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Homebuyer Tax Credit Extension Under Consideration

Scam E-Mail Sends Malicious Software to Recipients' Computers

Special Sales Tax Deduction for Car Purchases Available Through End of 2009

New Video Series Helps Exempt Organizations Understand Redesigned Form 990 Requirements

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Homebuyer Tax Credit Extension Under Consideration

House Democrats are open to a short-term fix so first-time homebuyers can qualify for an $8,000 tax credit even if they do not close on a home by Nov. 30, according to senior Ways and Means Committee members. The measure, still in the discussion stage, would allow prospective homeowners to qualify if they have a signed contract by that date but have not finished the closing process, which can take up to two months.

The credit was discussed at the White House earlier this week when House Speaker Pelosi and Senate Majority Leader Reid -- one of its biggest proponents -- met with President Obama to discuss the jobless rate and the extension of some stimulus provisions. Reid backs a six-month extension of the credit, which is important to the battered housing market in Las Vegas and other parts of his home state of Nevada. Conservative estimates peg the cost of such an extension at roughly $6 billion, and some estimates are at least double that figure, given that about 1.8 million taxpayers are expected to take advantage of the provision by the end of November. That amounts to more than $14 billion in tax credits, compared with an original estimate of less than $7 billion.

Industry groups back a broader extension of up to a year and want to make it available to more buyers regardless of income -- the credit phases out at $150,000 per household. They also want to waive the requirement that the recipients are first-time homebuyers. The short-term fix in the House could easily get held up in the Senate, where Reid and lead sponsor Sen. Benjamin Cardin, D-Md., have lined up bipartisan support for a six-month extension. Those calculations are factoring into the House talks, but in the interim the House unanimously passed a bill allowing overseas U.S. military, diplomats and aid workers who have been on extended duty an extra year to qualify. It seems unlikely the Senate would hold up that measure as leverage for a broader credit extension (November 2010 comes closer every day and holding hostage a bill benefiting military members abroad is not going to win many votes). Further fueling the fire, the White House recently announced its support of an extension to the tax credit.

Bottom line: as usual, we'll have to wait and see, but our belief is that we'll see an extension of some sort before Thanksgiving.

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Scam E-mail Sends Malicious Software to Recipients' Computers

In recent weeks, a phony e-mail claiming to come from the IRS has been circulating in large numbers. The subject line of the e-mail often states that the e-mail is a notice of underreported income. The e-mail may contain an attachment or a link to a bogus Web page directing taxpayers to their "tax statement." In either case, when the recipient opens the attachment or clicks on the link, they download a Trojan horse-type of virus to their computers.

Malicious code (also known as malware), of which the Trojan horse is but one example, can take over the victim’s computer hard drive, giving someone remote access to the computer, or it could look for passwords and other information and send them to the scammer. The scammer will then use whatever information they gather to commit identity theft, gain access to bank accounts and more.

The IRS does not send unsolicited e-mails to taxpayers about their tax accounts. Anyone who receives an unsolicited e-mail claiming to come from the IRS should avoid opening any attachments or clicking on any links. People can report suspicious e-mails they receive which claim to come from the IRS to a mailbox set up for this purpose, phishing@irs.gov. Those who believe they may already be victims of identity theft should find out what to do by going to the U.S. Federal Trade Commission's Website, OnGuardOnLine.gov

More information on e-mail scams may be viewed on How to Report and Identify Phishing, E-mail Scams and Bogus IRS Websites and Suspicious E-mails and Identity Theft.

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Special Sales Tax Deduction for Car Purchases Available Through End of 2009

WASHINGTON — With 2010 models arriving in dealer showrooms, the Internal Revenue Service reminds taxpayers that purchasing a new car, light truck, motor home or motorcycle could qualify them for a special deduction for the state and local sales and excise taxes on their 2009 tax returns.

Purchases made before Jan. 1, 2010, will qualify for this deduction under the American Recovery & Reinvestment Act of 2009 (ARRA).

