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Cypen & Cypen
NEWSLETTER
for
JANUARY 15, 2003

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001

1. TRAVEL AND PER DIEM EXPENSES FOR FLORIDA PUBLIC OFFICERS AND EMPLOYEES MAY NOT EXCEED STATUTORY RATES:

Section 112.061, Florida Statutes, governs per diem and travel expenses of public officers, employees and authorized persons. Its enactment represents the Florida Legislature’s efforts to establish uniform maximum rates and limitations applicable to public officers, employees and authorized persons whose travel expenses are paid by a public agency. A municipal pension board is included within the scope of the law. To ensure uniformity, the statute provides that it will prevail over any conflicting provisions in general law to the extent of the conflict, unless the general law contains a specific exemption. However, the provisions of any special or local law shall prevail over any conflicting provisions in the statute, but only to the extent of such conflict. A local law does not include an ordinance; only an enactment of the state legislature will suffice. Thus, Section 112.061(6), Florida Statutes, applies to pension boards and controls the maximum rates of per diem and subsistence allowance to be paid to officers, employees and others authorized to act in behalf of the board. While a municipality may adopt legislation implementing these maximum rates locally, the rates established by Section 112.061(6), Florida Statutes, may not be exceeded. AGO 2003-01 (January 3, 2003). We would be remiss here by not commenting that Florida’s subsistence rates (breakfast - $3.00, lunch - $6.00 and dinner - $12.00) are completely unrealistic.

2. IRS PROVIDES GUIDANCE ON WAIVER OF 60-DAY ROLLOVER REQUIREMENT:

Internal Revenue Service Revenue Procedure 2003-16, effective January 27, 2003, provides guidance on applying to IRS for a waiver of the 60-day rollover requirement contained in §§402(c)(3) and 408(d)(3) of the Internal Revenue Code. It also provides for an automatic waiver in certain circumstances. Section 401(a)(31) of the IRC requires that a qualified trust provide for a direct transfer of eligible rollover distributions. If a distributee fails to elect to have an eligible rollover distribution paid directly to an eligible retirement plan, the payor must withhold from such distribution an amount equal to 20 percent. Generally, any amount distributed from a qualified trust must be transferred to an eligible retirement plan within 60 days after receipt in order to avoid inclusion in the distributee’s gross income. (With certain exceptions, §72(t) of the IRC imposes an additional 10-percent tax on distribution from a qualified retirement plan.) Section 644 of the Economic Growth and Tax Relief Reconciliation Act of 2001 amended the IRC to permit the Secretary to waive the 60-day rollover requirement “where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement.” A taxpayer must apply for a hardship exception to the 60-day rollover requirement using the same procedure for obtaining IRS Letter Rulings -- including payment of the user fee. IRS will issue a ruling waiving the 60-day rollover requirement in cases meeting the foregoing criteria. In determining whether to grant a waiver, IRS will consider all relevant facts and circumstances, including (1) certain errors committed by a financial institution; (2) inability to complete a rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country or postal error; (3) use of the amount distributed (that is, whether the payment received by check was cashed); and (4) the time elapsed since distribution occurred. No application is required if a financial institution receives funds on behalf of a taxpayer prior to the expiration of the 60-day rollover period, the taxpayer follows all procedures required by the financial institution for depositing funds into an eligible retirement plan within the 60-day period and, solely due to an error on part of the financial institution, funds are not timely deposited. However, such automatic approval is granted only (1) if funds are deposited into an eligible retirement plan within 1 year from the beginning of the 60-day rollover period and (2) if the financial institution had deposited the funds as instructed, the rollover would have been valid. To be eligible for waiver of the 60-day rollover period, either through application or automatically, distribution must have occurred after December 31, 2001. Full text of Revenue Procedure 2003-16 can be found at ftp://ftp.irs.ustreas.gov/pub/irs-drop/rp-03-16.pdf. (Do not be confused by its title; IRS originally numbered it 2003-7, but later sent notice that it would be re-numbered upon actual issuance.)

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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