Law Offers Special Tax Breaks for Small Business; Act Now and Save, IRS Says

Small Business Week is May 17 to 23, and the Internal Revenue Service urges small businesses to act now and take advantage of tax-saving opportunities included in the recovery law.

The American Recovery and Reinvestment Act (ARRA), enacted in February, created, extended or expanded a variety of business tax deductions and credits. Because some of these changes—the bonus depreciation and increased section 179 deduction, for example—are only available this year, eligible businesses only have a few months to take action and save on their taxes. Here is a quick rundown of some of the key provisions.

Faster Write-Offs for Certain Capital Expenditures

Many small businesses that invest in new property and equipment will be able to write off most or all of these purchases on their 2009 returns. The new law extends through 2009 the special 50 percent depreciation allowance, also known as bonus depreciation, and increased limits on the section 179 deduction, named for the relevant section of the Internal Revenue Code. Normally, businesses recover these capital investments through annual depreciation deductions spread over several years. Both of these provisions encourage these investments by enabling businesses to write them off more quickly.

The bonus depreciation provision generally enables businesses to deduct half the cost of qualifying property in the year it is placed in service.

The section 179 deduction enables small businesses to deduct up to $250,000 of the cost of machinery, equipment, vehicles, furniture and other qualifying property placed in service during 2009. Without the new law, the limit would have dropped to $133,000. The existing $25,000 limit still applies to sport utility vehicles. A special phase-out provision effectively targets the section 179 deduction to small businesses and generally eliminates it for most larger businesses.

Bonus depreciation and the section 179 deduction are claimed on Form 4562. Further details are in the instructions for this form.

Expanded Net Operating Loss Carryback

Many small businesses that had expenses exceeding their incomes for 2008 can choose to carry those losses back for up to five years, instead of the usual two. For small businesses that were profitable in the past but lost money in 2008, this could mean a special tax refund. The option is available for a small business that has no more than an average of $15 million in gross receipts over a three-year period.

This option is still available for most eligible taxpayers, but only for a limited time. A corporation that operates on a calendar-year basis, for example, must file a claim by Sept. 15, 2009. For eligible individuals, the deadline is Oct. 15, 2009.

Eligible individuals should file a claim using Form 1045, and corporations should use Form 1139. Details can be found in the instructions for each of these forms, and answers to frequently-asked questions are posted on IRS.gov.

Exclusion of Gain on the Sale of Certain Small Business Stock

The new law provides an extra incentive for individuals who invest in small businesses. Investors in qualified small business stock can exclude 75 percent of the gain upon sale of the stock. This increased exclusion applies only if the qualified small business stock is acquired after Feb. 17, 2009 and before Jan. 1, 2011, and held for more than five years. For previously-acquired stock, the exclusion rate remains at 50 percent in most cases.

Estimated Tax Requirement Modified

Many individual small business taxpayers may be able to defer, until the end of the year, paying a larger part of their 2009 tax obligations. For 2009, eligible individuals can make quarterly estimated tax payments equal to 90 percent of their 2009 tax or 90 percent of their 2008 tax, whichever is less. Individuals qualify if they received more than half of their gross income from their small businesses in 2008 and meet other requirements. For details, see Publication 505.

COBRA Credit

Employers that provide the 65 percent COBRA premium subsidy under ARRA to eligible former employees claim credit for this subsidy on their quarterly or annual employment tax returns. To help avoid imposing an unnecessary cash-flow burden, affected employers can reduce their employment tax deposits by the amount of the credit. For details, see Form 941. Answers to frequently-asked questions are posted on IRS.gov.

Other ARRA business provisions relate to discharges of certain business indebtedness, the holding period for S corporation built-in gains and acceleration of certain business credits for corporations. Also see Fact Sheet FS-2009-11.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Transactions Require Both Economic Substance And A Nontax Business Motive To Be Valid For Tax Purposes

5th Circuit Joins Georgia's 11th Circuit and the majority view in holding transactions require both economic substance and a nontax business motive to be valid for tax purpose.

The U.S. Court of Appeals for the Fifth Circuit held in Klamath Strategic Investment Fund, et al. v. United States, No. 07-40861 (5th Cir. May 15, 2009), that “a lack of economic substance is sufficient to invalidate [a] transaction regardless of whether the taxpayer has motives other than tax avoidance.” Finding that the taxpayer’s Bond Linked Issue Premium Structure (BLIPS) transaction lacked economic substance, the Klamath panel affirmed the lower court’s ruling that the transaction should be disregarded for tax purposes. The panel also affirmed the lower court’s ruling that no penalties applied.

‘Conjunctive’ v. ‘disjunctive’ test

The Fifth Circuit’s opinion adopts the majority appellate view (following the Third, Tenth, Eleventh, and Federal Circuits) that a transaction will be respected for tax purposes only if it has economic substance and a nontax business purpose. This is often referred to as the “conjunctive” test.

By contrast, in the Fourth Circuit a transaction will be respected if it has economic substance or there is a nontax business purpose. This is often referred to as the “disjunctive” test. (See Rice’s Toyota World, Inc. v. Commissioner, 752 F.2d 89, 91-92 (4th Cir. 1985).)

Codification proposals take ‘conjunctive’ approach

The proposals to codify the economic substance doctrine contained in recent bills – for example, the Heartland, Habitat, Harvest, and Horticulture Act of 2007 (S. 2242) – and in President Obama’s FY 2010 budget follow the majority-view “conjunctive” test, and provide that a transaction will have economic substance only if: (1) the transaction changes the taxpayer’s economic position “in a meaningful way” apart from federal tax effects, and (2) the taxpayer has a “substantial purpose” other than a federal tax purpose for entering into the transaction.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Where Is My Refund??

