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BHBM Tax Alert 03/19/2010

Friday, March 19, 2010

PRACTICE ALERT
 
Target Date for Preparer Registration

The IRS has announced that January 1, 2011 is the new target date for all paid signing preparers to register and use a preparer tax identification number (PTIN).  The IRS expects an online registration system to be available by September 1, 2010.  Even if a preparer already has a PTIN, that preparer must register using the online system; the system will reassign the practitioner the same number.  As we receive more information on this new registration system, we will pass it along.

FEDERAL

Home Buyer Credit

As a reminder, the home buyer credits (the $8,000 credit for first-time home buyers and the $6,500 credit for long-time residents) will expire on April 30, 2010.  If a purchase contract is signed before the deadline, the home buyer has until June 30, 2010 to close on that purchase.  These dates are extended for certain members of the Armed Forces and for certain federal employees serving outside of the United States.
 
Estate Tax Update

With all of the focus on health care reform, Congress has not yet fully examined and passed a new estate tax bill.  While there are bills in Congress with various estate tax proposals, there has not been much movement on any one particular bill.  Recently, on March 16, House Ways and Means Committee Chairman, Sander Levin, told reporters that he would like to begin to work on the estate tax in the coming weeks. 

There have also been recent rumblings in Congress that since both parties cannot agree on a viable estate tax option, Congress may not do anything regarding the estate tax and simply allow the current laws to control (no estate tax for decedent dying in 2010).  If Congress decides to enact a retroactive estate tax (so that all decedents dying in 2010 are subject to estate tax), many commentators believe that there will be lawsuits filed to combat this retroactive effect. 
 
Offer in Compromise

The IRS Small Business/Self-Employed Division has released new guidance concerning the effect of the current economic downturn on offers in compromise.  The IRS expressed concern regarding the need to reevaluate an offer that has already been accepted when the offer no longer reflects a taxpayer's financial situation.  Further, under the IRS guidance, taxpayers are not required to include a twenty percent (20%) payment or periodic payments with their proposal to change the payment terms of an accepted offer or a formal proposal to compromise an accepted offer.

The gist of the new IRS guidance is that the IRS wants its employees to be sensitive to the current economic climate in investigating an offer in compromise
 
Dirty Dozen Tax Scams

On March 16, 2010, the IRS issued the 2010 version of the "Dirty Dozen" tax scams including schemes involving return preparer fraud and hiding income offshore.  If you would like to read this year's scam list, please click here.
 
STATE
 
Louisiana Technology Commercialization Credit

The Louisiana Department of Economic Development recently clarified the rules relating to the Technology Commercialization Credit program.  This program provides a refundable credit on any income tax or corporate franchise tax liability for companies that invest in the commercialization of Louisiana technology and create new jobs.  The taxpayer that creates this technology must be a Louisiana business or the commercialization must occur at a Louisiana business The credit is equal to forty percent (40%) of the amount invested in commercialization costs for one business location and is limited to $250,000.  Further, the jobs credit is equal to six percent (6%) of the gross payroll for new Louisiana jobs that are verified by the Louisiana Department of Economic Development.
 
Louisiana Tax Extensions

Louisiana recently revised the income tax filing extension rules that required taxpayers to use the Louisiana Department of Revenue's website to file electronic extensions.  As of 2010, software developers will be required to provide capability for taxpayers and tax preparers to request extensions electronically.

If you would like to receive BHBM Email Tax Alerts to stay informed on the latest changes in tax law on the Federal and State level, please email Stacey Lala at slala@bhbmlaw.com.