Tax Relief

July 20, 2009 | Mike Habib, EA

Tax Relief

No one looks forward to the tax filing season. This period is associated with endless paperwork and sorting through receipts and other documents to get your tax accounts in order. And even with the use of tax programs, you are still at risk of encountering errors that can get you in the spot light as far as the IRS is concerned. Your problem grows worse once you have the misfortune of owing the IRS monies or getting your return picked out for audit. You can only pray that you have managed to get every entry properly accounted for.

So what should you do?

In case you do find yourself and your tax return subjected to inquiry by the IRS, you need to get proper representation to help you get tax relief. The concept of using a licensed tax representative has risen in popularity over the years as more and more individuals and businesses are beginning to find it more difficult to justify the entries in their tax returns for some reason or come up with the monies to pay their mounting tax debts.

IRS reminder of ARRA

July 20, 2009 | Mike Habib, EA

IRS Reminds Taxpayers to Take Advantage of Recovery Act Benefits

WASHINGTON — With 2009 now half over, the Internal Revenue Service reminds taxpayers to take advantage of the numerous tax breaks made available earlier this year in the American Recovery and Reinvestment Act (ARRA).

The recovery law provides tax incentives for first-time homebuyers, people purchasing new cars, those interested in making their homes more energy efficient and parents and students paying for college. But all of these incentives have expiration dates so taxpayers should take advantage of them while they can.

Drywall tax relief

July 20, 2009 | Mike Habib, EA

Drywall victims could get tax relief

WASHINGTON, D.C. – The Internal Revenue Service has declared that residents whose homes have been severely damaged by Chinese drywall may qualify for special tax deductions.

Homeowners may be able to claim a casualty loss on their tax returns if they have Chinese drywall that emits an unusual or severe concentration of chemical fumes that causes extreme and unusual damage.

Tax Crack Down on CASH ECONOMY

July 18, 2009 | Mike Habib, EA

Hawaii Cash Economy Enforcement Act of 2009

On June 18, 2009, Governor Linda Lingle signed Senate Bill 972 SD2, HD1, CD1 into law as Act 134, the “Cash Economy Enforcement Act of 2009.”

This Act provides the department with additional resources and tools to target high-risk, cash-based transactions to shore up confidence in Hawaii’s tax system. In this regard, this measure ensures that all sectors of Hawaii’s economy, including those prone to substantial underreporting, are paying their fair share of taxes.

This Act focuses on the civil collection and enforcement nature of Hawaii’s tax laws, by establishing the Special Enforcement Section, a group of tax officials charged with handling sensitive and high-risk civil tax cases as directed by the director. This Act also provides various enforcement tools, including the authority to issue monetary fines and cease and desist citations.

IRS List of Interest

July 17, 2009 | Mike Habib, EA

IRS Releases List of Transactions of Interest (Notice 2009-55)

The IRS has provided a list of transactions that have been identified by the Service as “transactions of interest.” The IRS will consider transactions similar to any of the transactions on the list to be transactions of interest for purposes of Code Secs. 6111, 6112, 6662A, 6707, 6707A and 6708, and Reg. §1.6011-4(b)(6).

One transaction of interest (initially identified in Notice 2007-72, 2007-2 CB 544) involves taxpayers who purchase a remainder interest or similar successor member interest directly or indirectly in real property and then transfer such interest to a tax-exempt organization, claiming a charitable contribution deduction significantly higher than the amount paid for the interest. The Treasury and the IRS are concerned that taxpayers may be utilizing the contribution of such successor member interests to generate an excessive deduction.

Oregon Tax Amnesty

July 17, 2009 | Mike Habib, EA

Oregon: Tax Amnesty Program Enacted

Gov. Ted Kulongoski has signed legislation that authorizes the Oregon Department of Revenue (DOR) to initiate a tax amnesty program for taxpayers subject to the corporation excise (income) tax, the personal income tax, the inheritance tax, and the mass transit district tax on self-employment. The program will begin on October 1, 2009, and end on November 19, 2009, and applies to tax years, reporting periods, and estates for which the DOR could issue a notice of deficiency under ORS 305.265 or ORS 314.410, as amended and in effect on September 27, 2009.

To qualify for participation in the program, a taxpayer must have been required to:

file an income tax return for a tax year prior to 2008;
pay income tax for a tax year prior to 2008;
file an inheritance tax return and pay any required tax if the return was due before 2008; or
pay the mass transit tax on self-employment, if required to do so, before 2008.

A taxpayer may not participate in the tax amnesty program if the OR DOR issued a notice of deficiency before the start of the program or assessed a tax for a tax year for which the taxpayer could otherwise apply for amnesty. However, a taxpayer who has filed a bankruptcy petition may participate in the program if the taxpayer submits an order from the bankruptcy court allowing participation.

Louisiana Tax Amnesty

July 14, 2009 | Mike Habib, EA

Louisiana: Tax Amnesty Program Enacted

The Louisiana Tax Delinquency Amnesty Act of 2009, which requires the Department of Revenue () to develop and implement a tax amnesty program to be effective for a period not to exceed two consecutive calendar months between July 1, 2009, and June 30, 2010, at the discretion of the secretary, is enacted.

The tax amnesty program will apply to all taxes administered by the DOR except for motor fuel taxes and penalties for failure to submit information reports that are not based on an underpayment of tax.

Construction Industry Tax Problems

July 14, 2009 | Mike Habib, EA

Construction Industry Tax Issues

Accumulated Earnings Tax

Closely held C corporations are more likely to accumulate earnings and profits beyond the reasonable needs of the business in order to avoid income taxes on its shareholders than are large C corporations. Each accumulated earnings case is unique. No pro forma guide for calculating a taxpayer’s reasonable needs can be prepared. Reasonable needs that would usually be considered in any accumulated earnings case are the need for sufficient net liquid assets to pay reasonably anticipated, normal operating costs through one business cycle and sufficient net liquid assets to pay reasonably anticipated, extraordinary expenses and capital improvement financing.

In addition, the following represents a non-exclusive list of specific items that should be considered for construction contractors:

California IOU

July 10, 2009 | Mike Habib, EA

Registered Warrants Can Pay Your State Income Tax Bill

(Sacramento) – The Franchise Tax Board (FTB) announced it accepts California registered warrants (IOUs) as payment of current and past due personal and corporate tax obligations.

To pay a tax liability with an IOU, endorse the IOU on the reverse side with the phrase “Pay to the order of Franchise Tax Board” and your signature then mail it with the tax bill or estimated tax voucher. By law, FTB cannot deposit the IOU until it is payable, but FTB will credit the taxpayer’s account on the date the IOU is received to stop the accrual of interest. If the IOU is not sufficient to pay the outstanding balance, taxpayers should send an additional payment for the difference. Otherwise, the taxpayer will receive a bill reflecting the new balance due.

Avoid Tax Fraud

June 27, 2009 | Mike Habib, EA

Abusive Tax Evasion Schemes

Resolve your tax problem and get tax relief today!

Examples of Abusive Tax Scheme Investigations – Fiscal Year 2009