Dispatches > In Brief

In Brief

News highlights from around the world

Issue: "The trouble with Tommy," May 4, 2002

Ground-floor opportunity

Once the World Trade Center site is cleaned up, what happens to Ground Zero? Serious planning isn't expected to start until next summer, but the Big Apple is already buzzing with ideas for the space's future. Officials with the Lower Manhattan Development Corp., the government agency in charge of the site, want to turn the area into a hub of offices and homes. It would build what it calls a "museum of freedom and remembrance" to commemorate the 9/11 tragedies. The memorial, along with Ellis Island, the Statue of Liberty, and the New York Stock Exchange, would be marketed as a destination called "Freedom Park." (Some victims' families want a tomb of the unknowns added to hold the unidentified remains of hundreds.) Other New York officials want $7 billion-plus to rebuild the public-transit network that ran beneath the World Trade Center. That includes rebuilt stations, a new bus terminal, and more than $1 billion in additional security.

Man knows not his time

Thor Heyerdahl was no ivory-tower theorist. He developed novel ideas about human migration, and then tested them himself by sailing in primitive vessels. The explorer sold millions of books and became a national hero in his native Norway. Mr. Heyerdahl died last month at age 87. After being diagnosed with a terminal brain tumor, he stopped taking food, water, or medication and soon died in his sleep. Mr. Heyerdahl became a legend when he set off to cross the Pacific aboard a balsa raft in 1947. Warned that he would quickly sink, he stayed afloat for 101 days and 4,900 miles and reached Polynesia from Peru. He and five companions withstood high seas and sharks before washing ashore-and the tale of Kon-Tiki became a global fascination. His later expeditions included voyages aboard the reed rafts Ra, Ra II, and Tigris.

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San Francisco's Fior d'Italia restaurant has survived time, earthquakes, and fire to become one of America's oldest Italian restaurants. Now the 115-year-old establishment faces a new threat: the IRS. The eatery's dispute over taxes has now reached the Supreme Court. Other restaurant owners are watching this case closely because it concerns the Social Security taxes paid on their employees' tips. (The IRS said tips totaled $14.31 billion in 1999.) Now Fior d'Italia is challenging an extra $23,000 in taxes, which managers say they should not have to pay. "We're not fighting over $23,000," said Bob Larive, co-owner of Fior d'Italia. "We're fighting something that is wrong." The case hinges on whether the IRS can levy Social Security taxes on audited restaurants based on estimates of the tips workers earn, rather than the true amount. Taxes on tips have been a bookkeeping hassle for years. Restaurants pay 7.65 percent Social Security taxes on their employees' tips; the workers shell out the other 7.65 percent. In Fior d'Italia's case, the 9th U.S. Circuit Court of Appeals ruled last year that the IRS couldn't "slap the employer with assessments based on ... estimates." It ruled the agency should audit the employees instead. Other circuits have ruled otherwise, so it's up to the Supreme Court to break the impasse.

Privatizing Philly

Voting 3-2, Philadelphia's School Reform Commission last week voted to hand management of some of the city's failing elementary and middle schools over to private companies and nonprofits. The decision turns over 20 schools to Edison Schools, Inc., five to Chancellor Beacon Academies, and three to Victory Schools. Parent groups and nonprofits will take over several others. The changeover may take place as early as September. For the National Education Association, the teachers union that vociferously opposed the privatization plan, the move may be a slap in the pocketbook. The Philadelphia district is the nation's 7th largest, with 200,000 students in 265 schools and a $1.7 billion budget. If the NEA fails to unionize Philly's new private partners, the drain on union dues could begin to threaten NEA's power in the city. Daniel Whelan, a reform-minded commissioner, said it was the right prescription for affected schools, where more than half of students score in the bottom quarter on state reading and math tests. Said Mr. Whelan of the privatization vote: "If anything, we erred on the side of caution."

Tax attacks

Investors beware: In a new identity-theft and swindling scam, crooks lure victims by tempting them with lower taxes. The Office of the Comptroller of Currency in April warned the nation's banks, the Federal Reserve, the Federal Deposit Insurance Corporation, and bank regulatory agencies of a new scheme in which thieves impersonate bank officials and use phony Internal Revenue Service forms to bilk bank customers out of cash. Here's how it works: Using bank letterhead, swindlers send depositors a letter saying the institution is trying to identify persons exempt from reporting or paying taxes on certain kinds of financial dealings. The letter is accompanied by "Form W-9095," a bogus IRS form. The "bank" letter asks customers to complete and fax the form-which calls for detailed personal and bank account information-within 7 days, or risk a 31 percent tax-withholding on earned interest. Information on the form arms criminals with everything they need to gain access to victims' accounts. The Comptroller's office warned banks and government agencies that any customer who completed and faxed Form W-9095 should inform the IRS, relevant financial institutions, credit reporting firms, and their local police.


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