRA § 620
IRS about new pension plans
ERISA amendments to conform to various tax changes EGTRRA §§
612-663
Provision in the Fallen Hero Survivor Benefit Fairness
Act of 2001, P.L. 107-15 effective January 1, 2002:
Provision Citation
Extends the tax-exemption for survivor annuities IRC § 101(h)
to survivors of public safety officers killed in
the line of duty prior to January 1, 1997
Provisions in the Railroad Retirement and Survivors'
Improvement Act of 2001, P.L. 107-90, which became
effective on January 1, 2002:
Provision Citation
National Railroad Retirement Investment Trust as IRC §
a tax-exempt organization 501(c)(28)
Repeal of supplemental annuity tax on railroad IRC § 3211,
employers and employee representatives. 3221
Tier II tax rate adjustment to 15.6 percent for IRC § 3221
employers
Tier II tax rate adjustment to 14.75 percent on IRC § 3211
employee representatives
Tier II tax rate adjustment to 4.9 percent on IRC § 3201
employees
Provisions enacted prior to 2001 which became effective
as of January 1, 2002, not including expiring provisions:
Provision Citation
Reduction in electric vehicle tax credit IRC § 30
Puerto Rico economic activity credit limited IRC § 30A
Increase in qualified transportation fringe IRC § 132(f)
benefit to $100 per month
Deduction for health insurance for self-employed IRC § 162(l)
increases to 70%
Deduction for clean fuel vehicle reduced IRC § 179A
Increase in deduction for meals away from home IRC § 274(n)
for certain transportation workers
Coordination of foreign income tax credit with IRC § 904
nonrefundable personal credits
Increase in exclusion amount for U.S. citizens IRC § 911
living abroad
Reduction in empowerment zone employment credit IRC § 1396
Increase in qualified conservation easement IRC § 2031
exclusion limitation to $500,000
Reduction in tax of luxury passenger vehicles IRC § 4001
Certain approved terminals of registered persons IRC § 4041
required to offer dyed diesel fuel and kerosene
for non-taxable purposes
Increase in tax on transportation of persons IRC § 4261
by air
Tobacco excise tax rates increase IRC § 5701
Change in amount of required payment of estimated IRC § 6654
taxes for high income taxpayers
FOOTNOTE
1 The source can be determined by consulting the notes following the statutory language of the citation in either the Internal Revenue Code or title 26 of the U.S. Code.
END OF FOOTNOTE
DOCUMENT ATTRIBUTES
- AuthorsMorris, Marie B.
- Institutional AuthorsCongressional Research Service
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2002-528 (5 original pages)
- Tax Analysts Electronic Citation2002 TNT 5-12