Most taxpayers have already filed their federal tax returns but may still have questions. Here’s what you need to know about refund status, recordkeeping, mistakes and what to do if you move.

Refund Information

You can go online to check the status of your 2008 refund 72 hours after IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after you mail a paper return. Be sure to have a copy of your 2008 tax return available because you will need to know the filing status, the first SSN shown on the return, and the exact whole-dollar amount of the refund. You have three options for checking on your refund:

• Go to IRS.gov, and click on “Where’s My Refund.”
• Call 1-800-829-4477 24 hours a day, 7 days a week for automated refund information.
• Call 1-800-829-1954 during the hours shown in your form instructions.

What Records Should I Keep?

Good record keeping allows you to prepare a complete and accurate income tax return. You should keep all receipts, canceled checks or other proof of payment, and any other records to support any deductions or credits you claim.

Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer.

You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be helpful in amending filed returns or preparing future ones.

Change of Address

If you move after you filed your return, you should send Form 8822, Change of Address to the Internal Revenue Service. If you are expecting a refund through the mail, you should also notify the post office serving your former address, which will ensure your check makes it to your new address.

What If I Made a Mistake?

Errors may delay your refund or result in notices being sent to you. If you discover an error on your return, you can correct your return by filing an amended return using Form 1040X, Amended U.S. Individual Income Tax Return. Here are five reasons to file an amended return:

1. You did not report some income,
2. You claimed deductions or credits you should not have claimed.
3. You did not claim deductions or credits you could have claimed.
4. You should have claimed a different filing status. Taxpayers who filed a joint return cannot choose to file separate returns for that year after the due date of the return. However, an executor may be able to make this change for a deceased spouse.
5. If you bought or are thinking of buying home, you may be able to file an amended return to claim the First Time Home Buyer Credit. Taxpayers who purchased a qualifying home can claim the Homebuyer Credit on the 2008 return without waiting until next year to claim it on their 2009 return.

Visit IRS.gov for more information and Frequently Asked Questions regarding refunds, record keeping, address changes and amended returns.

Links:

• Where's My Refund
• Publication 552, Recordkeeping for Individuals
• Form 8822, Change of Address
• Form 1040X, Amended U.S. Individual Income Tax Return

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Merger Agreement Termination Fee Paid To Potential Acquiring Corporation Is Deductible

The Tax Court on April 27 held that a corporation was entitled to deduct $65 million paid to terminate a merger agreement with a would-be white knight when the corporation agreed to be bought by a competitor that increased its offer in a hostile takeover. (Santa Fe Pacific Gold Co. v. Commissioner, 132 T.C. No. 12 (Apr. 27, 2009).)

Santa Fe Pacific Gold was a publicly held mining company with large land positions, although it was considered “second-tier” in the mining industry, meaning that it was not one of the top mining companies in the country. In 1996, Santa Fe faced a hostile takeover by a first-tier competitor, Newmont. To avoid the takeover, Santa Fe entered into a merger agreement with a white knight, Homestake. That agreement provided for the payment of a termination fee should the agreement be terminated. Shortly thereafter, Newmont increased its offer, and Santa Fe’s board accepted the increased offer. Santa Fe paid a $65 million termination fee to Homestake and claimed a deduction for that amount on its 1997 tax return. The IRS disallowed the deduction.

The court distinguished the facts of this case from those of INDOPCO Inc. v. Commissioner, 503 U.S. 79 (1992), in which the Supreme Court held that no deduction was allowable for fees incurred during a friendly business combination. The High Court held that the fees had to be capitalized because the benefits that resulted for the taxpayer extended beyond the tax year at issue.

In this case, however, the Tax Court found that “Santa Fe did not reap the types of benefits present in INDOPCO.” In fact, “Newmont was primarily interested in obtaining Santa Fe’s land position [and] quickly terminated Santa Fe’s employees and discarded the business plans of Santa Fe’s management. Although Santa Fe the entity continued to exist on paper, it was nothing more than a shell owning valuable land.”

The court also found that Santa Fe agreed to the termination fee to protect its agreement with Homestake. That protective attempt failed when Newmont offered more money, causing Santa Fe’s board of directors to accept the higher offer in fulfillment of its fiduciary duties.

The court rejected the IRS’s assertion that Santa Fe was not facing a hostile takeover and that Santa Fe’s agreement with Homestake was merely a negotiating tactic to drive up Newmont’s offer.

It should be noted that the termination fee at issue was prior to Treasury reg. section 263(a)-5, under which a termination fee paid to a white knight is not deductible on the basis that the completed transaction and the failed transaction with the white knight are mutually exclusive.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Special Tax Avoidance Rules Apply To §1031 Like-Kind Exchanges Between Related Parties

In Ocmulgee Fields Inc. v. Commissioner, 132 T.C. No. 6 (3/31/09), the U.S. Tax Court held that a taxpayer’s participation in a like-kind exchange with a related person was structured to avoid Federal income taxes pursuant to §1031(f) of the Internal Revenue Code of 1986, as amended ("IRC").


Background

In Ocmulgee Fields, the taxpayer used a §1031 Intermediary to sell a parcel of taxpayer's real estate to an unrelated third-party. The taxpayer then used the proceeds from the first sale to purchase §1031 replacement property from a relative, who is a related party as defined under §1031(f). The IRS determined a deficiency because the taxpayer failed to establish that it met all of the requirements for the non-recognition of gain under Section 1031(f), which provides special rules for like-kind exchanges with related persons.

