Due to the drop in the stock market, many investors decided to sell their holdings in mutual funds. Not having enough money in cash reserves, many mutual fund managers were forced to sell some of the stocks in the funds to generate cash to pay the redeeming investors. Many of these stocks had been held for a long time with low cost basis, thus generating long-term capital gains. Those phantom long-term capital gains are now being "distributed" to the remaining mutual fund owners.
In order to avoid the income tax on these capital gain distributions, an investor will need to sell the mutual funds before the distributions are made. Investors should find out how exposed they are to the capital gains by contacting the fund companies.
For investors who hold “short” exchange traded funds (ETF’s), these funds sell short in various indexes and industries. While the performance has been great in this bear market, the ETF’s are now distributing capital gain dividends – some as high as 40% of the net asset value. And because the funds hold short positions, the capital gains are almost entirely short-term capital gain dividends that fall under the same rules as a mutual fund – the short term capital gains are taxed as ordinary income. So, not only does this tax the dividend at ordinary income rates, but the investor has no opportunity to offset the short term capital gain dividend with capital losses.
Tuesday, December 23, 2008
Wednesday, December 17, 2008
Economic Stimulus Check
https://sa1.www4.irs.gov/irfof/IRServlet?app=IRACTC&selectLanguage=en
You are required to report the amount of the economic stimulus check you received in the summer on your 2008 income tax return, even though the check is not taxable. The link above may help you locate the amount you received, if any.
You are required to report the amount of the economic stimulus check you received in the summer on your 2008 income tax return, even though the check is not taxable. The link above may help you locate the amount you received, if any.
Microsoft patches IE, but Firefox is still safer
http://www.windowssecrets.com/2008/12/17/02-Microsoft-patches-IE-but-Firefox-is-still-safer
By Mark Joseph Edwards
Microsoft recently announced that a special, out-of-cycle patch would be released on Dec. 17 for Internet Explorer's latest security vulnerability, the so-called XML exploit.
The Redmond software giant acknowledged on Dec. 16 that more than two million Windows users had already become infected via the IE flaw, according to an article by the Press Association. How many more people will get hit before the patch is widely distributed is anyone's guess.
Microsoft published a security advisory on Dec. 10, listing nine potential workarounds, before the patch became available. Many people, myself included, felt that the explanation did a poor job of clarifying which combination of fixes a particular user should implement. The company's Security Vulnerability Research and Defense blog attempted to clarify matters on Dec. 12. But the information there still left most people wondering how to determine the best combination of workarounds for their systems.
IE zero-day flaws cry out for switch to Firefox
There's no easy way to secure IE against similar flaws that will inevitably be discovered and used by hackers to their advantage in the future. For this reason — and in response to pleas for help by many Windows Secrets readers — here's my recommendation on the best way to surf the Web more securely:
* Step 1: Switch to Firefox, Opera, Chrome, or another contender and configure it to be your default browser. Use IE only to visit sites that require Microsoft-specific technology — probably because they rely on ActiveX to function. (For example, you need to use IE to download patches at the Windows Update site.) I recommend Firefox because of the numerous add-ons available for that browser, some of which I describe in Steps 2 and 3.
* Step 2: Install the Firefox add-ons known as User Agent Switcher (see UAS's download page) and IE Tab (download page).
User Agent Switcher lets you change your browser's identity. If a Web site demands the use of IE but actually works fine with other browsers, you can change the name of the operating system and browser the site thinks you're using. Many "IE only" sites render perfectly well in Firefox and other browsers.
IE Tab lets you open a site in a new Firefox tab that's driven by IE's rendering engine. This allows sites requiring ActiveX or other IE-only components to work in the same way they do in IE itself.
Unfortunately, using the IE rendering engine in a Firefox tab leaves your PC just as susceptible as it would be if you'd opened an IE window in the first place. Use this technique with caution and only with sites you feel are very unlikely to be hacked, such as Microsoft.com.
* Step 3: For added security, install the NoScript plug-in, which disables JavaScript, Flash, Silverlight, and other "active content" (see NoScript's download page). Because most Web sites of any complexity use JavaScript for menus and other functions, place in the utility's "whitelists" sites such as Microsoft.com and WindowsSecrets.com that are unlikely to try to run malicious scripts on you.
WS associate editor Scott Dunn wrote more about NoScript and other Firefox security add-ons in his Apr. 17, 2008, lead story.
* Step 4: Open an Internet Explorer window and set the security level of IE's Internet zone to High. To do this, click Tools, Internet Options, Security. Choose the Internet zone in the box at the top of the dialog and move the slider control below it to High. Note that this setting will cause many sites you haven't added to IE's Trusted Sites zone to render incorrectly or display error messages.
