Tax Debt Help – Form 982 to the Rescue
Mortgage Workouts, Now Tax-Free for Many Homeowners; Claim Relief on Newly-Revised IRS Form |
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Tax Debt Help – Four Frivolous Claims
Issue Number: IR-2008-008
Inside This Issue
IRS Names Four New Frivolous Claims to Avoid
WASHINGTON — The Internal Revenue Service today issued a notice that lists four additional erroneous legal positions that taxpayers should refrain from using as an excuse to avoid paying their taxes.
An individual or group may not avoid paying their fair share of taxes by making “frivolous” legal arguments such as those listed in this notice. The IRS publicizes these frivolous claims to help taxpayers understand the law and avoid penalties.
Notice 2008-14 lists positions identified as frivolous for purposes of the penalty under section 6702 of the federal tax code for filing a frivolous tax return or submitting to the IRS a frivolous request for a collection due process hearing or application for an installment agreement, offer-in-compromise, or Taxpayer Assistance Order.
Taxpayers who file a tax return or make a submission based on a position listed in this notice are subject to a $5,000 penalty. This notice adds to the positions listed in Notice 2007-30, 2007-14 I.R.B. 883. The positions that have been added are found in paragraphs 9(g), 11, 14, and 25.
The four new frivolous claims pertain to the following:
- Misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending.
- Erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States or the IRS.
- A nonexistent “Mariner’s Tax Deduction” (or the like) related to invalid deductions for meals.
- Certain instances of misuse or excessive use of the section 6421 fuels credit.
In 2006, Congress increased the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.
Notice 2008-14 will be published in the Internal Revenue Bulletin 2008-4 dated Jan. 28.
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Tax Debt Help – Taxing Air Transportation
The IRS has released new taxing regulations for the charging of excise tax on domestic and international air flights. The following is the release as sent out by the IRS.
2008 Excise Taxes on Air Transportation
WASHINGTON — Today the Internal Revenue Service announced the 2008 inflation adjustments to the excise taxes on air transportation.
Excise taxes apply to the domestic segments of taxable air transportation and to the use of international air facilities. The Consolidated Appropriations Act, 2008, signed into law on Dec. 26, 2007, extends these excise taxes to air transportation that begins or is paid for no later than Feb. 29, 2008.
These excise taxes are adjusted annually for inflation. For 2008, the excise tax on the domestic segment of taxable air transportation is $3.50. The excise tax for 2008 for international flights that begin or end in the United States is $15.40. The tax on use of international air facilities also applies at a reduced rate to departures of interstate flights that begin or end in Alaska or Hawaii. For 2008, the international air facilities tax on these flights is $7.70.
Revenue Procedure 2007-66, which contains other amounts that are adjusted annually for inflation, will be modified in the near future to include the 2008 inflation adjusted items listed above.
S. Raines, Sr. Financial Advisor/Tax Preparer
Tax Debt Help – Filing Season and the AMT Patch
The IRS has made an updated press release regarding the AMT patch for the 2007 tax filing season. This is a must read article to see if you will be affected by the recently approved legislation. The article is as follows:
Filing Season Opens on Time Except for Certain Taxpayers Potentially Affected by AMT Patch
WASHINGTON — The Internal Revenue Service announced today that the upcoming tax season is expected to start on time for everyone except certain taxpayers potentially affected by late enactment of the Alternative Minimum Tax “patch.”
Following extensive work in recent weeks, the IRS expects to be able to begin processing returns for the vast majority of taxpayers in mid-January. However, as many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law.
The IRS has targeted Feb. 11, as the potential starting date for taxpayers to begin submitting the five AMT-related returns affected by the legislation. The February date allows the IRS enough time to update and test its systems to accommodate the AMT changes without major disruptions to other operations related to the tax season. As the IRS has said previously, it will take approximately seven weeks after the AMT patch was approved to update IRS processing systems completely.
Although as many as 13.5 million taxpayers will not be able to file their returns until Feb. 11, the effect of the delay may be lessened by the fact that under previous filing patterns only between 3 million to 4 million taxpayers file returns with the five affected forms during these early weeks in the filing season.
