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PLEASE NOTE: Our 2009 BTB Income Tax Seminars Brochure will be mailed on April 20, 2009
April 2009 Tax News Update
Newsletter Topics:(click on the topic title below to jump directly to the topic)
(SBTW Topic)
New Law Extends NOL Carryback for Small Businesses (SBTW Topic)
IRS Offers Tax Payment Options Technical Guidance Revenue Ruling 2009-09 addresses the tax treatment of losses from criminally fraudulent investment arrangements that take the form of “Ponzi” schemes. The ruling holds that the losses are theft losses and provides guidance on the character, timing, and amount of the loss deduction. The revenue ruling sets forth the formal legal position of the IRS and Treasury Department. Below are some of the basic provisions:
IRS Releases Information for COBRA Medical Coverage Credit (SBTW Topic) IR-2009-15, Feb. 26, 2009 New information has been issued on the IRS website, IRS.gov, that includes an extensive set of questions and answers for employers. In addition, the Web site contains a revised version of the quarterly payroll tax return that employers will use to claim credit for the COBRA medical premiums they pay for their former employees. Form 941, Employer’s Quarterly Federal Tax Return, will also be sent to about 2 million employers in mid-March. The form is used to claim the new COBRA premium assistance payments credit, beginning with the first quarter of 2009. The American Recovery and Reinvestment Act of 2009 includes changes to the health benefit provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly referred to as COBRA. The new law will affect former employees and their families, employers and others involved in providing COBRA coverage. Under the new law, eligible former employees, enrolled in their employer’s health plan at the time they lost their jobs, are required to pay only 35 percent of the cost of COBRA coverage. Employers must treat the 35 percent payment by eligible former employees as full payment, but the employers are entitled to a credit for the other 65 percent of the COBRA cost on their payroll tax return. Employers must maintain supporting documentation for the credit claimed. This includes:
New Law Extends NOL Carryback for Small Businesses (SBTW Topic) Small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in up to five prior years. Details are in news release IR-2009-26 and Revenue Procedure 2009-19. IR-2009-39, April 9, 2009 Aware that the economic downturn has affected many people, the agency urged taxpayers in difficult financial situations to file a tax return, pay what they can and work with the IRS to establish a payment plan that will keep them compliant. Filing and Paying on Time Saves Money The IRS cautioned that there is a failure-to-file penalty for taxpayers who don’t file their tax returns by April 15 and who owe taxes. Filing by the deadline allows taxpayers to avoid this penalty, even if they can’t pay all or some of their taxes by the deadline. Taxpayers who can’t meet the filing deadline can request an extension of time to file. However, an extension of time to file is not an extension of time to pay. Taxpayers who can’t pay the full amount would still benefit from filing their return and paying as much as they can by April 15. Interest and failure-to-pay penalties are due on any unpaid balance and increase the amount that the taxpayer owes. Members of the military and some others serving in combat zones, or in support, can wait until after April 15 to file and pay. As a general rule, those eligible get the extra time penalty-free and interest-free without having to ask for it. Normally, the filing and payment deadline is postponed until 180 days after the service member leaves the combat zone. Electronic Options IRS offers various electronic payment options to taxpayers to make it as easy as possible to make a full or partial payment with their return. Taxpayers can make payments online, by phone using a credit or debit card, or through the Electronic Federal Tax Payment System. Taxpayers who e-file their return may use the electronic funds withdrawal option for submitting an electronic payment. They can e-file before April 15 but schedule their payment for withdrawal on April 15. Information on these options, including any fees involved, may be found on the IRS Web site, on the Electronic Payment Options Home Page. Installment Agreements and Online Applications Taxpayers who find they can’t make a full payment by the April 15 deadline may consider applying for an installment agreement. An installment agreement allows taxpayers to pay any remaining balance in monthly installments. Taxpayers who owe $25,000 or less may apply for a payment plan electronically, using the Online Payment Agreement application. Or they may attach Form9465, Installment Agreement Request, to the front of their tax return. Taxpayers must show the amount of their proposed monthly payment and the date they wish to make their payment each month. The IRS charges $105 for setting up the agreement or $52 if the payments are deducted directly from the taxpayer’s bank account ($43 for qualified lower-income taxpayers). The IRS will automatically give taxpayers the low income installment agreement fee if they qualify. The taxpayer does not have to request it. Taxpayers are required to pay interest plus a late payment penalty on the unpaid taxes for each month or part of a month after the due date that the tax is not paid. A taxpayer who does not file the return by the due date — including extensions — may have to pay a failure-to-file penalty. Visit the BTB Newsletter Archives Our Instructors:
Disclaimer
This publication is distributed with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional advice and assume no liability in connection with its use. Tax laws are constantly changing; are subject to differing interpretation; and the facts and circumstances in your particular situation may not be the same as those presented here. Therefore, we urge you to do additional research and make sure that you are fully informed and knowledgeable before using the information contained in this publication.
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