* Step 5: If for some reason you can't install Microsoft's Dec. 17 IE patch, refer to Microsoft's Dec. 10 and Dec. 12 advisories for workarounds, as I mentioned above. The latter page, for example, describes how to adjust Access Control Lists by using Registry scripts in an oledb32.zip file you can download from Microsoft. (The download link is at the end of that page.)
Be aware that some of the workarounds Microsoft recommends can have unexpected side-effects. For example, a comment posted by the Internet Storm Center on Dec. 16 stated that Microsoft's "Disable XML Island" workaround prevents users from sending e-mail using Exchange 2003 and Outlook Web Access.
If you need any more evidence that weaknesses in IE can be rapidly used by hackers, take a look at a wiki page provided by the Shadowserver Foundation, a security group that lists sites known to be infecting unsuspecting visitors. IMPORTANT: Do not visit any of the sites on the list, even if you think your browser is secure — these sites are or were infectious.
The point is that thousands of sites became carriers within days. (The Press Association quotes Trend Micro as saying more than 10,000 sites were compromised by Dec. 16.) If you use a URL filtering system or block list, you should add the sites cited by Shadowserver to prevent access — at least until all your machines are patched or a specific site is proved to be clean.
Mark Joseph Edwards is a senior contributing editor of Windows IT Pro Magazine and regularly writes for its Security Matters blog. He's a network engineer, freelance writer, and the author of Internet Security with Windows NT.
By Mark Joseph Edwards
Microsoft recently announced that a special, out-of-cycle patch would be released on Dec. 17 for Internet Explorer's latest security vulnerability, the so-called XML exploit.
The Redmond software giant acknowledged on Dec. 16 that more than two million Windows users had already become infected via the IE flaw, according to an article by the Press Association. How many more people will get hit before the patch is widely distributed is anyone's guess.
Microsoft published a security advisory on Dec. 10, listing nine potential workarounds, before the patch became available. Many people, myself included, felt that the explanation did a poor job of clarifying which combination of fixes a particular user should implement. The company's Security Vulnerability Research and Defense blog attempted to clarify matters on Dec. 12. But the information there still left most people wondering how to determine the best combination of workarounds for their systems.
IE zero-day flaws cry out for switch to Firefox
There's no easy way to secure IE against similar flaws that will inevitably be discovered and used by hackers to their advantage in the future. For this reason — and in response to pleas for help by many Windows Secrets readers — here's my recommendation on the best way to surf the Web more securely:
* Step 1: Switch to Firefox, Opera, Chrome, or another contender and configure it to be your default browser. Use IE only to visit sites that require Microsoft-specific technology — probably because they rely on ActiveX to function. (For example, you need to use IE to download patches at the Windows Update site.) I recommend Firefox because of the numerous add-ons available for that browser, some of which I describe in Steps 2 and 3.
* Step 2: Install the Firefox add-ons known as User Agent Switcher (see UAS's download page) and IE Tab (download page).
User Agent Switcher lets you change your browser's identity. If a Web site demands the use of IE but actually works fine with other browsers, you can change the name of the operating system and browser the site thinks you're using. Many "IE only" sites render perfectly well in Firefox and other browsers.
IE Tab lets you open a site in a new Firefox tab that's driven by IE's rendering engine. This allows sites requiring ActiveX or other IE-only components to work in the same way they do in IE itself.
Unfortunately, using the IE rendering engine in a Firefox tab leaves your PC just as susceptible as it would be if you'd opened an IE window in the first place. Use this technique with caution and only with sites you feel are very unlikely to be hacked, such as Microsoft.com.
* Step 3: For added security, install the NoScript plug-in, which disables JavaScript, Flash, Silverlight, and other "active content" (see NoScript's download page). Because most Web sites of any complexity use JavaScript for menus and other functions, place in the utility's "whitelists" sites such as Microsoft.com and WindowsSecrets.com that are unlikely to try to run malicious scripts on you.
WS associate editor Scott Dunn wrote more about NoScript and other Firefox security add-ons in his Apr. 17, 2008, lead story.
* Step 4: Open an Internet Explorer window and set the security level of IE's Internet zone to High. To do this, click Tools, Internet Options, Security. Choose the Internet zone in the box at the top of the dialog and move the slider control below it to High. Note that this setting will cause many sites you haven't added to IE's Trusted Sites zone to render incorrectly or display error messages.
* Step 5: If for some reason you can't install Microsoft's Dec. 17 IE patch, refer to Microsoft's Dec. 10 and Dec. 12 advisories for workarounds, as I mentioned above. The latter page, for example, describes how to adjust Access Control Lists by using Registry scripts in an oledb32.zip file you can download from Microsoft. (The download link is at the end of that page.)
Be aware that some of the workarounds Microsoft recommends can have unexpected side-effects. For example, a comment posted by the Internet Storm Center on Dec. 16 stated that Microsoft's "Disable XML Island" workaround prevents users from sending e-mail using Exchange 2003 and Outlook Web Access.
