The IRS has released the helpful video clip below which explains the extension of the deadline to close and what steps you need to take in order to obtain the credit.
If you want to learn about how the homebuyer tax credit closing extension passed, watched this informational video.
As part of a Special Edition Tax Tip, the IRS provides 9 Tips on the 10 Percent Tax on Tanning Services for businesses offering tanning services :
- Businesses providing ultraviolet tanning services must collect the 10 percent excise tax at the time the customer pays for the tanning services.
- If the customer fails to pay the excise tax, the tanning service provider is liable for the tax.
- The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises.
- The tax does not apply to spray-on tanning services.
- If a payment covers charges for tanning services along with other goods and services, the other goods and services may be excluded from the tax if they are separately stated and the charges do not exceed the fair market value for those other goods and services.
- If the customer purchases bundled services and the charges are not separately stated, the tax applies to the portion of the payment that can be reasonably attributed to the indoor tanning services.
- The tax does not have to be paid on membership fees for certain qualified physical fitness facilities that offer indoor tanning services as an incidental service to members without a separately identifiable fee.
- Tanning service providers must report and pay the excise tax on a quarterly basis.
- To pay the tax, businesses must file IRS Form 720, Quarterly Federal Excise Tax Return using an Employer Identification Number assigned by the IRS. Businesses that don’t already have one can apply for an EIN online at IRS.gov.
Other resources:
Excise on Indoor Tanning Services FAQs
Affordable Care Act Tax Provisions
And for good measure a video from the IRS explaining the tax. Enjoy!
In IR 2010-78, the IRS issued guidance to individuals and businesses effected by the oil spill in the Gulf of Mexico. In addition to a number of new efforts to assist taxpayers, the service announced that on July 17th there will be a special Gulf Coast Assistance Day:
The guidance released today is based on current law, and it explains how recipients of payments from BP should treat the payments for tax purposes. According to the current law, BP payments for lost income are taxable in the same way that the wages or business income these payments are replacing would have been. The law treats compensation for lost wages or income differently for tax purposes than compensation for physical injuries or property loss, which generally are nontaxable.
Here are links to additional IRS Gulf Oil Spill Resources:
On today’s NPR’s All Things Considered radio program, it was reported that there have been thousands of fraudulent first-time homebuyer tax credit claims as revealed in a report by the U.S. Treasury Inspector general. The program also notes that prisoners have been able to take advantage of the credit:
The tax credit applies only to a primary residence — a person has to actually live in the house. So if someone is in prison, it would be pretty tough to qualify for the credit. But that didn’t stop an estimated 1,300 inmates from fraudulently collecting the tax credit from behind bars.
“Unfortunately, they have a lot of time on their hands, and so this is how they’ve elected to use that time,” says J. Russell George, the Treasury inspector general for tax administration. George says it is possible for a prisoner to buy a house, and if the prisoner has a spouse on the outside, that property could even qualify for the credit.
The Internal Revenue Service has awarded Accenture a five-year contract to design, implement, and operate the Return Preparer Registration (RPR) Program according to MarketWatch:
The RPR program is designed to allow the IRS to regulate and improve the quality of the paid tax return preparer community by requiring registration and mandating competency level testing and annual continuing education requirements. The IRS expects that better tracking and qualification of preparers will result in increased taxpayer compliance and more uniform ethical standards of conduct for preparers.
Accenture is a global management, consulting, technology services and outsourcing company.
Soon after the buzz surrounding the Snooki John McCain tweets began (see previous post John McCain to Snooki: I Would Never Tax Your Tanning Bed) the IRS announced (not via tweet) that it has issued regulations outlining the 10-percent tanning tax:
In general, providers of indoor tanning services will collect the tax at the time the purchaser pays for the tanning services. The provider then pays over these amounts to the government, quarterly, along with IRS Form 720, Quarterly Federal Excise Tax Return.
The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises. The regulations also provide an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee.
From the Wall Street Journal’s article Gay Couples Get Equal Tax Treatment:
The Internal Revenue Service has ruled that same-sex couples must be treated the same as heterosexual couples under a feature of California tax law. Advocates for the change say it is the first time the agency has acknowledged gay couples as a unit for tax purposes.
The change reverses a 2006 IRS ruling and opens a tax benefit to many same-sex couples that wasn’t available before. It may affect couples in Nevada and Washington state, as well.
Specifically, the agency said nearly 58,000 couples who are registered as domestic partners in California must combine their income and each report half of it on their separate tax returns. Same-sex couples account for an estimated 95% of the state’s domestic partnerships; partnership status is also available to heterosexual couples in which one partner is over age 62.
The Internal Revenue Service has released IR-2010-69 which encourages small businesses to take advantage of tax incentives included in recently enacted federal legislation. The release, in recognition of National Small Business Week, includes a summary of a variety of tax-saving opportunities as well as resources. Summaries and links to resources are provided below:
Health Care Tax Credit
The Affordable Care Act is designed to encourage small employers to offer health insurance coverage for the first time or maintain existing coverage. The Credit is generally available to small employers that pay at least half the cost of single coverage for employees in 2010.
For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers. The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less. The credit is completely phased out for employers with more than 25 FTEs or with average wages of more than $50,000.
Answers to Frequently Asked Questions
Benefits for Hiring and Retaining Recently Unemployed
Employers who hire unemployed workers this year (after Feb. 3 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive. This in effect exempts them from the employer’s share of Social Security tax on wages paid to these workers after March 18. Further, if the qualified employee is retained for at least a year and whose wages did not significantly decrease in the second half of the year, a qualifying business may claim a new hire retention credit up to $1,000 on their tax return.
Form W-11 – fulfills required signed statement regarding eligibility
Answers to Frequently Asked Questions
Work Opportunity Tax Credit
This credit offers tax savings to business that hire employees belonging to various target groups. Groups include: people ages 18 to 39 living in designated communities in certain states and D.C., recipients of various types of public assistance, certain veterans, ex-felons, and certain youth workers.
Form 8850- filing with state workforce agency within 28 days after eligible worker begins work
An eligible employer can claim both the WOTC and the new hire retention credit for the same employee. However, an employer may not claim both the payroll tax exemption and the WOTC for the same employee. Therefore, any employer that chooses to apply the exemption to wages paid to a qualified employee may not receive the WOTC on any wages paid to that employee during the one-year period beginning on the employee’s hiring date.
Gain Exclusion on Sale of Certain Small Business Stock
Investors in qualified small business stock can exclude 75 percent of the gain upon sale of stock if acquired after Feb 17, 2009 and before Jan. 1, 2011 and is held for more than five years. If acquired prior to these dates, the exclusion rate generally remains at 50 percent.
COBRA Credit
Employers that provide the 65 percent COBRA premium subsidy to eligible former employees can claim credit for this subsidy on their quarterly or annual payroll tax returns. To help avoid imposing an unnecessary cash-flow burden, affected employers can reduce their payroll tax deposits by the amount of the credit.
Other Resources:
According to Robert Snell (“The Tax Watchdog”) of the Detroit News, the IRS has filed a $1,050,733 lien against golfer John Daly on Monday with the Shelby County (Tenn.) Register of Deeds. According to the lien he owes 2007 and 2008 income taxes.
Below is a trailer for an online “reality TV” series called ‘The IRS Hitman’. Enjoy!