Like-kind exchange transactions

According to §1031(a)(1), generally no gain or loss is recognized on the exchange of property used in a trade or business, or for investment, for another like kind property. Under Section 1031(f)(1), gain or loss on an exchange between related persons is generally not recognized if the property exchanged is not disposed within two years from the date of the exchange. However, under Section 1031(f)(2)(C), the taxpayer must establish to the IRS’s satisfaction that neither the original transaction nor the later disposition had the avoidance of Federal income tax as one of its principal purpose. Further, under Section 1031(f)(4), the non-recognition treatment of a like-kind exchange doesn’t apply to a transaction or series of transactions structured to avoid the purposes of the related party exchange rules.

In Ocmulgee Fields, the Tax Court relied on its earlier decision in Teruya Brothers, Ltd. & Subsidiaries, 124 TC 45 (2005), which also dealt with a like-kind exchange between related parties effected through a qualified intermediary. In that case, the Tax Court held that the transactions involved were economically equivalent to direct exchanges of properties between related parties, followed by the sale of property by one of the related parties to unrelated third parties. The interposition of a qualified intermediary did not obscure the end result. The Tax Court found that the transactions were set up to avoid Federal income taxes under Section 1031(f)(4).

In essence this kind of related party transaction is scrutinized by the IRS as though the cash realized on the first sale and ultimately transferred to the relative (i.e., when the second piece of real estate is purchased from that relative to close the loop on the §1031 Like-Kind Exchange) is funneled back to the taxpayer in a tax avoidance scheme covered by §1031(f)(4).

Tax Court rejected the taxpayer’s claim that it had no tax avoidance purpose and concluded that the substance of the transaction was as if the taxpayer had made an exchange directly with the related person.

The Tax Court stated that it was not prepared to hold, as a matter of law, that a finding of basis shifting precludes the possibility of having a non-tax avoidance principal purpose. However, it found that in Ocmulgee Fields, the immediate tax consequences resulting from the taxpayer’s deemed exchange with a related party included approximately $1.8 million reduction in taxable gain and the substitution of a 15-percent tax rate for a 34-percent tax rate. The Court found that the tax savings were significant and that the taxpayer’s counter arguments were unconvincing or speculative, and thus did not persuade the Court that the principal purpose was something other than to avoid Federal income taxes.

Accuracy-related penalty

The Tax Court found that although the taxpayer’s understatement was substantial under Section 6662(d), the taxpayer showed reasonable cause and good faith for its position. The taxpayer relied on a CPA, who was a member of the largest accounting firm in the taxpayer’s area and had significant experience in the real estate business. The CPA provided tax advice to the taxpayer for many years and was aware of all the facts with respect to the like-kind exchange. In addition, the Tax Court had not yet decided the Teruya Brothers case when the return was prepared. Although the IRS had issued Revenue Ruling 2002-83, the Tax Court found that the Revenue Ruling did not leave the result free from doubt and that the CPA did not make any unreasonable assumptions. Therefore, the Tax Court ruled that the taxpayer was not liable for an accuracy-related penalty.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Withholding Requirements On Differential Pay Paid By Employers To Reservists Called To Active Duty

Revenue Ruling 2009-11 provides that differential pay that employers pay to their employees that leave their job to go on active military duty is subject to income tax withholding, but is not subject to Federal Insurance Contributions Act (“FICA”) or Federal Unemployment Tax Act (“FUTA”) taxes. Additionally, the ruling provides that employers may use the aggregate procedure or optional flat rate withholding to calculate the amount of income taxes required to be withheld on these payments, and that these payments must be reported on Form W-2

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Revenue Ruling 2009-12: Various Prescribed Rates For Federal Income Tax Purposes (May 2009)

Revenue Ruling 2009-12 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.

Part I

Section 1274.--Determination of Issue Price in the Case of
Certain Debt Instruments Issued for Property

(Also Sections 42, 280G, 382, 412, 467, 468, 482, 483, 642, 807, 846, 1288, 7520,
7872.)



Rev. Rul. 2009-12

This revenue ruling provides various prescribed rates for federal income tax
purposes for May 2009 (the current month). Table 1 contains the short-term, mid-term,
and long-term applicable federal rates (AFR) for the current month for purposes of
section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-
term, and long-term adjusted applicable federal rates (adjusted AFR) for the current
month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-
term rate and the long-term tax-exempt rate described in section 382(f). Table 4
contains the appropriate percentages for determining the low-income housing credit
described in section 42(b)(1) for buildings placed in service during the current month.
However, under section 42(b)(2), the applicable percentage for non-federally subsidized
new buildings placed in service after July 30, 2008, and before December 31, 2013,
shall not be less than 9%. Finally, Table 5 contains the federal rate for determining the
present value of an annuity, an interest for life or for a term of years, or a remainder or a
reversionary interest for purposes of section 7520.


REV. RUL. 2009-12 TABLE 1

Applicable Federal Rates (AFR) for May 2009

Period for Compounding
Annual Semiannual Quarterly Monthly

Short-term

AFR .76% .76% .76% .76%
110% AFR .84% .84% .84% .84%
120% AFR .91% .91% .91% .91%
130% AFR .99% .99% .99% .99%

Mid-term

AFR 2.05% 2.04% 2.03% 2.03%
110% AFR 2.25% 2.24% 2.23% 2.23%
120% AFR 2.47% 2.45% 2.44% 2.44%
130% AFR 2.67% 2.65% 2.64% 2.64%
150% AFR 3.08% 3.06% 3.05% 3.04%
175% AFR 3.60% 3.57% 3.55% 3.54%

Long-term

AFR 3.58% 3.55% 3.53% 3.52%
110% AFR 3.95% 3.91% 3.89% 3.88%
120% AFR 4.31% 4.26% 4.24% 4.22%
130% AFR 4.67% 4.62% 4.59% 4.58%


REV. RUL. 2009-12 TABLE 2

Adjusted AFR for May 2009

Period for Compounding
Annual Semiannual Quarterly Monthly
Short-term
adjusted AFR .80% .80% .80% .80%