If you need any more evidence that weaknesses in IE can be rapidly used by hackers, take a look at a wiki page provided by the Shadowserver Foundation, a security group that lists sites known to be infecting unsuspecting visitors. IMPORTANT: Do not visit any of the sites on the list, even if you think your browser is secure — these sites are or were infectious.
The point is that thousands of sites became carriers within days. (The Press Association quotes Trend Micro as saying more than 10,000 sites were compromised by Dec. 16.) If you use a URL filtering system or block list, you should add the sites cited by Shadowserver to prevent access — at least until all your machines are patched or a specific site is proved to be clean.
Mark Joseph Edwards is a senior contributing editor of Windows IT Pro Magazine and regularly writes for its Security Matters blog. He's a network engineer, freelance writer, and the author of Internet Security with Windows NT.
Monday, December 15, 2008
IRS drops interest rate
IRS Drops Interest Rates
Washington, D.C. (December 15, 2008)
By WebCPA Staff
The Internal Revenue Service announced that the interest rates for the calendar quarter beginning January 1, 2009, will drop by one percentage point.
The new rates, as laid out in Revenue Ruling 2008-54 will be:
-- 5 percent for overpayments (4 percent in the case of a corporation);
-- 5 percent for underpayments;
-- 7 percent for large corporate underpayments; and,
-- 2.5 percent for the portion of a corporate overpayment exceeding $10,000.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis, based on the federal short-term rate. The most recent rates were computed from the federal short-term rate during October 2008 to take effect November 1, 2008, based on daily compounding.
Washington, D.C. (December 15, 2008)
By WebCPA Staff
The Internal Revenue Service announced that the interest rates for the calendar quarter beginning January 1, 2009, will drop by one percentage point.
The new rates, as laid out in Revenue Ruling 2008-54 will be:
-- 5 percent for overpayments (4 percent in the case of a corporation);
-- 5 percent for underpayments;
-- 7 percent for large corporate underpayments; and,
-- 2.5 percent for the portion of a corporate overpayment exceeding $10,000.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis, based on the federal short-term rate. The most recent rates were computed from the federal short-term rate during October 2008 to take effect November 1, 2008, based on daily compounding.
Friday, December 12, 2008
Social Security Podcast
The Social Security Administration has begun to produce podcasts. To listen, go to http://www.socialsecurity.gov/podcasts/.
Episode 1 is on Deciding When to Start Retirement Benefits. The direct link is at http://www.socialsecurity.gov/media/ocomm/podcasts/episode1.mp3.
Episode 1 is on Deciding When to Start Retirement Benefits. The direct link is at http://www.socialsecurity.gov/media/ocomm/podcasts/episode1.mp3.
Tuesday, December 2, 2008
Cash for your old electronic gadgets
http://gadgetress.freedomblogging.com/2008/12/02/e-recycling-another-way-to-get-deals-on-electronics/5350/
11 sites that pay for your old iPod, PC, other electronics
December 2nd, 2008, 5:56 am
Beyond digging for deals and finding the lowest price, there is another way to fund your next electronic purchase without opening up that wallet.
Several companies will pay you money for your old computer, iPod or other gadget. Some pay cash, others gift cards. Another company lets you lock in how much money you can get for a gadget after six months to two years of use.
As you may or may not know, such recycling efforts are part of the whole green tech trend. In California, it’s been illegal to dump a monitor or computer into the trash can for years. More recently, consumers here pay an ‘e-recycling’ fee when buying a new monitor, PC or other device with a screen.
While many computer sites now offer free recycling, I’ve honed in on the sites that give you a little something extra for your junk. Pretty much all offer free shipping — you just print out a label on your computer and ship the gadget.
Using my old 40 GB iPod Photo (in good condition, with minor scratches) as an example, here’s what I can get for it (from high to low):
$60 = Toshiba America - Uses eztradein.com to run its program. Gives gift cards and cash for old electronics. Read my past story on the program, “Toshiba’s PC recycling program now accepts all e-junk.”
$60 = BestBuy.com uses the same service as Toshiba. But instead of cash, you’ll get a gift card to Best Buy.
$60 = PayPal.com uses the same service as Toshiba. Pays with PayPal credit.
$56.70 = Amazon.com uses several companies including Gazelle (mentioned below). All pay with Amazon gift cards. In this case, NextWorth accepts old iPods and iPhones. Using FlipSwap.com, my iPod got me $35.29 in Amazon gift cards.
$56 = Costco.com uses GreenSight Technologies for its recycling program. Program pays in Costco gift cards.
$56 = SamsClub.com uses EcoNEWonline.com for its recycling program. Program pays in Sams Club gift cards.
$53 = TigerDirect.com uses GreenSight Technologies for its recycling program. Program pays in TigerDirect gift cards.