“We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund,” said Linda Stiff, Acting IRS Commissioner. “We’ve taken extraordinary steps to figure out a way that we can start the filing season on time for most taxpayers, including some using AMT-related forms. Our goal has always been to make sure we can accurately process tax returns while getting refunds to taxpayers as quickly as possible.”
The February delay caused by the AMT patch will affect taxpayers using these five forms:
- Form 8863, Education Credits
- Form 5695, Residential Energy Credits
- Form 1040A’s Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers
- Form 8396, Mortgage Interest Credit
- Form 8859, District of Columbia First-Time Homebuyer Credit
While these five forms require significant additional reprogramming due to the AMT patch, the IRS has been able to reprogram its systems to begin processing seven other AMT-related forms, including Form 6251, Alternative Minimum Tax – Individuals. Taxpayers filing these seven forms should not experience delays in filing, and the IRS expects to begin processing those returns starting on Jan. 14.
Electronic returns involving those five forms will not be accepted until systems are updated in February; similarly, paper filers should wait to file as well. All other e-file and paper returns will be accepted starting in January. The IRS urges affected taxpayers to file electronically in order to reduce wait times for their refunds. E-file with direct deposit gets refunds in as little as 10 days, while paper returns take four to six weeks.
“E-file is a great option for everyone, especially if they are affected by the AMT,” said Richard Spires, IRS Deputy Commissioner for Operations Support. “Filing electronically will get people their refunds faster, and e-file greatly reduces the chances for making an error on the AMT or other tax issues.”
In addition to filing electronically, the IRS urges taxpayers to take simple steps to avoid problems:
- Taxpayers filing electronically should make sure to update their tax software in order to get the latest AMT updates.
- Taxpayers with $54,000 or less in Adjusted Gross Income can use Free File to electronically file their returns for free. Free File will only be available by visiting the official IRS web site at IRS.gov. In all, 90 million taxpayers qualify for this free service.
- Taxpayers who use tax software to print out paper copies of tax forms should make sure they update their software before printing out forms. Taxpayers using paper forms can also visit IRS.gov to get updated copies of AMT forms.
The IRS has created a special section on IRS.gov to provide taxpayers with additional information and copies of updated forms affected by the AMT. In recent days, the IRS has posted updated copies of all forms affected by the late enactment of the AMT patch by Congress.
The IRS also reminds taxpayers that printed tax packages, which will begin arriving in the mail around New Year’s, went to the printer in November before the AMT changes were enacted. The packages reflect the law in effect at the time of printing. The tax packages include cautionary language to taxpayers that late legislation was pending.
The IRS is also working closely with tax professionals and the tax preparation software community to make sure they can help taxpayers with all of the latest developments on the enactment of the AMT patch and other tax changes.
“The IRS is going to continue to do everything it can to make this a fully successful filing season for the nation’s taxpayers,” Stiff said. “We will continue to work to keep taxpayers up to date and make this situation as easy as possible for everyone.”
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S. Raines, Sr. Financial Advisor/Tax Preparer
www.effectur.com
TAX DEBT HELP – IRS Issues List of Vehicles that Qualify for the Alternative Motor Vehicle Credit
WASHINGTON — Purchasers of certain large trucks, buses or other heavy vehicles running on alternative fuel can claim a credit of up $32,000, and purchasers of certain large hybrid trucks and other heavy hybrid vehicles can claim a credit of up to $12,000 if they qualify for the Alternative Motor Vehicle Credit.
Qualified Alternative Fuel Motor Vehicles (QAFMV) are powered solely by alternative fuels, such as compressed natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen and any liquid at least 85 percent of the volume of which consists of methanol. Vehicles powered by a combination of an alternative fuel and a petroleum-based fuel may qualify for a reduced credit. Purchases of new vehicles with special equipment, as well as ones converted for alternative power, may qualify.
A credit also is available for certain new qualified heavy hybrid vehicles with a gross vehicle weight rating in excess of 8,500 pounds. A qualifying heavy hybrid motor vehicle draws propulsion energy from onboard sources of stored energy which are both an internal combustion or heat engine using consumable fuel, and a rechargeable energy storage system. This credit should be not confused with the alternative motor vehicle credit for qualified hybrid passenger automobiles and light trucks.
The list of vehicles is updated periodically
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