Mid-term
adjusted AFR 2.39% 2.38% 2.37% 2.37%

Long-term
adjusted AFR 4.58% 4.53% 4.50% 4.49%

REV. RUL. 2009-12 TABLE 3

Rates Under Section 382 for May 2009
Adjusted federal long-term rate for the current month 4.58%

Long-term tax-exempt rate for ownership changes during the
current month (the highest of the adjusted federal long-term
rates for the current month and the prior two months.) 4.61%


REV. RUL. 2009-12 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for May 2009

Note: Under Section 42(b)(2), the applicable percentage for non-federally
subsidized new buildings placed in service after July 30, 2008, and before
December 31, 2013, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income
housing credit 7.65%

Appropriate percentage for the 30% present value low-income
housing credit 3.28%


REV. RUL. 2009-12 TABLE 5

Rate Under Section 7520 for May 2009

Applicable federal rate for determining the present value of an
annuity, an interest for life or a term of years, or a remainder or
reversionary interest 2.4%

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Seven Facts about the New Sales Tax Deduction for Vehicle Purchases

Taxpayers who buy a new car or several other types of motor vehicles this year may be entitled to a special tax deduction when they file their 2009 federal tax returns next year. The tax break is part of the American Recovery and Reinvestment Act of 2009.

Here are seven things you should know about this new deduction:

1. State and local sales taxes paid on up to $49,500 of the purchase price of qualifying vehicles are deductible.
2. Qualified motor vehicles generally include new (not used) cars, light trucks, motor homes and motorcycles.
3. Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
4. This is an above-the-line deduction and can be taken regardless of whether or not you itemize other deductions on your tax return.
5. Taxpayers will claim this deduction when filing their 2009 federal income tax return next year.
6. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
7. The deduction may not be taken on 2008 tax returns.
   Consumers who are considering buying a new car may find that this tax incentive means there has never have been a better time to buy.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Tax Breaks For Qualified Plug-In Electric Vehicles

IR-2009-45, April 24, 2009

WASHINGTON — Plug-in electric vehicles using certain types of batteries may qualify for a new tax credit if purchased this year, the Internal Revenue Service said today.

The Emergency Economic Stabilization Act of 2008 (EESA) and the American Recovery and Reinvestment Act of 2009 (ARRA) created two new tax credits for various types of electric vehicles, which may include what are commonly referred to as neighborhood electric vehicles.

ARRA creates a tax credit for low-speed or two- or three-wheel electric vehicles, such as motor scooters, purchased after Feb. 17, 2009, and before Jan. 1, 2012. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500. To qualify, a vehicle must be either a low-speed vehicle that is propelled to a significant extent by a rechargeable battery with a capacity of at least 4 kilowatt hours or be a two- or three-wheeled vehicle that is propelled to a significant extent by a rechargeable battery with a capacity of at least 2.5 kilowatt hours.

EESA created a tax credit for vehicles that have at least four wheels and draw propulsion using a rechargeable traction battery with at least four kilowatt hours of capacity. For 2009, the minimum credit is $2,500 and the credit tops out at $7,500 to $15,000, depending on the weight of the vehicle and the capacity of the battery.

During 2009, low-speed, four-wheeled vehicles manufactured primarily for use on public streets, roads and highways (neighborhood electric vehicles) may qualify both for the EESA credit and, if purchased after February 17, 2009, for the ARRA credit for low-speed electric vehicles. A taxpayer may not claim both credits for the same vehicle. Vehicles manufactured primarily for off-road use, such as for use on a golf course, do not qualify for either credit.

The Internal Revenue Service is working on guidance regarding certification procedures for both of these credits.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Energy-Saving Steps This Year May Result in Tax Savings Next Year

IR-2009-44, April 22, 2009

WASHINGON — The Internal Revenue Service today reminded individual and business taxpayers that many energy-saving steps taken this year may result in bigger tax savings next year.

The recently enacted American Recovery and Reinvestment Act (ARRA) of 2009 contained a number of either new or expanded tax benefits on expenditures to reduce energy use or create new energy sources.

The IRS encouraged individuals and businesses to explore whether they are eligible for any of the new energy tax provisions. More information on the wide range of energy items is available on the special Recovery section of IRS.gov. For a larger listing of ARRA’s energy-related tax benefits, see Fact Sheet 2009-10.

Tax Credits for Home Energy Efficiency Improvements Increase

Homeowners can get bigger tax credits for making energy efficiency improvements or installing alternative energy equipment.

The IRS also announced homeowners seeking these tax credits can temporarily rely on existing manufacturer certifications or appropriate Energy Star labels for purchasing qualifying products until updated certification guidelines are announced later this spring.

“These new, expanded credits encourage homeowners to make improvements that will make their homes more energy efficient,” said IRS Commissioner Doug Shulman. “People can improve their homes and save money over the long run.”

ARRA provides for a uniform credit of 30 percent of the cost of qualifying improvements up to $1,500, such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems. The new law replaces the old law combination available in 2007 of a 10-percent credit for certain property and a credit equal to cost up to a specified amount for other property.

The new law also raised the limit on the amount that can be claimed for improvements placed in service during 2009 and 2010 to $1,500, instead of the $500 lifetime limit under the old law.

In addition, the new law has increased the energy efficiency standards for building insulation, exterior windows, doors, and skylights, certain central air conditioners, and natural gas, propane or oil water heaters placed in service after Feb. 17, 2009.

IRS guidance issued before the enactment of ARRA will be modified in the near future to reflect the new energy efficiency standards. In the meantime, homeowners may continue to rely on manufacturers’ certifications that were provided under the old guidance and on Energy Star labels for exterior windows and skylights in determining whether property purchased before June 1, 2009, qualifies for the credit. Manufacturers should not continue to provide certifications for property that fails to meet the new standards.