$36 = Crutchfield.com uses cexchange.com and pays in store gift cards.
$30.60 = RadioShack offers RadioShack gift cards. Read my past story on RadioShack’s program at “RadioShack offers gift cards for your old electronics.”
$25 = Gazelle.com accepts a wide variety of electronics and pays cash, PayPal credit, an Amazon gift card or donates to a variety of charities. It also promises to wipe out any data still on the gadget.
$23 = Lenovo’s Eco Takeback program puts the cash on the Eco International pre-paid Visa card. It has no cash value.
Up to $40 = Apple recyles its own products for free but doesn’t pay cash. However, if you drop off your old iPod at an Apple Store, you can get a 10 percent discount on a new iPod (like, the $399 iPod Touch).
I guess after 3 years, you can’t expect much return on the $499 investment (did I really pay that much for an iPod Photo?)
There are other sites that pay money or credit for the recycling of their own electronics, like Sony. But I wanted to list sites that accept all brands of electronics.
One other possible option: Locking in the price at the time of purchase. TechForward offers a ‘guaranteed buy back’ program for electronics. You pay a one-time fee to lock in the ‘buy back’ rate.
The fee is anywhere from $20 (for an iPod or digital camera) to $150 (for big TVs). The buy back rate is the same for all products: 50 percent of the purchase price if returned in 6 months, 40 percent between 6 to 12 months, 30 percent between 12 to 18 months and 20 percent for up to 24 months.
I haven’t tried the program but there is not enough incentive for me. While getting 50 percent back is unheard of, you’ve got to return the product within six months to get that rate. Plus, it must be in good condition and there is the upfront fee. Right now, the service is only offered to TigerDirect.com, CompUSA and Amazon customers plus some local Los Angeles stores. Still, this could be an option for people who must have the latest and greatest gadget and know that within a few months after purchase, they’ll be upgrading again.
11 sites that pay for your old iPod, PC, other electronics
December 2nd, 2008, 5:56 am
Beyond digging for deals and finding the lowest price, there is another way to fund your next electronic purchase without opening up that wallet.
Several companies will pay you money for your old computer, iPod or other gadget. Some pay cash, others gift cards. Another company lets you lock in how much money you can get for a gadget after six months to two years of use.
As you may or may not know, such recycling efforts are part of the whole green tech trend. In California, it’s been illegal to dump a monitor or computer into the trash can for years. More recently, consumers here pay an ‘e-recycling’ fee when buying a new monitor, PC or other device with a screen.
While many computer sites now offer free recycling, I’ve honed in on the sites that give you a little something extra for your junk. Pretty much all offer free shipping — you just print out a label on your computer and ship the gadget.
Using my old 40 GB iPod Photo (in good condition, with minor scratches) as an example, here’s what I can get for it (from high to low):
$60 = Toshiba America - Uses eztradein.com to run its program. Gives gift cards and cash for old electronics. Read my past story on the program, “Toshiba’s PC recycling program now accepts all e-junk.”
$60 = BestBuy.com uses the same service as Toshiba. But instead of cash, you’ll get a gift card to Best Buy.
$60 = PayPal.com uses the same service as Toshiba. Pays with PayPal credit.
$56.70 = Amazon.com uses several companies including Gazelle (mentioned below). All pay with Amazon gift cards. In this case, NextWorth accepts old iPods and iPhones. Using FlipSwap.com, my iPod got me $35.29 in Amazon gift cards.
$56 = Costco.com uses GreenSight Technologies for its recycling program. Program pays in Costco gift cards.
$56 = SamsClub.com uses EcoNEWonline.com for its recycling program. Program pays in Sams Club gift cards.
$53 = TigerDirect.com uses GreenSight Technologies for its recycling program. Program pays in TigerDirect gift cards.
$36 = Crutchfield.com uses cexchange.com and pays in store gift cards.
$30.60 = RadioShack offers RadioShack gift cards. Read my past story on RadioShack’s program at “RadioShack offers gift cards for your old electronics.”
$25 = Gazelle.com accepts a wide variety of electronics and pays cash, PayPal credit, an Amazon gift card or donates to a variety of charities. It also promises to wipe out any data still on the gadget.
$23 = Lenovo’s Eco Takeback program puts the cash on the Eco International pre-paid Visa card. It has no cash value.
Up to $40 = Apple recyles its own products for free but doesn’t pay cash. However, if you drop off your old iPod at an Apple Store, you can get a 10 percent discount on a new iPod (like, the $399 iPod Touch).
I guess after 3 years, you can’t expect much return on the $499 investment (did I really pay that much for an iPod Photo?)
There are other sites that pay money or credit for the recycling of their own electronics, like Sony. But I wanted to list sites that accept all brands of electronics.
One other possible option: Locking in the price at the time of purchase. TechForward offers a ‘guaranteed buy back’ program for electronics. You pay a one-time fee to lock in the ‘buy back’ rate.
