The Tax Ticker: Oct. ’09

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in Small Business Tax

No ‘free lunch’ for tax debts. Have you seen the ads on TV, or heard them on radio, promoting low-cost payoffs to the IRS for unpaid federal tax debts? Chances are, if something sounds too good to be true, it probably is. The IRS intends to crack down on companies that try to defraud taxpayers by promising they can dramatically reduce their debt in return for big up-front fees. The agency may impose penalties and/or criminal sanctions on offenders.

Tip: If you’re in a position where you need to offer a compromise to the IRS, consult with an experienced tax professional.

Show a little patience. If you’re waiting for the refund from an amended return, it may take awhile longer. Reason: The IRS is being swamped with refund claims for 2008 returns, mainly due to taxpayers who are eligible for the new first-time homebuyer credit. For a home purchased in 2009, you can claim the credit by amending your ’08 return instead of taking the credit on your 2009 return. Expect the processing time for refunds to take 12 to 16 weeks instead of the usual eight to 12 weeks.

Tip: Speed up homebuyer credit refunds by attaching a copy of the HUD-1 settlement sheet.

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