Tag Archives: individual

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.

Liverpool decide against Suarez appeal in race abuse ban

 Liverpool will not be appealing the eight-game ban for their Uruguay international striker Luis Suarez, the English Premier League club said Tuesday.

Suarez received the suspension and a $62,000 fine for racially abusing Manchester United’s Patrice Evra in a match in October.
Their decision follows the weekend release by the English Football Association (FA) of the findings of its Independent Regulatory Commission.
A detailed 115-page report concluded that Suarez’s evidence was “unreliable” and “inconsistent”, revealing that he had called Evra a “negro” no fewer than seven times in a heated exchange.
Liverpool continued to defend Suarez in a lengthy statement on its official website, claiming the FA had constructed a “highly subjective” case against him, which was “ultimately unsubstantiated.”

Suarez, who joined Liverpool from Dutch side Ajax last season, also protested his innocence in a statement.

“Never, I repeat, never, have I had any racial problem with a team mate or individual who was of a different race or color to mine. Never,” it read.He added: “In my country, ‘negro’ is a word we use commonly, a word which doesn’t show any lack of respect and is even less so a form of racist abuse. Based on this, everything which has been said so far is totally false.”

Suarez’s ban will begin immediately, meaning he will miss Tuesday night’s clash against EPL leaders Manchester City at the Etihad Stadium.

“I do feel sorry for the fans and for my team mates whom I will not be able to help during the next month. It will be a very difficult time for me,” he said.
Liverpool manager Kenny Dalglish and his players wore Suarez t-shirts in the warm-up before their match
against Wigan last month, but ultimately the club decided not to prolong the affair.
FA: Suarez evidence ‘unreliable’
“It is time to put the Luis Suarez matter to rest and for all of us, going forward, to work together to stamp out racism in every form both inside and outside the sport,” the statement said.
His absence from the Liverpool line-up will be keenly felt during a critical period as they chase a Champions League place.
Suarez will also miss their League Cup semifinal tie against Manchester City as Dalglish bids to win his first silverware since taking charge last season.

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