The new law also eliminates the cap on the 30 percent tax credit for alternative energy equipment, such as solar water heaters, geothermal heat pumps and small wind turbines, installed in a home. The cap generally has been eliminated for these improvements beginning in the 2009 tax year. The IRS today issued Notice 2009-41, which explains the effects of this change.

Funding Options for Renewable Energy Power Plants

Business taxpayers who place in service facilities that produce electricity from wind and some other renewable resources can choose one of three options to fund the project: a tax credit based on the amount invested, a tax credit based on the energy produced or a grant.

The flexibility to choose among these options was enacted as part of ARRA.

Taxpayers may opt to claim the energy investment tax credit, which generally provides a 30 percent tax credit for investments in energy projects, instead of the production tax credit, which can provide a credit of up to 2.1 cents per kilowatt-hour for electricity produced from renewable sources.

Taxpayers making qualified investments that are placed in service after 2008 and before 2014 (or 2013 for wind facilities) can make an irrevocable election to claim the energy investment tax credit instead of the renewable electricity production tax credit. IRS will issue guidance explaining how to make the election.

Taxpayers also can claim a grant once the property is placed in service instead of claiming either the energy investment tax credit or the renewable energy production tax credit. For qualified renewable energy facilities, the grant is 30 percent of the investment in the facility as long as construction begins in 2009 or 2010 and the property is placed in service before 2014 (2013 for wind facilities). The Treasury Department will issue guidance explaining how the grant works and how to apply.

Taxpayers electing to receive the grant, created by the ARRA, will not be eligible for either of the tax credits. Proceeds from the grants are not includible in the taxpayer’s gross income, but the grant amount is subject to recapture if the property is disposed of or otherwise ceases to qualify.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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What Income is Taxable?

While most income you receive is generally considered taxable, there are some situations when certain types of income are partially taxed or not taxed at all.

Some common examples of items that are not included in your income are:

• Adoption Expense Reimbursements for qualifying expenses
• Child support payments
• Gifts, bequests and inheritances
• Workers' compensation benefits
• Meals and Lodging for the convenience of your employer
• Compensatory Damages awarded for physical injury or physical sickness
• Welfare Benefits
• Cash Rebates from a dealer or manufacturer
• Economic Stimulus Payment received in 2008

Some income may be taxable under certain circumstance, but not taxable in other situations. Examples of items that may or may not be included in your income are:

• Life Insurance. If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. Life insurance proceeds paid to you because of the death of the insured person are not taxable unless the policy was turned over to you for a price.
• Scholarship or Fellowship Grant. If you are a candidate for a degree, you can exclude amounts you receive as a qualified scholarship or fellowship. Amounts used for room and board do not qualify.
  All other items—including income such as wages, salaries and tips—must be included in your income, unless it is specifically excluded by law.
  Taxable income may be in a form other than cash. One example of this is bartering, which is an exchange of property or services. The fair market value of goods and services exchanged is fully taxable and must be included as income on Form 1040 of both parties.

These examples are not all-inclusive. For more information, visit the IRS Web site at IRS.gov to view or download Publication 525, Taxable and Nontaxable Income from the Forms and Publications section or call 800-TAX-FORM (800-829-3676).

Link

• Publication 525, Taxable and Nontaxable Income (PDF 1178.2KB)

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Five Important Changes for Taxpayers

Here are a few tax law changes you may want to note before filing your 2008 federal tax return:

1. Expiring Tax Breaks Renewed
The following popular tax breaks were renewed for tax-years 2008 and 2009:

• Deduction for state and local sales taxes on Form 1040 Schedule A, Line 5
• Educator expense deduction on Form 1040, Line 23 or Form 1040A, Line 16
• Tuition and fees deduction on Form 8917

In addition, the residential energy-efficient property credit is extended through 2016. In general, solar electric, solar water heating and fuel cell property qualify for this credit. Starting in 2008, small wind energy and geothermal heat pump property also qualify.

2. Standard Deduction Increased for Most Taxpayers
The 2008 basic standard deductions all increased. They are:

• $10,900 for married couples filing a joint return and qualifying widows and widowers
• $5,450 for singles and married individuals filing separate returns
• $8,000 for heads of household

Beginning this year, taxpayers can claim an additional standard deduction based on the state or local real-estate taxes paid in 2008. Also new for 2008, a taxpayer can increase his standard deduction by the net disaster losses suffered from a federally declared disaster.

3. Contribution Limits Rise for IRAs and Other Retirement Plans
This filing season, more people can make tax-deductible contributions to a traditional IRA. The deduction is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes between $53,000 and $63,000. For married couples filing jointly, the income phase-out range is $85,000 to $105,000.

4. Standard Mileage Rates Adjusted for 2008
The standard mileage rates for business use of a vehicle:

• 50.5 cents per mile from Jan. 1 to June 30, 2008
• 58.5 cents per mile driven during the rest of 2008

The standard mileage rates for the cost of operating a vehicle for medical reasons or a deductible move:

• 19 cents per mile Jan. 1 to June 30, 2008
• 27 cents from July 1 to Dec. 31, 2008

The standard mileage rate for using a car to provide services to charitable organizations remains at 14 cents a mile. Special rates apply to the Midwest disaster area.

5. Kiddie Tax Revised
The tax on a child's investment income previously only applied to children younger than age 18. It now applies if the child has investment income greater than $1,800 and is:

• Younger than 18
• 18 years of age and had earned income that was equal to or less than half of his or her total support in 2008
• Older than 18 and younger than 24, a student and during 2008 had earned income that was equal to or less than half of his or her total support.

