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Feature:
Tax News and Notes
by Roy A. Lewis, E.A.
Vote Buying Checks: It appears that Congress will approve another law in which incumbents can purchase the votes of their constituents. They call it a "stimulus package", but it'll allow all of the current incumbents to advertise that they got you money in your pocket. Nevertheless, whatever you call it, it's important to understand that such a check will be provided only to those who have filed their tax returns for 2006. Therefore, it's important that if you haven't filed your return for 2006, you might want to consider doing so immediately. And, since the checks will be "paper" checks, they'll be addressed to your last known address (at least known by the IRS). So if you're considering moving (or have moved since filing your 2006 return) you'll want to make sure that you actually receive the check that you're entitled to. If you don't receive your check, I'm sure that additional paperwork will be required for you to finally obtain your check. More on this will follow as the law gets closer to reaching the President for his signature.
Late Filing Required: If you've tried to e-file your return and received a rejection notice, or if you've already paper filed and wonder about your refund, you might be caught up in administrative never-never land. In late December Congress decided to finally "patch" the Alternative Minimum Tax (AMT), which caused the IRS a number of headaches relative to their computer system. The IRS recently announced that, despite it's best efforts, returns containing any one of the five different forms noted below will not be accepted for e-filing prior to February 11, 2008. Those forms include:
- 1. Schedule 2, Form 1040A, Child and Dependent Care Expenses;
- 2. Form 5695, Residential Energy Credits;
- 3. Form 8396, Mortgage Interest Credit;
- 4. Form 8863, Education Credits; and
- 5. Form 8859, Washington DC First Time Homebuyer Credit
So if you do have any of these forms on your return, you might want to cool your jets as to e-filing your return prior to the February 11, 2008 acceptance date.
AMT Patch…Again?: Many taxpayer's are under the mistaken impression that the AMT patch approved by the Congress and signed by the President in late December 2007 fixed the entire AMT matter. Not true. Rather, it was a temporary solution applicable only to the 2007 tax year and 2007 tax returns. Hopefully the Congress will address this issue sometime in 2008 (hopefully earlier than December). If not, expect the dreaded AMT to hit millions of more taxpayer in 2008 than were hit in 2007. And one of those taxpayers could be you!
Will you be audited?: The IRS recently released the Fiscal Year 2007 IRS Enforcement and Service Tables as well as the FY 2007 Enforcement Revenue and Individual Audits Chart. Interesting reading, especially if you play fast and loose with the tax code (otherwise known as "audit lottery"). Basically, audits and enforcement are up…in some cases substantially over prior years. I doubt that this trend will be reversed in the near future. There is much less compliance to the tax code, primarily because of the complexity of the law and the fact that tax preparers are virtually unregulated at either the state or federal levels. It's always been astounding to me that you have to have a license to cut somebody's hair, or install their plumbing, or even apply makeup…but not to prepare a federal or state tax return. Amazing.
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