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OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS

Report No: 550
Date: 01/12/01

  1. LAW NUMBER: P.L.106-573 (H.R. 3594)

  2. BILL TITLE: Installment Tax Correction Act

  3. BILL PURPOSE: Reinstates the installment method of accounting for determining income from installment sales for accrual method taxpayers.

  4. OMB ESTIMATE: P.L.106-573 repeals provisions of law enacted in the Ticket to Work and Work Incentive Improvement Act that disallow the installment method of accounting for certain taxpayers. The installment method allows taxpayers to recognize the gain from dispositions of property proportionately as payments are received. Otherwise, taxpayers must include in income all of the gain from disposition when ownership of the property is transferred. OMB estimates that the repeal will reduce receipts by $2.3 billion over the period 2001 to 2005.
    5. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Revenues..................................... 0 -781 -864 -499 -130 -18

     

  5. CBO ESTIMATE:
    6. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Net costs.................................... 0 -1,120 -394 -249 -70 -8

     

  6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

    7. The difference between OMB and CBO estimates is the result of different baselines and estimating models.

  7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:
    8. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Outlay effect.............. 34 7,887 12,198 14,552 15,747 16,863
    Receipt effect............ -8 -2,558 -3,850 -3,911 -3,582 -3,806
    Net costs.................... 42 10,445 16,048 18,463 19,329 20,669

    NOTE: Pursuant to P.L.106-554, the pay-as-you-go balances that would result in a sequester for FY 2001 will be set to zero in OMB's final sequestration report.