The fee is anywhere from $20 (for an iPod or digital camera) to $150 (for big TVs). The buy back rate is the same for all products: 50 percent of the purchase price if returned in 6 months, 40 percent between 6 to 12 months, 30 percent between 12 to 18 months and 20 percent for up to 24 months.
I haven’t tried the program but there is not enough incentive for me. While getting 50 percent back is unheard of, you’ve got to return the product within six months to get that rate. Plus, it must be in good condition and there is the upfront fee. Right now, the service is only offered to TigerDirect.com, CompUSA and Amazon customers plus some local Los Angeles stores. Still, this could be an option for people who must have the latest and greatest gadget and know that within a few months after purchase, they’ll be upgrading again.
New CA tax law
SB 1389 (enacted September 30, 2008) added Section 19011.5 to the Revenue & Taxation Code, requiring some taxpayers to make their tax payments using an electronic method. See http://www.ftb.ca.gov/individuals/Mandatory_e-pay.shtml.
Beginning January 1, 2009 personal income taxpayers whose tax liability is greater than $80,000 or who make an estimated tax or extension payment that exceeds $20,000 for taxable years beginning on or after January 1, 2009, must send the payment electronically. Once either of these conditions is met, all payments regardless of type, amount, or tax year must be remitted electronically. Electronic payment methods include Electronic Funds Withdrawal (EFW), Web Pay, or Credit Card.
There is a one percent penalty of the amount paid unless the failure to pay electronically was for reasonable cause and not willful neglect.
Taxpayers whose tax thresholds fall below the mandatory e-pay amounts may request to discontinue making electronic payments. In March 2009, FTB will provide a waiver form for taxpayers to file.
On December 1, the Franchise Tax Board sent courtesy letters (http://www.ftb.ca.gov/forms/misc/4105MEO.pdf) to taxpayers who made a payment in 2008 that could qualify them for mandatory e-pay. The letter informed these taxpayers of the law change, and that they may meet the mandatory e-pay threshold in 2009.
AB 583 (Hancock, Stats. 2008, Ch. 735): Establishes the Fair Elections Fund and places the Voters Fair Elections Fund as a voluntary contribution designation on the personal income tax return beginning with the 2008 return.
AB 1452 (Committee on Budget, Stats. 2008, Ch. 763): Does the following:
* Suspends net operating loss (NOL) deductions for two years, makes the NOL carryover period 20 years, and allows taxpayers a two-year carryback for NOLs from 2011 and later.
* Authorizes FTB to conduct a tax amnesty for the 2003 through 2006 taxable years for corporation and personal income taxpayers. (Repealed by SBX1 28.)
* Requires a limited liability company (LLC) to estimate and pay its LLC fee by a specific date. (Clarified by SBX1 28.)
* Limits the amount of tax credits that may reduce tax for two years, and allows tax credits to be assigned among members of a combined reporting group under the Corporation Tax Law. (Clarified by SBX1 28.)
AB 2249 (Niello, Stats. 2008, Ch. 234): Allows a taxpayer to recover an income tax refund that they misdirected to the wrong bank account. Also allows FTB, where necessary, to use its assessment and collection powers to get a misdirected refund back from a third-party who is the unintended recipient of a misdirected refund.
AB 3078 (Assembly Revenue & Taxation Committee, Stats. 2008, Ch. 305): Does the following:
* Allows entities to file a tax return on behalf of certain nonresidents.
* Closes loopholes in current tax withholding on the payments that nonresident individuals and non-California businesses receive from the sale of California real property.
* Extends the statute of limitations for claiming the credit for taxes paid to another state.
* Gives discretionary authority to the Taxpayers' Rights Advocate to grant relief from penalties, fees, or interest imposed on a taxpayer because of erroneous actions of the department.
* Increases the Personal Income Tax estimated tax penalty threshold.
* Clarifies the rules for the elimination from income of certain dividends received.
SBX1 28 (Senate Budget Committee, Stats. 2008, First Ex. Sess. 2007-2008, Ch. 1): Does the following:
* Accelerates the amount of estimate tax payments required to be made for taxable years beginning on or after January 1, 2009, and eliminates the option for certain taxpayers to use last year’s income tax in calculating estimate payment requirements for current year.
* Repeals Tax Amnesty provisions and penalty, as enacted in AB 1452.
* Enacts a new corporation tax penalty for understatements of tax in excess of $1 million for taxable years beginning on or after January 1, 2003.
* Clarifies the operative date for the requirement to estimate and pay the limited liability company fee of taxable years beginning on or after January 1, 2009.
* Clarifies legislative intent on business tax credit assignment language in AB 1452 for purposes of proper implementation of that section.