Links:

• IRS FS 2009-1 Highlights of 2008 Tax Law Changes
• Form 1040 instructions (PDF 941K)
• Publication 526 Charitable Contributions

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Special Charitable Contributions for Certain IRA Owners

As an alternative method for donating to a charity, certain taxpayers may transfer funds from their IRA to an eligible charitable organization. Here are ten things taxpayers who are thinking about making such a donation will need to know.

1. The IRA owner must be age 70 ½ or older.

2. The donor must directly transfer the money tax-free to an eligible organization.

3. The maximum amount that an IRA owner may transfer annually tax-free is $100,000 to an eligible organization.

4. This option, created in 2006 and recently extended through 2009, is available to eligible IRA owners, regardless of whether they itemize their deductions.

5. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension plans – commonly referred to as SEP Plans – are not eligible.

6. To qualify, the funds must be contributed directly by the IRA trustee to the eligible charity.

7. Amounts transferred are not taxable and no deduction is available for the amount given to the charity unless nondeductible contributions are transferred.

8. Not all charities are eligible. For example, donor-advised funds and supporting organizations are not eligible recipients.

9. Transferred amounts are counted in determining whether the owner has met the IRA's required minimum distribution rules. Where individuals have made nondeductible contributions to their traditional IRAs, a special rule treats transferred amounts as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions. If nondeductible contributions are transferred to an eligible organization, a charitable contribution deduction may be allowed if itemizing deductions.

10. More information about qualified charitable distributions can be found in Publication 590, Individual Retirement Arrangements.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

 

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

"Lawyer's That Mean Business"

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Guidance To Corporate Issuers With Respect To Five Programs Established Under EESA:

IRS Notice 2009-14 expands, clarifies, and supersedes previously issued Notice 2008-100, 2008-44 I.R.B. 1081. It will provide guidance relating to new programs established under the Emergency Economic Stabilization Act of 2008, P.L. 110-343, after Notice 2008-100 was published. Notice 2009-14 will be in IRB 2009-7, dated February 17, 2009.

I. Purpose.

The Internal Revenue Service (Service) and Treasury Department (Treasury)
intend to issue regulations implementing certain of the rules as described below.
Pending the issuance of further guidance, taxpayers may rely on the rules set forth in
this notice to the extent provided herein.

Section 101(a)(1) of EESA authorizes the Secretary to establish the Troubled
Asset Relief Program (TARP). This notice provides guidance to corporate issuers with
respect to five programs established under EESA: (i) the Capital Purchase Program for
publicly-traded issuers (Public CPP); (ii) the Capital Purchase Program for private
issuers (Private CPP); (iii) the Capital Purchase Program for S corporations (S Corp
CPP); (iv) the Targeted Investment Program (TARP TIP); and (v) the Automotive
Industry Financing Program (TARP Auto). Unless otherwise specified below, a
reference to "the Programs" shall include any of the various EESA programs described
in the preceding sentence.

II. Background.

Section 382(a) of the Internal Revenue Code (Code) provides that the taxable
income of a loss corporation for a year following an ownership change that may be
offset by pre-change losses cannot exceed the section 382 limitation for such year. An
ownership change occurs with respect to a corporation if it is a loss corporation on a
testing date and, immediately after the close of the testing date, the percentage of stock
of the corporation owned by one or more 5-percent shareholders has increased by more
than 50 percentage points over the lowest percentage of stock of such corporation
owned by such shareholders at any time during the testing period. See §1.382-2T(a)(1)
of the Income Tax Regulations. Section 382(m) of the Code provides that the Secretary

shall prescribe such regulations as may be necessary or appropriate to carry out the
purposes of sections 382 and 383.

Section 101(c)(5) of EESA provides that the Secretary is authorized to issue
such regulations and other guidance as may be necessary or appropriate to carry out
the purposes of EESA.

Except as otherwise provided, any definitions and terms used herein have the
same meaning as they do in section 382 of the Code and the regulations thereunder or
in EESA. Unless otherwise specified, a reference herein to "section" is to the particular
section of the Code or regulations thereunder.

III. Guidance Regarding Corporations Whose Instruments are Acquired by the Treasury
Pursuant to EESA

Taxpayers may rely on the rules described in this Section III to the extent
provided below.

RULES:

A. Treatment of indebtedness and preferred stock acquired by Treasury. For all
Federal income tax purposes, any instrument issued to Treasury pursuant to the
Programs, whether owned by Treasury or subsequent holders, shall be treated as an
instrument of indebtedness if denominated as such, and as stock described in section
1504(a)(4) if denominated as preferred stock. Any amount received by an issuer under
the Programs shall be treated as received, in its entirety, as consideration in exchange
for the instruments issued. No such instrument shall be treated as stock for purposes of
section 382 while held by Treasury or by other holders, except that preferred stock will
be treated as stock for purposes of section 382(e)(1).

B. Treatment of warrants acquired by Treasury. For all Federal income tax
purposes, any warrant to purchase stock acquired by Treasury pursuant to the Public
CPP, TARP TIP, and TARP Auto, whether owned by Treasury or subsequent holders,
shall be treated as an option (and not as stock). While held by Treasury, such warrant
will not be deemed exercised under §1.382-4(d)(2). For all Federal income tax
purposes, any warrant to purchase stock acquired by Treasury pursuant to the Private
CPP shall be treated as an ownership interest in the underlying stock, which shall be
treated as preferred stock described in section 1504(a)(4). For all Federal income tax
purposes, any warrant acquired by Treasury pursuant to the S Corp CPP shall be
treated as an ownership interest in the underlying indebtedness.

C. Section 382 treatment of stock acquired by Treasury. For purposes of
section 382, with respect to any stock (other than preferred stock) acquired by Treasury
pursuant to the Programs (either directly or upon the exercise of a warrant), the
ownership represented by such stock on any date on which it is held by Treasury shall
not be considered to have caused Treasury's ownership in the issuing corporation to

have increased over its lowest percentage owned on any earlier date. Except as
described below, such stock is considered outstanding for purposes of determining the
percentage of stock owned by other 5-percent shareholders on a testing date.

