Tag Archives: federal

New tax breaks cause confusion, enforcement issues

New tax breaks enacted last year are causing confusion for taxpayers and enforcement problems for the Internal Revenue Service, according to a government report issued Thursday, the deadline for filing individual returns.

As of March 5, the IRS erroneously gave out $24.2 million in Making Work Pay tax credits, according to the report by J. Russell George, the Treasury inspector general for tax administration. The IRS issued a total of $25 billion worth of the credits during the period, for an error rate of less than one-tenth of 1 percent.

The IRS also erroneously issued about $4.7 million in tax credits meant for people who bought plug-in electric cars. The new tax breaks were enacted as part of the massive economic recovery package passed last year.

“Our report concludes that the IRS is having a mixed filing season this year,” George said. “On the one hand, they are having difficulty implementing many of the changes created by the passage of the laws designed to stimulate the economy. On the other hand, the news is not all bad as the IRS is detecting and stopping more erroneous refunds this year.”

The report covers returns processed as of March 5. At the time, the IRS had received about 61 million returns. The agency expects to receive about 140 million individual returns this year.

“Any time you have major tax changes you will see some confusion over it,” said IRS spokesman Terry Lemons. The IRS is doing “everything we can” to work through problems and process returns quickly.

The stimulus package enacted last year presented many challenges for taxpayers and the IRS, making an already complicated tax system even more complex. There were tax credits for qualified families who buy new homes or make energy improvements to existing ones, as well as tax breaks to help pay college tuition or buy new cars.

The Making Work Pay tax credit was President Barack Obama’s signature tax break in the package. It provides individuals with up to $400 and couples up to $800.

The homebuyer tax credit was so popular that Congress extended and expanded it in November. Buyers who have owned their current homes at least five years are eligible, subject to income limits, for tax credits of up to $6,500. First-time homebuyers — or people who haven’t owned homes in the previous three years — can get up to $8,000. To qualify, buyers have to sign purchase agreements before May 1 and close before July 1.

The IRS expects half the people claiming the homebuyer credit not to include proper documentation, such as a settlement statement, and that will delay refunds, according to the report.

As of April 2, the average refund was $2,950, up about $255 over last year, Lemons said. The fastest way to get a refund: file electronically and have the refund deposited directly into a bank account, which takes about 10 days.

Refunds can take six to eight weeks for last-minute filers who use paper returns and receive checks, Lemons said.

Some measures won’t help prevent flu pandemic – report

2A woman talks on a phone through a protective mask while waiting for a health check at a hospital in Hanoi August 4, 2009.

Some measures won’t help prevent flu pandemic – report

By Maggie Fox, Health and Science Editor

WASHINGTON (Reuters) – Closing schools, stopping large gatherings and other such measures are unlikely to do much to prevent the spread of the H1N1 swine flu pandemic, a team of experts predicted on Wednesday.

They said pandemic closely resembles the pandemic of H2N2 influenza in 1957 when it quickly became apparent that there was little officials could do to stop it.

“Efforts to mitigate it were futile,” Brooke Courtney Center for Biosecurity at the University of Pittsburgh Medical Center said in a telephone interview.

Federal officials are expected to announce their recommendations for school closures on Friday. Local school districts and states usually make the decision to close schools, but they look to the federal government for advice.

At the height of the epidemic in May, more than 700 schools closed in the United States, according to the Department of Education.

In Mexico, where the pandemic started, officials closed government offices and schools for around two weeks in April and May, and encouraged businesses to close.

H1N1 is still circulating and, just as influenza did in 1957, it is dominating the mixture of viruses in the southern hemisphere’s flu season going on now.

In its latest update last week the World Health Organization reported 162,230 confirmed cases and 1,154 deaths. But flu experts said this probably reflected only a fraction of the true count as not every patient can be diagnosed with a lab test.

Experts expect the flu will pick up activity in the northern hemisphere’s autumn and the WHO predicted one third of the world’s population — two billion people — will eventually be infected.

TOO WIDESPREAD

Governments are taking different approaches to slowing the spread of the virus. Last month, British experts on the spread of disease said closing schools at the first sign of a new pandemic might delay the worst so health officials can prepare, but cannot prevent the spread of the disease.

Writing in the journal Biosecurity and Bioterrorism, Courtney, Dr. D. A. Henderson and colleagues said it appears that the new H1N1 is now too widespread to try to stop.

“In 1957 it was decided pretty early on that efforts to quarantine or isolate people would not be effective,” Courtney said.

As happened this year, the virus first appeared in the northern hemisphere’s spring. It worsened in the fall. “The opening of schools in September appeared to be a major factor in initiating community epidemics,” the researchers wrote.

“Schools were not closed for the purpose of trying to control the spread of disease. They were closed because too many teachers or administrators or students were out,” Courtney said.

In 1957, 25 percent of the U.S. population became ill. Global health experts estimate two million people died.

“What we saw was that the federal government took very practical steps to deal with the expected pandemic in the fall in 1957,” Courtney said. “They understood that, yes, it was expected that there would be a lot of people who got sick.”

In 1957 it took months to make a vaccine and then it was not very effective, the researchers found.

Drug companies have started making vaccine against H1N1 swine flu. But the recommended population of 160 million people, including healthcare workers and pregnant women, cannot be fully immunized until December, experts estimate. Two doses are needed for full protection.

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