December 15, 2010 NY Partnership Return Snafu Approximately, 17,000 partnership tax returns that were filed with New York before the mandated September 15th deadline were processed incorrectly and received erroneous notices of late filing penalties. While most of the returns were reprocessed and adjusted before the assessments were issued, some assessments were mailed to taxpayers. According to New York, the returns were processed based upon the date they were received by the Tax Department rather than the date they were postmarked. The state said they will be canceling the erroneous fees and sending notices of cancellation in the near future. If the penalty has already been paid, the taxpayer is supposed to receive a refund along with the notice of adjustment. The Trusted Professional Vol 13, No. 20, 11/1/10 p. 1. OK, You Are Not Dead It’s 3:00 am. You are either having a stroke or heart attack. Your spouse is on the telephone calling 911. Who will get the second telephone call? More Canaries California accepts a $2.33 billion bid from 3 investment companies to sell and then lease back 24 state office buildings for a minimum of 20 years including the San Francisco Civic Center. Instead of cutting payroll and other expenses, they are selling off their assets. LA Times 10/11/10. For more than a year, Menasha, Wisconsin has not paid back $23 million in principal even though the deal’s offering documents include a written statement that the city would use tax revenue to cover any debt payments, if needed. Additionally, the city is spending $80,000 per month to fight investor lawsuits in three courts to avoid paying their obligation. Buena Vista, Virginia did not appropriate any funds in its 2011 budget to make debt payments on a municipal golf course financed by $10 million in bonds. Wall Street Journal 11/10/10. For more details on canaries see “Canary in the Coal Mine” in my September 2010 Newsletter. Do you still think Municipal Bonds are a secure investment? Facts Are Stubborn Things - John Adams The share of the 2008 income tax burden according to the Internal Revenue Service: Top 1% - 38% of all taxes (AGI of $380,354) Top 5% - 58.7% of all taxes (AGI of $159,610) Top 10% - 69.9% of all taxes (AGI of $113,799) Bottom 50% - 2.7% of all taxes The Bush tax cuts are the main reason so many people were removed from the tax rolls with the result that almost 90% of all taxpayers do not have a vested interest in the tax system, thereby allowing fewer and fewer individuals to carry the entire tax burden. This is not a healthy prescription for a democracy. 2010 Home Buyer Credit 2010 tax returns claiming the homebuyer credit can now be electronically filed. Last year, taxpayers who claimed the credit on Form 5405 could not e-file because they had to attach a copy of the settlement statement to the 1040. For 2010, IRS officials say that filers taking the credit can scan the settlement statement and attach the file to their electronically filed returns. Only homes purchased prior to May 1, 2010 can obtain the credit except that individuals who had signed a binding contract by April 30 had until September 30 to close the deal. The Kiplinger Tax Letter 10/29/10. As always, if you have any questions about these or any other matters, do not hesitate to call me. Remember, We’re Here For You!