D. Section 382 treatment of redemptions of stock from Treasury. For purposes
of measuring shifts in ownership by any 5-percent shareholder on any testing date
occurring on or after the date on which the issuing corporation redeems stock held by
Treasury that was acquired pursuant to the Programs (either directly or upon the
exercise of a warrant), the stock so redeemed shall be treated as if it had never been
outstanding.

E. Section 382(l)(1) not applicable with respect to capital contributions made by
Treasury pursuant to the Programs. For purposes of section 382(l)(1), any capital
contribution made by Treasury pursuant to the Programs shall not be considered to
have been made as part of a plan a principal purpose of which was to avoid or increase
any section 382 limitation.

IV. Reliance on Notice.

Taxpayers may rely on the rules described in Section III. These rules will
continue to apply unless and until there is additional guidance. Any future contrary
guidance will not apply to instruments (i) held by Treasury that were acquired pursuant
to the Programs prior to the publication of that guidance, or (ii) issued to Treasury
pursuant to the Programs under binding contracts entered into prior to the publication of
that guidance. In exercising its authority under EESA in this notice, the Treasury and
the Service do not intend to suggest that similar Federal income tax results would obtain
with respect to instruments similar to those described herein that are not issued under
the Programs. Accordingly, the Federal income tax consequences of instruments not
issued under the Programs should continue to be determined based upon specific facts
and circumstances.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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IRS Answers the "What If" Tax Questions of an Economic Downturn

What if I lose my job? Is my unemployment check taxable? Can I afford to take money out of my retirement account? These are just a few of the "What If" questions people are dealing with these days.

The IRS recognizes that many people are going through difficult times financially. Often, there is a tax impact to events such as job loss, debt forgiveness or dipping into a retirement account. If your income has decreased, you may even be eligible for certain tax credits, such as the Earned Income Tax Credit, which can mean money in your pocket.

Most importantly, if you believe you may have trouble paying your tax bill, contact the IRS immediately. There are steps the IRS can take to help. To avoid additional penalties, you should always file your tax return on time even if you are unable pay your tax bill.

Here are some “What if” questions that are answered on the official IRS Web site. Simply go to IRS.gov and type the keywords "What If" in the “Search” box at the top of the page.

• Job Related
  What if I lose my job?
  What if my income declines?
  What if I withdraw money from my IRA?
  What if my 401(k) drops in value
• Debt Related
  What if I lose my home through foreclosure?
  What if I sell my home for a loss?
  What if my debt is forgiven?
• Tax Related
  What if I can’t pay my taxes?
  What if I can’t pay my installment agreement?
  What if I can’t resolve my tax problem with the IRS?
  What if I need legal representation to help with my tax problem but can’t afford it?
  
  

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Eight Reasons to Try e-file

If you’ve never filed your tax return electronically, you should definitely consider trying it in 2009. Join the millions of taxpayers who are saving time and money to file their tax returns without the many headaches often associated with filing a paper return.

Here are the top eight reasons close to 90 million people filed their tax returns electronically in 2008:

1. It’s easy. You can usually file a state tax return at the same time you electronically file your federal tax return.

2. It’s accurate. No more human errors because e-file checks for math errors and necessary information. This not only increases the accuracy of your return, but it also reduces the need for correspondence with the IRS to clarify errors or omissions.

3. No more second-guessing yourself. When you file electronically, the computer software or online program guides you through the process step-by-step.

4. You’ll get your refund faster. When you use e-file, you can get your refund in as little as ten days.

5. There are more payment options. With e-file, you can file your return early, but wait to pay any balance due by the April deadline. You can also pay electronically using a credit card, electronic funds withdrawal or in some cases the Electronic Federal Tax Payment System.

6. It’s fast. You don’t have to make a trip to the post office. In fact, you won’t even need to walk to the mailbox to send your return. Just click Send.

7. You’ll know the IRS received your return. The IRS will send you an electronic notification acknowledging receipt of your return.

8. You’ll have peace of mind. After clicking send and receiving your notification from the IRS that they received your return…kick back and relax – you’re done!

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

www.AttorneyBritt.com “Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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IRS Offers Tips to Avoid Recovery Rebate Credit Confusion

WASHINGTON –– In response to errors showing up on early tax filings, the Internal Revenue Service today urged taxpayers and tax preparers to make sure they properly determine eligibility for the recovery rebate credit before they file their 2008 federal tax returns.

Some individuals who did not get the economic stimulus payment, and a smaller number of those who did, may be eligible for the recovery rebate credit. However, most taxpayers who received the economic stimulus payment last year will not qualify for the recovery rebate credit on their 2008 federal income tax return.

An early sampling of tax returns shows about 15 percent have errors involving the recovery rebate credit. Some tax returns erroneously claim the credit, do not claim the proper amount of recovery rebate credit or mistakenly enter the amount of the stimulus payment they received on the recovery rebate credit line.

To avoid delays in tax refunds, it is critical that taxpayers know the correct amount of the stimulus payment they received last year, if any, to help determine whether they qualify for the recovery rebate credit now.

The amount of the stimulus payment will not be entered directly on the tax return. For people using a paper tax return, the stimulus payment amount will be required when completing a related worksheet. For people using tax software, the stimulus payment amount will be needed as part of the return preparation process.

