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Tax News Update
IRS Releases 2008 Data Book
IR-2009-22, March 13, 2009 — The IRS has announced the release of the 2008 IRS Data Book, which is an annual snapshot of IRS activities for a given fiscal year. The report describes activities conducted by the IRS from Oct. 1, 2007, to Sept. 30, 2008, and includes information about returns filed, tax collections, enforcement and taxpayer assistance, as well as the IRS budget and workforce. Taxpayers Filing Earlier and Banking Larger Refunds in 2009 IR-2009-20, March 6, 2009 — Taxpayers are filing earlier and receiving larger refunds so far this year, according to early filing season statistics released today by the IRS. As of Feb. 27, 2009, the IRS had received 56 million individual tax returns, a slight increase over the previous year. And, the average individual refund was $2,869, a 9 percent increase or $232 more than the same time last year. The IRS notes that possible reasons for the larger refunds may include taxpayers benefiting from the recovery rebate credit and other tax breaks such as the first-time homebuyer credit and the additional standard deduction for real estate taxes. IRS Decides Not to Renew Private Debt Collection Contracts IR-2009-19, March 5, 2009 — After conducting an extensive review of the private debt collection program, including the cost effectiveness of the effort, the Internal Revenue Service will not renew its contracts with two private debt collection agencies. The IRS determined that the work is best done by IRS employees who have more flexibility handling cases, which is particularly important with many taxpayers currently facing economic hardship. Technical Guidance Revenue Ruling 2009-07 provides the rates for interest on tax overpayment and underpayments for the calendar quarter beginning April 1, 2009. The interest rates will be 4 percent for overpayments (3 percent in the case of a corporation), 4 percent for underpayments, 1.5 percent for the portion of a corporation overpayment exceeding $10,000, and 6 percent for large corporation underpayments. First Time Homebuyer Credit (Part I Seminar Topic) If a taxpayer purchased a home in 2009 prior to the change in the First Time Homebuyer legislation ($8000 and doesn’t need to be repaid) and filed Form 5405 claiming only the $7500, it is necessary to file an amended return to claim the additional $500 credit. Attach the revised (February 09) Form 5405 to the 1040X. The IRS will not automatically make this adjustment; a 1040X is necessary. On Wednesday, March 11 a Quick Alerts was issued advising that Form 5405 will not be accepted until March 30 for electronic filing. See below: •ATTN: Software Developers, Return Transmitters and Authorized IRS e-file Providers/EROs •Please be advised, returns with Form 5405 claiming the First-Time Homebuyer Credit of $8,000 for homes bought in 2009, will be accepted electronically starting with the 6 PM drain March 30, 2009. •Form 5405 can also be transmitted for PATS testing on March 30, 2009, for the 4 PM drain. •The revised file specification for Form 5405 will be available on irs.gov March 20, 2009. •Processing will begin March 16 for paper returns with a 2009 purchase on the Form 5405. These returns have been held up. It will be 6 to 8 weeks before refunds are issued. Making Work Pay Credit (Part II Seminar Topic) As you know, many taxpayers will begin to see an increase in their paychecks from a decrease in withholding due to the new Making Work Pay Credit. No action is necessary on the part of taxpayers for this adjustment to occur. However, there are some taxpayers who will want to revise their W-4s so that they are not underwithheld when they file their 2009 returns next year. Taxpayers, who have two jobs, will have the $400 adjustment made to both paychecks. Therefore they should consider revising their W-4s so they are not actually having an $800 withholding reduction. Married couples whose combined income places them in an income bracket where the credit is phased out should also consider submitting a revised W-4.
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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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