SB 797 (Ridley-Thomas, Stats. 2008, Ch. 33): Requires income tax returns prepared by an employee of an exempt tax preparer to be signed by either of the following:
* An exempt tax preparer (Certified Public Accountant, Attorney, or Enrolled Agent).
* A tax preparer that is registered with the California Tax Education Counsel.
SB 1055 (Machado, Stats. 2008, Ch. 282): Allows taxpayers to exclude up to $250,000 of cancellation-of-debt income that results from a discharge of a loan that was used to acquire, construct, or substantially improve the principal residence of the taxpayer. The maximum amount of a loan eligible to be excluded is $800,000, and the exclusion is phased-out for discharged loans that exceed $800,000.
SB 1285 (Corbett, Stats. 2008, Ch. 711): Requires FTB to establish appraisal standards and requirements for the purpose of substantiating the amount of charitable contributions claimed by a seller for conservation land acquired using state funds".
Beginning January 1, 2009 personal income taxpayers whose tax liability is greater than $80,000 or who make an estimated tax or extension payment that exceeds $20,000 for taxable years beginning on or after January 1, 2009, must send the payment electronically. Once either of these conditions is met, all payments regardless of type, amount, or tax year must be remitted electronically. Electronic payment methods include Electronic Funds Withdrawal (EFW), Web Pay, or Credit Card.
There is a one percent penalty of the amount paid unless the failure to pay electronically was for reasonable cause and not willful neglect.
Taxpayers whose tax thresholds fall below the mandatory e-pay amounts may request to discontinue making electronic payments. In March 2009, FTB will provide a waiver form for taxpayers to file.
On December 1, we sent courtesy letters to taxpayers who made a payment in 2008 that could qualify them for mandatory e-pay. The letter informed these taxpayers of the law change, and that they may meet the mandatory e-pay threshold in 2009.
AB 583 (Hancock, Stats. 2008, Ch. 735): Establishes the Fair Elections Fund and places the Voters Fair Elections Fund as a voluntary contribution designation on the personal income tax return beginning with the 2008 return.
AB 1452 (Committee on Budget, Stats. 2008, Ch. 763): Does the following:
* Suspends net operating loss (NOL) deductions for two years, makes the NOL carryover period 20 years, and allows taxpayers a two-year carryback for NOLs from 2011 and later.
* Authorizes FTB to conduct a tax amnesty for the 2003 through 2006 taxable years for corporation and personal income taxpayers. (Repealed by SBX1 28.)
* Requires a limited liability company (LLC) to estimate and pay its LLC fee by a specific date. (Clarified by SBX1 28.)
* Limits the amount of tax credits that may reduce tax for two years, and allows tax credits to be assigned among members of a combined reporting group under the Corporation Tax Law. (Clarified by SBX1 28.)
AB 2249 (Niello, Stats. 2008, Ch. 234): Allows a taxpayer to recover an income tax refund that they misdirected to the wrong bank account. Also allows FTB, where necessary, to use its assessment and collection powers to get a misdirected refund back from a third-party who is the unintended recipient of a misdirected refund.
AB 3078 (Assembly Revenue & Taxation Committee, Stats. 2008, Ch. 305): Does the following:
* Allows entities to file a tax return on behalf of certain nonresidents.
* Closes loopholes in current tax withholding on the payments that nonresident individuals and non-California businesses receive from the sale of California real property.
* Extends the statute of limitations for claiming the credit for taxes paid to another state.
* Gives discretionary authority to the Taxpayers' Rights Advocate to grant relief from penalties, fees, or interest imposed on a taxpayer because of erroneous actions of the department.
* Increases the Personal Income Tax estimated tax penalty threshold.
* Clarifies the rules for the elimination from income of certain dividends received.
SBX1 28 (Senate Budget Committee, Stats. 2008, First Ex. Sess. 2007-2008, Ch. 1): Does the following:
* Accelerates the amount of estimate tax payments required to be made for taxable years beginning on or after January 1, 2009, and eliminates the option for certain taxpayers to use last year’s income tax in calculating estimate payment requirements for current year.
* Repeals Tax Amnesty provisions and penalty, as enacted in AB 1452.
* Enacts a new corporation tax penalty for understatements of tax in excess of $1 million for taxable years beginning on or after January 1, 2003.
* Clarifies the operative date for the requirement to estimate and pay the limited liability company fee of taxable years beginning on or after January 1, 2009.
* Clarifies legislative intent on business tax credit assignment language in AB 1452 for purposes of proper implementation of that section.
SB 797 (Ridley-Thomas, Stats. 2008, Ch. 33): Requires income tax returns prepared by an employee of an exempt tax preparer to be signed by either of the following:
* An exempt tax preparer (Certified Public Accountant, Attorney, or Enrolled Agent).
* A tax preparer that is registered with the California Tax Education Counsel.