How to Get the Recovery Rebate Credit Right

The IRS sent taxpayers nearly 119 million stimulus payments last year. There are three ways individuals can find out how much they received:

• Check the amount listed on Notice 1378, which the IRS mailed last year to individuals who received the economic stimulus payment.
• Go to the How Much Was My Stimulus Payment? tool that is available on the IRS Web site, IRS.gov. This can provide the correct amount in a matter of a few seconds.
• Individuals can call the IRS at 1-866-234-2942. After a brief recorded announcement they can select option one to find out the amount of their economic stimulus payment. They will need to provide their filing status, Social Security Number and number of exemptions.

With the amount of last year’s economic stimulus payment in hand, the taxpayer can then enter the figure on the recovery rebate credit worksheet or in the appropriate location when tax preparation software requests it.

If the taxpayer or preparer is using tax software, the amount of the rebate recovery credit will automatically be calculated and reported properly. If the taxpayer is using the paper method, the rebate recovery credit, as determined through the worksheet, should be reported on Line 70 of Form 1040, Line 42 of Form 1040A or Line 9 of Form 1040EZ.

For most taxpayers, the correct entry for the recovery rebate credit will either be blank or zero.

If there is any question at all as to the amount that should be reported for the recovery rebate credit, the taxpayer or preparer should enter a zero on the appropriate line above, and the IRS will determine whether a recovery rebate credit is due, and, if so, how much.

Some of the major factors that could qualify you for the recovery rebate credit include:

• Your financial situation changed dramatically from 2007 to 2008.
• You did not file a 2007 tax return.
• Your family gained an additional qualifying child in 2008.
• You were claimed as a dependent on someone else’s return in 2007 but cannot be claimed as dependent by someone else in 2008.

Stimulus Payments Not Taxable; Reports of Extensive Refund Delays False

The IRS has received a number of recurring questions involving stimulus payments and the recovery rebate credit. Here are some important tips to keep in mind:

Taxability. The economic stimulus payment is not taxable and it should not be reported as income on the 2008 Form 1040, 1040A or 1040EZ.

Refund delays. IRS personnel are aware of reports that errors in claiming the recovery rebate credit could delay tax refunds for as much as eight to 12 weeks. These reports are false. As the IRS detects and corrects return errors concerning the recovery rebate credit, refund delays are currently no longer than about one week.

One payment. In addition, the IRS notes taxpayers will receive a single refund that includes any recovery rebate credit to which they are entitled. The IRS will not be issuing separate recovery rebate credit payments.

Refund amounts. The IRS reminds taxpayers they should not use their regular refund from last year in calculating the recovery rebate credit. Some taxpayers may be confusing their regular tax refunds with the economic stimulus payment they received when completing their 2008 tax return.

Direct Deposit Requests. Taxpayers who request a direct deposit will receive the refund in the form of a direct deposit even if errors are detected.

For more information, visit the Recovery Rebate Credit Information Center as well as the rebate questions and answers.

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

www.AttorneyBritt.com “Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Free Tax Help Available Nationwide

WASHINGTON - Nearly 12,000 free tax preparation sites will be open
nationwide this year as the Internal Revenue Service continues to expand its
partnerships with nonprofit and community organizations performing vital tax
preparation services for low-income and elderly taxpayers.

The IRS Volunteer Income Tax Assistance (VITA) Program offers free tax help
to people who earn less than $42,000. The Tax Counseling for the Elderly
(TCE) Program offers free tax help to taxpayers who are 60 and older.

Today, partners and local officials will be hosting news conferences or
issuing news releases nationwide to highlight the Earned Income Tax Credit
and their free tax preparation programs. The EITC is already the
government's largest cash assistance program targeted to low-income
Americans. However, not all eligible taxpayers may be aware or claim the
credit.

Taxpayers need to bring to the VITA/TCE sites the following items:

* Photo identification
* Valid Social Security cards for the taxpayer, spouse and dependents
* Birth dates for primary, secondary and dependents on the tax return
* Current year's tax package, if received
* Wage and earning statement(s) Form W-2, W-2G, 1099-R, from all
employers
* Interest and dividend statements from banks (Forms 1099)
* A copy of last year's federal and state returns, if available
* Bank routing numbers and account numbers for direct deposit
* Other relevant information about income and expenses
* Total paid for day care
* Day care provider's identifying number

To file taxes electronically on a Married Filing Jointly tax return, both
spouses must be present to sign the required forms.

Trained community volunteers can help eligible taxpayers with all special
credits, such as the Child Tax Credit or Credit for the Elderly. Also, many
sites have language specialists to assist people with limited English
skills.

In addition to free tax return preparation assistance, most sites use free
electronic filing (e-filing). Individuals taking advantage of the e-file
program will receive their refunds in half the time compared to returns
filed on paper - even faster if taxpayers have their refund deposited
directly into their bank accounts.

As part of the IRS-sponsored TCE Program, AARP offers the Tax-Aide
counseling program at nearly 8,000 sites nationwide during the filing
season. Trained and certified AARP Tax-Aide volunteer counselors help people
of low-to-middle income with special attention to people age 60 and older.
To locate the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit
AARP's Internet site.

The military also partners with the IRS to provide free tax assistance to
military personnel and their families. The Armed Forces Tax Council (AFTC)
consists of the tax program coordinators for the Army, Air Force, Navy,
Marine Corps and Coast Guard. The AFTC oversees the operation of the
military tax programs worldwide, and serves as the main conduit for outreach
by the IRS to military personnel and their families. Volunteers are trained
and equipped to address military specific tax issues, such as combat zone
tax benefits and the effect of the EITC guidelines.

If taxpayers owe, they can make a payment April 15 by authorizing an
electronic funds withdrawal (direct debit) from a checking or savings
account, paying by credit (Discover CardR, American ExpressR, MasterCardR or
VISAR Card), or by check or money order (made out to the United States
Treasury) using Form 1040-V, Payment Voucher.

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

www.AttorneyBritt.com “Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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