ABC Taxes, Tips & Tools

After much debate and con­gres­sional gnash­ing of teeth, the long awaited unem­ploy­ment exten­sion act, enti­tled, the Worker, Home­own­er­ship, and Busi­ness Assis­tance Act of 2009, has been passed and signed into law as of Novem­ber 6, 2009. It is hap­pen­ing none too soon for some unem­ployed work­ers – DOL sta­tis­tics list more than a third of unem­ployed work­ers have been unem­ployed for 27 weeks or more. This leg­is­la­tion con­tains ben­e­fits for home­buy­ers, busi­nesses expe­ri­enc­ing losses too.   This blog is not to dis­cuss the right­ness or wrong­ness of the leg­is­la­tion; it merely to express what has been signed into law and what it is sup­posed to do.

Unem­ploy­ment Ben­e­fits Pro­vi­sions: These ben­e­fits are sup­posed to help workers.

• pro­vides an addi­tional 14 weeks of extended unem­ploy­ment ben­e­fits (EB) in all States
• an six addi­tional weeks of EB for work­ers in states with unem­ploy­ment lev­els over 8.5 per­cent. High unem­ploy­ment states cur­rently include the Dis­trict of Colum­bia, Puerto Rico, Alabama, Ari­zona, Cal­i­for­nia, Dis­trict of Colum­bia, Florida, Geor­gia, Idaho, Illi­nois, Indi­ana, Ken­tucky, Maine, Mass­a­chu­setts, Michi­gan, Mis­sis­sippi, Mis­souri, Nevada, New Jer­sey, North Car­olina, New York, Ohio, Ore­gon, Penn­syl­va­nia, Puerto Rico, Rhode Island, South Car­olina, Ten­nessee, Wash­ing­ton, West Vir­ginia and Wis­con­sin. More states could soon qual­ify because of ris­ing unem­ploy­ment rates.
• These ben­e­fits are in addi­tion to the Emer­gency Unem­ploy­ment Com­pen­sa­tion (EUC) which may pro­vide up to 33 weeks of addi­tional ben­e­fits beyond reg­u­lar unem­ploy­ment compensation.
• Check with your state’s unem­ploy­ment agency for eli­gi­bil­ity details and infor­ma­tion on how to apply for ben­e­fits as unem­ploy­ment varies from state to state.

Note: In my research there is a ques­tion as to whether work­ers who run out of reg­u­lar and EUC ben­e­fits after Decem­ber 26, 2009, will eli­gi­ble for this 14–20 weeks of extended ben­e­fits.  I have been to the AZ unem­ploy­ment ben­e­fit exten­sions web­site and they are research­ing how this leg­is­la­tion affect Arisona work­ers.  AZ DES states that they will pub­lish updates on the web­site; AZ DES requests that you do not call them as nobody you might talk to will have any more infor­ma­tion than what is con­tained on their website.

Home­buyer Credit: These ben­e­fits are sup­posed to kick start the hous­ing mar­ket again.

• extends the $8,000 First-Time Home­buyer Tax Credit through April 30, 2010 and
• pro­vides a $6,500 credit to cer­tain other home­buy­ers, peo­ple who have lived in their cur­rent home for at least 5 years and want to step up to a new home, through April 30, 2010
• for pur­chases after the Act’s enact­ment date, the credit can­not be claimed for buy­ing a res­i­dence with a pur­chase price in excess of $800,000
• in addi­tion, the Act includes new anti-abuse pro­vi­sions: To curb fraud, tax­pay­ers must now attach a copy of the set­tle­ment agree­ment to the tax return.  The credit must be repaid if, within three years of pur­chase, the home ceases to be the taxpayer’s prin­ci­pal residence.
• the credit phases out for indi­vid­ual tax­pay­ers with mod­i­fied adjusted gross income between $125,000 and $145,000 ($225,000 and $245,000 for joint fil­ers) for the year of purchase.
• the bill will also elim­i­nate the first-time home­buy­ers recap­ture require­ment for mil­i­tary per­son­nel, includ­ing mem­bers of the For­eign Ser­vice and intel­li­gence com­mu­nity, who are forced to sell as a result of an offi­cial extended duty of ser­vice and will allow mil­i­tary per­son­nel serv­ing out­side the United States at least 90 days in 2009 or 2010, one addi­tional year to qual­ify for the credit.

NOL carry-back for 5 years for busi­nesses: These ben­e­fits are sup­posed to get com­pa­nies hir­ing work­ers again.