SB 1055 (Machado, Stats. 2008, Ch. 282): Allows taxpayers to exclude up to $250,000 of cancellation-of-debt income that results from a discharge of a loan that was used to acquire, construct, or substantially improve the principal residence of the taxpayer. The maximum amount of a loan eligible to be excluded is $800,000, and the exclusion is phased-out for discharged loans that exceed $800,000.
SB 1285 (Corbett, Stats. 2008, Ch. 711): Requires FTB to establish appraisal standards and requirements for the purpose of substantiating the amount of charitable contributions claimed by a seller for conservation land acquired using state funds
Beginning January 1, 2009 personal income taxpayers whose tax liability is greater than $80,000 or who make an estimated tax or extension payment that exceeds $20,000 for taxable years beginning on or after January 1, 2009, must send the payment electronically. Once either of these conditions is met, all payments regardless of type, amount, or tax year must be remitted electronically. Electronic payment methods include Electronic Funds Withdrawal (EFW), Web Pay, or Credit Card.
There is a one percent penalty of the amount paid unless the failure to pay electronically was for reasonable cause and not willful neglect.
Taxpayers whose tax thresholds fall below the mandatory e-pay amounts may request to discontinue making electronic payments. In March 2009, FTB will provide a waiver form for taxpayers to file.
On December 1, the Franchise Tax Board sent courtesy letters (http://www.ftb.ca.gov/forms/misc/4105MEO.pdf) to taxpayers who made a payment in 2008 that could qualify them for mandatory e-pay. The letter informed these taxpayers of the law change, and that they may meet the mandatory e-pay threshold in 2009.
AB 583 (Hancock, Stats. 2008, Ch. 735): Establishes the Fair Elections Fund and places the Voters Fair Elections Fund as a voluntary contribution designation on the personal income tax return beginning with the 2008 return.
AB 1452 (Committee on Budget, Stats. 2008, Ch. 763): Does the following:
* Suspends net operating loss (NOL) deductions for two years, makes the NOL carryover period 20 years, and allows taxpayers a two-year carryback for NOLs from 2011 and later.
* Authorizes FTB to conduct a tax amnesty for the 2003 through 2006 taxable years for corporation and personal income taxpayers. (Repealed by SBX1 28.)
* Requires a limited liability company (LLC) to estimate and pay its LLC fee by a specific date. (Clarified by SBX1 28.)
* Limits the amount of tax credits that may reduce tax for two years, and allows tax credits to be assigned among members of a combined reporting group under the Corporation Tax Law. (Clarified by SBX1 28.)
AB 2249 (Niello, Stats. 2008, Ch. 234): Allows a taxpayer to recover an income tax refund that they misdirected to the wrong bank account. Also allows FTB, where necessary, to use its assessment and collection powers to get a misdirected refund back from a third-party who is the unintended recipient of a misdirected refund.
AB 3078 (Assembly Revenue & Taxation Committee, Stats. 2008, Ch. 305): Does the following:
* Allows entities to file a tax return on behalf of certain nonresidents.
* Closes loopholes in current tax withholding on the payments that nonresident individuals and non-California businesses receive from the sale of California real property.
* Extends the statute of limitations for claiming the credit for taxes paid to another state.
* Gives discretionary authority to the Taxpayers' Rights Advocate to grant relief from penalties, fees, or interest imposed on a taxpayer because of erroneous actions of the department.
* Increases the Personal Income Tax estimated tax penalty threshold.
* Clarifies the rules for the elimination from income of certain dividends received.
SBX1 28 (Senate Budget Committee, Stats. 2008, First Ex. Sess. 2007-2008, Ch. 1): Does the following:
* Accelerates the amount of estimate tax payments required to be made for taxable years beginning on or after January 1, 2009, and eliminates the option for certain taxpayers to use last year’s income tax in calculating estimate payment requirements for current year.
* Repeals Tax Amnesty provisions and penalty, as enacted in AB 1452.
* Enacts a new corporation tax penalty for understatements of tax in excess of $1 million for taxable years beginning on or after January 1, 2003.
* Clarifies the operative date for the requirement to estimate and pay the limited liability company fee of taxable years beginning on or after January 1, 2009.
* Clarifies legislative intent on business tax credit assignment language in AB 1452 for purposes of proper implementation of that section.
SB 797 (Ridley-Thomas, Stats. 2008, Ch. 33): Requires income tax returns prepared by an employee of an exempt tax preparer to be signed by either of the following:
* An exempt tax preparer (Certified Public Accountant, Attorney, or Enrolled Agent).
* A tax preparer that is registered with the California Tax Education Counsel.
SB 1055 (Machado, Stats. 2008, Ch. 282): Allows taxpayers to exclude up to $250,000 of cancellation-of-debt income that results from a discharge of a loan that was used to acquire, construct, or substantially improve the principal residence of the taxpayer. The maximum amount of a loan eligible to be excluded is $800,000, and the exclusion is phased-out for discharged loans that exceed $800,000.
