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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.

A subdued Beckham returns, hatchets buried

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A subdued Beckham returns, hatchets buried

EAST RUTHERFORD, N.J., July 17 – Maybe it was the heat, or the global commute or the rust from weeks without the intense effort of European soccer, but it turned out to be a quiet return for the marquee player of U.S. soccer, David Beckham.

The England international was booed by the crowd with every touch of the ball but said, after playing a minor role in the L.A. Galaxy’s convincing win over Major League Soccer’s worst team, he was pleased to be back with his team mates.

Beckham spent the off-season with AC Milan in Italy and his extended loan spell there led Landon Donovan, the Galaxy captain, to publicly question Beckham’s commitment to the LA team.

“It’s to be expected. Sometimes it’s nice to get the boos. It gives you inspiration, especially when we play like we did,” said Beckham.

Beckham and Donovan later buried the hatchet in a meeting brokered by their manager, former U.S. national team coach Bruce Arena.

In the aftermath of a thumping 3-1 win over the New York Red Bulls, off-field differences were put aside.

“Given all the circumstances and issues, I think he had a great game,” said Arena.

Donovan said the chemistry between the two on the right side of midfield was “fantastic”.

‘GREAT ATTITUDE’

Donovan was by far the better player on the night, scoring one goal and setting up another in the Galaxy victory.

Beckham appeared a step behind and lacked his trademark deft passing. He was substituted in the 70th minute on a night the temperature read 86 degrees at kickoff.

Arena praised Beckham’s attitude and said he played longer than expected.

“At halftime, I said 60 minutes, and he told me: ’65, 70,'” Arena said.

“He’s got a great attitude and stepped right in … There was never a doubt in our mind that these guys would work together. We expect him to be like all the other guys, and that’s what he wants.”

The allure of the league’s highest-paid player may have worn off on the fans — only 23,238 attended Thursday’s match, half the number that took in the match last year and a third of the fans that showed up for Beckham’s debut the year before.

“I don’t know. The first year was impressive, but we are in a recession, maybe that’s part of it,” Beckham said.

Beckham has said he expected to find another loan deal when the current MLS season ends, with the goal of staying in England manager Fabio Capello’s plan for the 2010 World Cup in South Africa.

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