IR-2008-14, Feb. 6, 2008

Listen In: Audio Interview on New IRS.gov Tools / Text Script

WASHINGTON — Things have gotten easier for taxpayers who need help preparing their federal returns this year. The IRS has enhanced both Publication 17 and Where’s My Refund?, two key electronic tools available on this Web site, IRS.gov, the official Web site of the IRS. These improvements will help any taxpayer with Internet access find answers to tax questions quickly, prepare returns accurately and file on time.

Publication 17, Your Federal Income Tax –– The online version of Publication 17 now contains electronic links allowing users to more quickly navigate this widely used publication. Both the downloadable PDF and the html version of the 2007 Publication 17 contain more than 800 hyperlinks. The links allow users to jump immediately to other parts of the publication, reducing the time it takes to access information. In accordance with the Americans with Disabilities Act, the html version of Publication 17 on IRS.gov is accessible to visually impaired taxpayers.

IR-2008-15, Feb. 7, 2008

WASHINGTON — As some taxpayers begin to prepare their paper tax returns, the Internal Revenue Service notes that some may be sending their returns to a different service center than last year. Those who received a tax instruction booklet from the IRS in the mail and use the labels included with the booklet can be assured that their tax returns will go to the correct address. Taxpayers who e-file are not affected by these changes.

For tax year 2007, the mailing changes affect returns, with or without payments, from seven states: Iowa, Kansas, Kentucky, Oklahoma, Pennsylvania, West Virginia, and Wisconsin.

Taxpayers should send:

• Returns from Iowa, Kansas, Oklahoma and Wisconsin to the IRS center in Fresno, California.

• Returns from Kentucky to the IRS center in Austin, Texas.

• Returns from Pennsylvania and West Virginia to the IRS center in Kansas City, Missouri.

For taxpayers who file paper returns, the correct center addresses are on labels inside the tax packages they receive in the mail. Taxpayers who do not receive a package should refer to the back cover of the instructions to Form 1040, 1040A or 1040EZ.

Taxpayers who e-file will not be affected by these changes. Last year, 57 percent of all individual income tax filers chose to e-file their tax returns.

Notes:

IR-2008-16, Feb. 8, 2008

WASHINGTON — The Internal Revenue Service today announced 312 projects eligible to be financed with tax-credit bonds under the Clean Renewable Energy Bonds (CREB) program.

The U.S. Treasury Secretary is authorized to distribute volume cap allocations of tax-credit bonds through the CREB program, which was created by the Energy Tax Incentives Act of 2005 and the Tax Relief and Health Care Act of 2006.

In November 2006, the IRS announced the first round of volume cap allocations, which allocated $800 million of volume cap (some of which was subsequently relinquished) to 610 projects. (The announcement was in IR-2006-181 available on the IRS website.) State and local governments as well as electrical cooperatives are able to issue tax-credit bonds under the program.

Internal Revenue Code Section 54 authorizes the allocation of $1.2 billion of tax-credit bond volume cap to fund projects that can generate clean renewable energy. State and local government borrowers are limited to no more than $750 million of the volume cap with the rest going to qualified mutual or cooperative electric companies.

CREB volume cap allocations are awarded on a “smallest-to-largest” project basis. IRS Notices 2007-26 and 2005-98 further explain the program and can also be found on the IRS website.  

The IRS has completed the review of applications for $897 million of CREB financing submitted pursuant to Notice 2007-26 and has notified applicants of the results. The second round included 342 applications from 33 states, pertaining to 395 projects.  Approximately $477 million of CREB volume cap was available for allocation to qualified issuers. 

Updated with FAQs at bottom — Feb. 28, 2008

IR-2008-17, Feb. 12, 2008

WASHINGTON — Homeowners whose mortgage debt was partly or entirely forgiven during 2007 may be able to claim special tax relief by filling out newly-revised Form 982 and attaching it to their 2007 federal income tax return, according to the Internal Revenue Service.

Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was less than $2 million. The limit is $1 million for a married person filing a separate return. Details are on Form 982 and its instructions, available now on this Web site.

“The new law contains important provisions for struggling homeowners,” said Acting IRS Commissioner Linda Stiff. “We urge people with mortgage problems to take full advantage of the valuable tax relief available.”

The late-December enactment means that reporting procedures for this law change were not incorporated into tax-preparation software or IRS forms. For that reason, people using tax software should check with their provider for updates that include the revised Form 982. Similarly, the IRS is now updating its systems and expects to begin accepting electronically-filed returns that include Form 982 by March 3. The paper Form 982 is now being accepted, but the IRS reminds affected taxpayers to consider filing electronically, which greatly reduces errors and speeds refunds.

IR-2008-18, Feb. 13, 2008

Audio file: Economic Stimulus Payment

WASHINGTON — The Internal Revenue Service today advised taxpayers that in most cases they will not have to do anything extra this year to get the economic stimulus payments beginning in May.

“If you are eligible for a payment, all you have to do is file a 2007 tax return and the IRS will do the rest,” said Acting IRS Commissioner Linda Stiff.