SB 1285 (Corbett, Stats. 2008, Ch. 711): Requires FTB to establish appraisal standards and requirements for the purpose of substantiating the amount of charitable contributions claimed by a seller for conservation land acquired using state funds".
Beginning January 1, 2009 personal income taxpayers whose tax liability is greater than $80,000 or who make an estimated tax or extension payment that exceeds $20,000 for taxable years beginning on or after January 1, 2009, must send the payment electronically. Once either of these conditions is met, all payments regardless of type, amount, or tax year must be remitted electronically. Electronic payment methods include Electronic Funds Withdrawal (EFW), Web Pay, or Credit Card.
There is a one percent penalty of the amount paid unless the failure to pay electronically was for reasonable cause and not willful neglect.
Taxpayers whose tax thresholds fall below the mandatory e-pay amounts may request to discontinue making electronic payments. In March 2009, FTB will provide a waiver form for taxpayers to file.
On December 1, we sent courtesy letters to taxpayers who made a payment in 2008 that could qualify them for mandatory e-pay. The letter informed these taxpayers of the law change, and that they may meet the mandatory e-pay threshold in 2009.
AB 583 (Hancock, Stats. 2008, Ch. 735): Establishes the Fair Elections Fund and places the Voters Fair Elections Fund as a voluntary contribution designation on the personal income tax return beginning with the 2008 return.
AB 1452 (Committee on Budget, Stats. 2008, Ch. 763): Does the following:
* Suspends net operating loss (NOL) deductions for two years, makes the NOL carryover period 20 years, and allows taxpayers a two-year carryback for NOLs from 2011 and later.
* Authorizes FTB to conduct a tax amnesty for the 2003 through 2006 taxable years for corporation and personal income taxpayers. (Repealed by SBX1 28.)
* Requires a limited liability company (LLC) to estimate and pay its LLC fee by a specific date. (Clarified by SBX1 28.)
* Limits the amount of tax credits that may reduce tax for two years, and allows tax credits to be assigned among members of a combined reporting group under the Corporation Tax Law. (Clarified by SBX1 28.)
AB 2249 (Niello, Stats. 2008, Ch. 234): Allows a taxpayer to recover an income tax refund that they misdirected to the wrong bank account. Also allows FTB, where necessary, to use its assessment and collection powers to get a misdirected refund back from a third-party who is the unintended recipient of a misdirected refund.
AB 3078 (Assembly Revenue & Taxation Committee, Stats. 2008, Ch. 305): Does the following:
* Allows entities to file a tax return on behalf of certain nonresidents.
* Closes loopholes in current tax withholding on the payments that nonresident individuals and non-California businesses receive from the sale of California real property.
* Extends the statute of limitations for claiming the credit for taxes paid to another state.
* Gives discretionary authority to the Taxpayers' Rights Advocate to grant relief from penalties, fees, or interest imposed on a taxpayer because of erroneous actions of the department.
* Increases the Personal Income Tax estimated tax penalty threshold.
* Clarifies the rules for the elimination from income of certain dividends received.
SBX1 28 (Senate Budget Committee, Stats. 2008, First Ex. Sess. 2007-2008, Ch. 1): Does the following:
* Accelerates the amount of estimate tax payments required to be made for taxable years beginning on or after January 1, 2009, and eliminates the option for certain taxpayers to use last year’s income tax in calculating estimate payment requirements for current year.
* Repeals Tax Amnesty provisions and penalty, as enacted in AB 1452.
* Enacts a new corporation tax penalty for understatements of tax in excess of $1 million for taxable years beginning on or after January 1, 2003.
* Clarifies the operative date for the requirement to estimate and pay the limited liability company fee of taxable years beginning on or after January 1, 2009.
* Clarifies legislative intent on business tax credit assignment language in AB 1452 for purposes of proper implementation of that section.
SB 797 (Ridley-Thomas, Stats. 2008, Ch. 33): Requires income tax returns prepared by an employee of an exempt tax preparer to be signed by either of the following:
* An exempt tax preparer (Certified Public Accountant, Attorney, or Enrolled Agent).
* A tax preparer that is registered with the California Tax Education Counsel.
SB 1055 (Machado, Stats. 2008, Ch. 282): Allows taxpayers to exclude up to $250,000 of cancellation-of-debt income that results from a discharge of a loan that was used to acquire, construct, or substantially improve the principal residence of the taxpayer. The maximum amount of a loan eligible to be excluded is $800,000, and the exclusion is phased-out for discharged loans that exceed $800,000.
SB 1285 (Corbett, Stats. 2008, Ch. 711): Requires FTB to establish appraisal standards and requirements for the purpose of substantiating the amount of charitable contributions claimed by a seller for conservation land acquired using state funds
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