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IRS To Purchase AOL

From: Associated Press

WASHINGTON, DC (AP) -- In a move that some Wall Street analysts are calling "staggering," the United States' Internal Revenue Service announced in a joint press conference today that they will be purchasing America Online,cInc., (NYSE: AOL), headquartered in Dulles, Virginia, for an undisclosed amount.

AOL Chairman and CEO Steve Case, and President and COO Robert W. Pittman, joined Commissioner of Internal Revenue, Charles O. Rossotti, in Washington, DC, to announce this merger.

Rossotti explained that, "[due] to their high volume of American users, AOL is the perfect agency for The Department of the Treasury to venture into collecting information and revenue electronically."

The IRS has announced that as soon as the SEC approves the purchase, they will be changing the current rate structure on AOL. AOL had announced a rate change from their standard $19.95 per month to $21.95, which was to be implemented as of April 1, 1998. However, the IRS has stated they will instead be lowering the monthly rate to a base $4.95 per month. On top of the base rate, they will be instituting what is being termed a "usage" rate.

As an example, a single user would take 28% of the number of minutes they are online and multiply by ten cents per percentage point. Thus, a user on line for 60 minutes would incur a usage cost of an additional $1.68. Now, a married couple would take 37 ½% of the number of minutes they are online and multiply by ten cents per percentage point, hence, 60 minutes would incur a usage cost of $2.25. However, should this married couple have a child under the age of 18, they can deduct 2 ½% of each 5 minute interval that any dependent is online. Additional usage cost modifiers will be included as Congress deems it necessary.

Case and Rossotti jointly stated that the IRS believes, "this pricing structure will persuade many Americans to migrate back to using AOL for their Internet access and for payment of their income taxes." AOL will also be removing many of their advertising banners due to the political ramifications that may be brought into question by Congress as, "favoritism," or, "wrongful contributions."

According to Rossotti, the main reason for the proposed merger is
financial. The IRS intends to use revenue generated by the base plus usage rates to subsidize the rising costs associated with the processing of the federal income taxes.

The IRS will also sell off the foreign units of AOL consisting of Canada,
the United Kingdom (also serving Sweden), France, Germany (also serving Austria and Switzerland), and Japan. They expect that these "branches" will spawn Europe Online, Asia Online, and Canada Online, and bring to the IRS an estimated $1.3 billion.

Another method of attempting to reduce the processing costs, Rossotti
continued, is that in cooperation with the Department of Social Security,
the IRS-AOL merger will allow AOL users to file their income taxes under their screen names rather than their social security numbers directly
through AOL. As an incentive for this "screen name - income tax" plan to
work, known as IRS Initiative 257, the IRS will be granting a 5% tax
reduction on all monies due for any AOL user filing under their screen
name. Any refunds due back to AOL users will be processed first, with no reduction.

The IRS has stated that they will set up a toll-free number to handle
questions and calls concerning the merger and any pricing structure
changes, or you may visit their website at http://www.irs.ustreas.gov, and
soon to be linked by http://www.aol.com/corp.





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- Walter Cronkite

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- Bill Clinton

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- Queen Elizabeth

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Eddie Einstein (Albert's little brother)

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