The deduction is limited to the sales and excise taxes and similar fees paid on up to $49,500 of the purchase price of a new vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify.
Taxpayers who make qualifying new vehicle purchases this year can estimate the deduction with the help of Worksheet 10 in IRS Publication 919, How Do I Adjust My Withholding? Lines 10a to 10k of the worksheet show how to take into account purchases above the $49,500 limit, as well as the reduced deductions for taxpayers at higher income levels.
The special deduction is available regardless of whether taxpayers itemize deductions on their returns. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.

For those that have questions about the deduction for sales tax and other fees, these questions and answers  might help. A videovideo on the IRS Youtube.com channel and audio podcasts in  English and Spanish are also available to help taxpayers take full advantage of the deduction.

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New Video Series Helps Exempt Organizations Understand Redesigned Form 990 Requirements

WASHINGTON — The Internal Revenue Service has launched a new case study and video program to help exempt organizations better understand the newly revised Form 990 series which must be filed for the 2008 tax year.

The Form 990 series, redesigned for the first time in nearly 30 years, requires more disclosure and transparency by exempt organizations. With some exceptions, organizations that are exempt for federal taxation are required to file the Form 990 information return. The additional information will give the IRS and the public a better view of how the exempt organizations work, especially in terms of expenditures and executive salaries.

To help illustrate key points and answer important questions about the new Form 990, the IRS’ Exempt Organizations Division developed “The New Form 990: Getting Started,” a case study about a hypothetical organization – Exempt Organization for Disaster Relief (EODR).

The hypothetical case study includes a set of facts describing organizational and financial aspects of EODR, and a completed Form 990 based on those facts. A video series walks you through key reporting issues common to most organizations required to file Form 990.

Before starting the videos, people should read the hypothetical EODR case study and review the example Form 990. The series of videos, each between five and ten minutes long, cover a key area of the Form 990, using facts from the case study.

The videos are listed in an order based on the sequencing list found on page 5 of the Form 990 instructions. However, they can be viewed in any order. Included in the video series are:

  • Overview
    This video is a good place to start for people who have questions about the redesigned Form 990. It looks at some of the key things to consider about the Form 990 and the various schedules that exempt organizations may need to complete, particularly Schedule R.
  • Revenue and Expenses
    This segment covers two of the financial statement portions: Part VIII, Statement of Revenue, and Part IX, Statement of Functional Expenses. It looks at how to fill out the required columns of information for revenue and expenses.
  • Balance Sheet, Supplemental Financial Statements, and Schedule D
    This video, reviews Part X of the Form 990, the Balance Sheet, and Part XI, which covers Financial Statements and Reporting. It explains some differences between the redesigned and previous version of Form 990. It also focuses on parts of Schedule D, Supplemental Financial Statements.
  • Program Services, Other IRS Filings and Tax Compliance
    This video focuses on Part III, which allows an organization to “tell its story” and describe its program services, and Part V, which covers other IRS filings and areas of tax compliance. Part V will alert organizations if they have other filing obligations besides the Form 990 and will help them to determine if they engage in activities that raise tax compliance concerns.
  • Compensation
    This segment reviews the Form 990 compensation reporting in Part VII. It explains who needs to be listed in Part VII and explains the three types of compensation to report. It also highlights Schedule J, the compensation continuation schedule.
  • Governance
    This segment describes how to complete Part VI of the redesigned Form 990, which requests information about the organization’s governing body, management, policies and procedures and disclosure practices. It also focuses on Schedule L, which requests information on transactions with interested persons, such as directors, officers, key employees and their family members.
  • Summary, Schedules, Signatures
    This segment covers Parts I, II and IV of the Form 990—Summary, Signature Block and Checklist of Required Schedules. It also provides an overview of several new schedules to the Form 990.

“The New Form 990: Getting Started” is only one of the online resources the IRS offers for 990 filers. There is a five-part interactive course at www.stayexempt.irs.gov and a series of 990 filing tips, plus the 990 form, schedules and instructions at www.irs.gov/charities.

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