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Earthquake in Chile Designatred as Qualified Disaster by IRS

The IRS has determined that the Chilean earthquake, which occurred in February 2010, is an event of a catastrophic nature for federal tax purposes, and has consequently designated the earthquake as a qualified disaster under Code Sec. 139.

REMINDER: 2009 Tax Break for New Car Purchases

The IRS has issued a reminder to individual taxpayers who are considering buying a new car that they have until Dec. 31 to take advantage of a tax break that may not be available in 2010. Taxpayers who buy a qualifying new motor vehicle after Feb. 16, 2009, can deduct the state or local sales or excise taxes they paid on the first $49,500 of the purchase price. Qualifying motor vehicles include new passenger automobiles, light trucks, motorcycles, and motor homes.

House Expected to Vote on Temporary Estate Tax Fix

The House, during the week beginning November 30, is expected to take up legislation that would extend current estate tax levels for one year. Advocates for a permanent fix to the tax said that Congress would likely revisit the issue in 2010.

Food Industry Tip Reporting Program Extended For Two Years (IR-2009-110; Rev. Proc. 2009-53)

The IRS's Attributed Tip Income Program (ATIP), originally set to expire Dec. 31, 2009, has been extended to Dec. 31, 2011. Employers who participate in ATIP report the tip income of employees based on a formula that uses a percentage of gross receipts, which are generally allocated among employees based on the practices of the restaurant. Employers elect participation in the program by checking the designated box on Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips.

First-Time Homebuyer Credit Extended to April 30, 2010; Some Current Homeowners Now Also Qualify

IR-2009-108, Nov. 24, 2009

WASHINGTON — A new law that went into effect Nov. 6 extends the first-time homebuyer credit five months and expands the eligibility requirements for purchasers.

The Worker, Homeownership, and Business Assistance Act of 2009 extends the deadline for qualifying home purchases from Nov. 30, 2009, to April 30, 2010. Additionally, if a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase.

Millions Face Reduced Refunds Due to Making Work Pay Credit, TIGTA Warns; IRS Disputes Number

More than 15 million taxpayers may see their refunds reduced or owe more in taxes when they file their 2009 and 2010 returns because of the Making Work Pay credit (MWPC), the Treasury Inspector General for Tax Administration (TIGTA) warned on November 16 ("Millions of Taxpayers May Be Negatively Affected by the Reduced Withholding Associated With The Making Work Pay Credit" (Reference No. 2010-41-002)). The MWPC is being advanced to taxpayers by employers through reduced withholding in 2009 and 2010.

Inflation Having Little Effect on Tax Rates and Benefits in 2010

WASHINGTON (IR-2009-93, Oct. 15, 2009) — Tax rate brackets and various tax benefits will remain unchanged or change only slightly in 2010 due to inflation, the Internal Revenue Service announced today.

By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits are subject to inflation adjustments each year, but because recent inflation factors have been minimal, many of these benefits will remain unchanged or change only slightly for 2010.

New IRS Initiative Targets Tax Evasion by High-Wealth Individuals

The IRS is set to launch a new initiative to uncover tax evasion by higher income individuals, IRS Commissioner Douglas Shulman said on October 26. The Global High Wealth Industry Group will examine sophisticated financial, business, and investment vehicles for tax avoidance. Shulman also appeared to predict that any future registration and testing of return preparers would exclude Circular 230 professionals. Shulman spoke at the AICPA National Tax Conference in Washington, D.C.

High-Wealth Individuals

IRS Touts Success of Offshore Account Initiative, Announces Expansion of Enforcement Efforts

IRS Commissioner Douglas H. Shulman announced at a press conference on October 14 that 7,500 U.S. taxpayers have responded to the IRS's offshore voluntary compliance initiative. The initiative ends October 15 and will not be extended, the IRS has confirmed. The initiative was announced on March 23, 2009 (TAXDAY, 2009/03/27, I.3), and deadline has been extended once, from September 23 to October 15 (IR-2009-84; TAXDAY, 2009/09/22, I.1).

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