The IRS will use information on the 2007 tax return filed by the taxpayer to determine eligibility and calculate the amount of the stimulus payments.

The IRS will begin sending taxpayers their payments in early May after the current tax season concludes. Payments to more than 130 million taxpayers will continue over several weeks during the spring and summer. A payment schedule for taxpayers will be announced in the near future.

Stimulus payments will be direct deposited for taxpayers selecting that option when filing their 2007 tax returns. Taxpayers who have already filed with direct deposit won't need to do anything else to receive the stimulus payment. For taxpayers who haven't filed their 2007 returns yet, the IRS reminds them that direct deposit is the fastest way to get both regular refunds and stimulus payments.

Most taxpayers just need to file a 2007 tax return as usual. No other action, extra form or call is necessary. This Web site will be the best information source for all updates and taxpayer questions.

In most cases, the payment will equal the amount of tax liability on the tax return, with a maximum amount of $600 for individuals ($1,200 for taxpayers who file a joint return).

IR-2008-19, Feb. 14, 2008

WASHINGTON — The Internal Revenue Service is now processing five tax forms affected by legislation involving the Alternative Minimum Tax (AMT).

On Monday, IRS systems began to accept and process returns that include the five affected forms. After several days of processing, the IRS has confirmed all systems are working properly.

In late December, the IRS announced it would delay processing of several tax forms. For the vast majority of taxpayers, the filing season this year began on time. But for any taxpayer whose return included any of the five affected forms, filing opened on Feb. 11.

Taxpayers who use the five forms can now file their tax returns as normal.

The affected forms are:

• Form 8863, Education Credits
• Form 5695, Residential Energy Credits
• Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers;
• Form 8396, Mortgage Interest Credit
• Form 8859, District of Columbia First-Time Homebuyer Credit

Approximately 13.5 million taxpayers will use these forms this year. Altogether, the IRS expects to receive nearly 140 million individual tax return submissions this year.

IR-2008-20, Feb. 15, 2008

WASHINGTON — The Internal Revenue Service is seeking candidates for membership on the Electronic Tax Administration Advisory Committee (ETAAC). All applicants should submit a resume and complete an application form for the fall vacancies. In addition, the IRS will require a federal tax check waiver and a Federal Bureau of Investigation (FBI) check of the best qualified applicants. The deadline for submitting applications is Tuesday, April 1, 2008.

ETAAC provides an organized public forum for discussion of electronic tax administration issues in support of the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns. ETAAC provides an annual report to Congress on IRS’s progress in increasing electronic transactions.

ETAAC researches, analyzes, considers and makes recommendations on a wide range of electronic tax administration issues. Membership on ETAAC requires expertise in electronic tax administration, a personal commitment of approximately 100 hours a year and a desire to help shape the electronic tax administration system.

For additional information, please send an e-mail to etaac@irs.gov.

ETAAC was created in 1998 by the IRS Electronic Tax Administration as required by the IRS Restructuring and Reform Act of 1998 (RRA 98).

Notes:

IR-2008-21, Feb. 15, 2008

IR-2008-22, Feb. 21, 2008

WASHINGTON — In addition to providing stimulus payments to individuals, the Economic Stimulus Act of 2008 provides incentives to businesses. These incentives include a special 50-percent depreciation allowance for 2008 purchases and an increase in the small business expensing limitation for tax years beginning in 2008.

50-Percent Special Depreciation Allowance

Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property over several years. It is an annual allowance for the wear and tear, deterioration or obsolescence of the property.

Under the new law, a taxpayer is entitled to depreciate 50 percent of the adjusted basis of certain qualified property during the year that the property is placed in service. This is similar to the special depreciation allowance was previously available for certain property placed in service generally before Jan. 1, 2005, often referred to as “bonus depreciation.” To qualify for the 50 percent special depreciation allowance under the new law, the property must be placed in service after Dec. 31, 2007, but generally before Jan. 1, 2009.

To reflect the new 50-percent special depreciation allowance, the IRS developed a new version of the depreciation and amortization form for fiscal year filers. The new form is designated as the 2007 Form 4562-FY and is available on this Web site. 

New Depreciation Limits on Business Vehicles

IR- 2008 –23, Feb 22, 2008

WASHINGTON — After reviewing the fourth quarter 2007 sales of American Honda Motor Company, Inc., the Internal Revenue Service announced that purchasers of qualifying Honda vehicles may continue to claim the Alternative Motor Vehicle Credit. Given the number of vehicles sold, the phase out period for Honda vehicles began on Jan. 1, 2008.

Honda sold 8,017 qualifying vehicles to retail dealers in the quarter ending Dec. 31, 2007. This brings the cumulative sales of qualified Honda hybrid vehicles sold from the period of Jan. 1, 2006, to Dec. 31, 2007, to 73,108. 

Taxpayers may claim the full amount of the credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th qualified vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.

Qualifying Vehicle	Full Credit When Purchased By 12/31/07	Reduced Credit When Purchased From 01/1/08 through 6/30/08	Reduced Credit When Purchased From 7/1/08  through 12/31/087	Beginning 1/01/09
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