• increases from two to five pre­ced­ing years the period for which busi­nesses can off­set net oper­a­tion losses in 2008 OR 2009 against income.
• the only com­pa­nies not eli­gi­ble for the 5-year NOL carry-back are Fan­nie Mae, Fred­die Mac and com­pa­nies that took money under the Trou­bled Asset Relief Pro­gram (TARP)
• the tax­payer can choose to carry-back the losses in either 2008 OR 2009 for this treat­ment, but once the year is elected it can­not be changed.
• small busi­nesses that qual­i­fied for the 5-year carry-back under Amer­i­can Recov­ery and Rein­vest­ment Act of 2009 (ARRA), may be eli­gi­ble for 5 year carry back in both 2008 and 2009.
• under this act, the 5th year carry-back can­not exceed 50% of the tax­able income for that year.
• the Act sus­pends the 90% lim­i­ta­tion on the use of net oper­at­ing losses for AMT purposes.

It also helps mil­i­tary fam­i­lies by clar­i­fy­ing that mil­i­tary base realign­ment and clo­sure pay­ments – added as part of the recov­ery act – are tax exempt.

The Act gives broad author­ity to the Trea­sury to issue anti-abuse reg­u­la­tions includ­ing anti-churning rules (includ­ing sale/leaseback), anti-stuffing rules, and rules sim­i­lar to the wash sale rules.

How are they pay­ing for it?

The leg­is­la­tion pays for these new steps, prin­ci­pally by post­pon­ing tax pro­vi­sions ben­e­fit­ing U.S.  multi­na­tional cor­po­ra­tions.  The leg­is­la­tion delays for seven years (through 2017) a  tax break enacted in 2004 that would let U.S. multi­na­tional com­pa­nies that have shipped jobs over­seas reduce their U.S. taxes by deduct­ing more of their world­wide inter­est income against their U.S. income.

The Act extends the Fed­eral Unem­ploy­ment Tax Act sur­tax through June 30, 2011: FUTA was set to drop to 6%, but this extends the 6.2% level-by the way this sur­tax was enacted about 30 years ago as a tem­po­rary mea­sure that keeps get­ting extended.

The Act increased the penalty from $89 to $195 per partner/shareholder for fail­ure to file an S-corporation or part­ner­ship tax return.

The Act increases esti­mated tax pay­ments for large cor­po­ra­tions in 2014

And that is every­thing I have been able to find out about this new leg­is­la­tion, I hope you find it infor­ma­tive.  As always, small busi­ness ser­vices and tax­a­tion are our busi­ness. If you need help Please give Art & Busi­ness Con­sult­ing a call. We would love to engage you as a client.

The usual dis­claimers: Although ABC has made every effort to insure the accu­racy of Taxes, Tips and Tools, mis­in­for­ma­tion, dis­in­for­ma­tion, changes, mis­takes, typos and hack­ers hap­pen, there­fore Art & Busi­ness Con­sult­ing LLC takes no respon­si­bil­ity for any action taken or results based on the infor­ma­tion sup­plied here in.   Inter­nal Rev­enue Ser­vice Cir­cu­lar 230 Dis­clo­sure:  As pro­vided for in Trea­sury reg­u­la­tions, advice (if any) relat­ing to fed­eral taxes that is con­tained in this com­mu­ni­ca­tion (includ­ing attach­ments) is not intended or writ­ten to be used, and can­not be used for the pur­pose of (1) avoid­ing penal­ties under the Inter­nal Rev­enue Code or (2) pro­mot­ing, mar­ket­ing or rec­om­mend­ing to another party any plan or arrange­ment address herein.  Art & Busi­ness Con­sult­ing LLC cur­rently does not have a cer­ti­fied pub­lic accoun­tant or an attor­ney on staff; this infor­ma­tion is purely for edu­ca­tional pur­poses and not to be con­strued as legal or finan­cial advice. Art & Busi­ness Con­sult­ing LLC and its employ­ees, mem­bers and asso­ciates are not engage to prac­tice law; you always should dis­cuss legal mat­ters with your attor­ney before talk­ing to any­one else.

Tags: 2009, 5-year NOL carryback, business NOL carryback, emergency unemployment compensation, EUC, extended benefits, homebuyer credit, worker homeownership and business assistance act

This entry was posted on Saturday, November 14th, 2009 at 4:03 pm and is filed under General Business, General Individual. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.