Unemployment Compensation Extension Act of 2009 – Amends the Supplemental Appropriations Act, 2008 with respect to the state-established individual emergency unemployment compensation account (EUCA). Requires a further additional Tier-3 period for deposits to an individual’s EUCA, using the current formula, if, at the time the amount added to such individual’s account under the Act is exhausted or at any time thereafter, the individual’s state is in an extended benefit period. Prescribes a formula for determining if a state is in an extended benefit period. Allows the Tier-3 period augmentation to be applied to the individual’s EUCA only once. Authorizes a state to pay extended compensation to an otherwise eligible individual before any further additional emergency unemployment compensation (EUC), if such individual claimed extended compensation for at least one week of unemployment after the exhaustion of additional EUC. Amends the Internal Revenue Code to extend from 2009 through 2010 the 6.2% surtax on employers under the Federal Unemployment Tax Act (FUTA). Delays the scheduled 2010 reduction in the surtax to 6% until 2011. Amends title IV part D (Child Support and Establishment of Paternity) of the Social Security Act to require an employer to report to the state Directory of New Hires, in addition to other information, the date services for remuneration were first performed by a newly hired employee. Qualifies the requirement that an employer file new hire reports on a W-4 or equivalent form by adding the phrase “to the extent practicable.”
Is the clock about to strike midnight for the Federal tax credit to support housing?
Uncle Sam has implemented a wide array of programs to support the domestic housing market. These programs include:
1. Mortgage modifications.
2. Massive funding support for Freddie Mac, Fannie Mae, and the Federal Housing Administration.
3. Increasing the loan limits on mortgages eligible for purchase by Freddie and Fannie in certain regions of the country.
4. Capital injections into a number of large banks and mortgage originators via the TARP.
5. An $8k tax credit for new home purchases.
Of all of these programs, most analysts believe the tax credit has had the largest positive impact. Why has that happened? In my opinion, the tax credit directly impacts the buyer while the other programs are an attempt to support housing but are as much or more supportive of the financial organizations than the homebuyers.
That said, all of these programs are funded by Uncle Sam and at some point in time even a socialized housing program needs to operate within the confines of a budget or limits.
To that end, the primary reason for today’s selloff in the equity markets is a story circulating from International Strategy and Investment. Who is ISI?
ISI consists of two parts: ISI Group Inc., a registered broker-dealer, and ISI Inc., a registered investment advisor. ISI is engaged in investment research, sales, trading and portfolio management with offices in New York, Washington DC, Alabama and Beijing.
What did ISI have to say about the housing tax credit? Bloomberg reports, Housing Credit Will Likely Be Phased Out, ISI Says,
The U.S. Congress will probably phase out the tax credit for first-time home buyers, according to a note sent by ISI Group Inc.’s Washington research analysts.
“There could be an agreement reached as early today on the Reid/Baucus amendment that would PHASE OUT (not extend, as we originally understood when the idea was first proposed last week) the home buyer tax credit,” ISI analysts said in the note. “The phase out is worse than a straight extension and probably worse for housing than the consensus.”
I have been supportive of providing a tax credit to support our housing market. However, tax credits can not go on for perpetuity. If that were the case, they are not a credit they are a subsidy. As such, the subsidy skews the long term health and well being of a properly functioning market.
While the equity markets have had approximately a 2% retracement today and may retreat further without the tax credit to support housing, I actually view a discontinuation of the credit as a positive. Why? Let the market work. Let homebuyers purchase homes which they can truly afford without the assistance of Uncle Sam. Let the local housing markets find levels where buyers and sellers will naturally transact without the presence or influence of Uncle Sam.
It’s called capitalism.
Alfred was divorced from Sarah Old in March 2007. Under the divorce agreement, Alfred is to pay Sarah $1,250 per month for the next 10 years or until Sarah’s death, whichever occurs first. Alfred pays Sarah $15,000 in 2008. In addition, in January 2008, Alfred pays Sarah $50,000, which is designated as being for her share of the marital property. Also, Alfred is responsible for all prior years’ income taxes. Sarah’s Social Security number is 123-45-6788.
Alfred’s salary for 2008 is $110,000, and his employer, Cherry, Inc. (Federal I.D. No. 98-7654321), provides him with group term life insurance equal to twice his annual salary. His employer withheld $15,400 for Federal income taxes and $3,400 for state income taxes. The following amounts were withheld for PICA taxes: $6,324 ($102,000 x 6.2%) for Social Security and $1,595 ($110,000 x 1.45%) for Medicare.
Beulah recently graduated from law school and is employed by Legal Aid Society, Inc. (Federal I.D. No. 11-1111111), as a public defender. She receives a salary of $40,000 in 2008. Her employer withheld $7,500 for Federal income taxes and $2,300 for state income taxes. The following amounts were withheld for PICA taxes: $2,480 ($40,000 x 6.2%) for Social Security and $580 ($40,000 x 1.45%) for Medicare.
Beulah has $1,800 in qualified dividends on Yellow Corporation stock she inherited. Beulah receives a $950 refund of 2007 state income taxes. She used the standard deduction on her 2007 Federal income tax return. Alfred receives a $1,600 refund on his 2007 state income taxes. He itemized deductions on his 2007 Federal income tax return. Alfred and Beulah pay $4,800 interest and $1,450 property taxes on their personal residence in 2008. Their charitable contributions total $1,400 (all to their church). They paid sales taxes of $1,400 for which they maintain the receipts.
Three principals in a Utah-based thoroughbred horse breeding tax shelter that attracted millions of dollars from several wealthy Portlanders pleaded guilty to federal tax charges Monday in federal court.
S. David Plummer, his son, Spencer D. Plummer, and Terry L. Green, executives of ClassicStar LLC — who once hobnobbed with the well-heeled horsy set, flying their Portland customers to the Kentucky Derby and other prestigious races in a private jet — pleaded guilty to one count of conspiracy to defraud the U.S. government through impeding the Internal Revenue Service.
ClassicStar investors filed tax returns with the IRS claiming false tax deductions of over $500 million, resulting in a tax loss to the United States government of over $200 million, prosecutors allege.
It is by far the largest criminal tax case in Oregon history, government officials said.
Allen Garten, the assistant U.S. attorney leading the ClassicStar prosecution, said a crackdown on bogus tax shelters is vital, given the nation’s own faltering finances.
“With the burgeoning federal deficit, vigorous enforcement of the nation’s federal tax laws is more important than ever,” Garten said. “This office is dedicated to the rigorous pursuit of those who would willfully ignore federal tax laws to the detriment of taxpayers nationwide.”
The maximum sentence for conspiracy to defraud the government is five years. But it’s unclear how much time the trio of defendants will serve.
Garten said during Monday’s hearing that the Plummers and Green are cooperating with the government in its continuing investigation of ClassicStar, which will earn them some points in the sentencing equation.
Plummer and his son ran ClassicStar. The government is believed to be focusing on other executives involved with ClassicStar, including some officers with GeoStar, a Michigan oil and gas exploration company that bought ClassicStar.
The case embroiled several Portlanders.
Portland lawyer Joe Hanna is being investigated for potential ethics violations by the Oregon State Bar for his role in the tax deal. Hanna steered several clients into ClassicStar. Three of those clients later sued the prominent tax attorney for malpractice alleging that Hanna had accepted more than $600,000 in commission payments from ClassicStar and other firms for each client he got into the breeding scam.
Hanna and his clients have settled the lawsuit. The bar’s disciplinary arm has been investigating Hanna’s actions for some time, but has yet to decide whether to go ahead with a case against him.
Portland homebuilders Wally Remmers and Dennis Sackhoff were among several locals who invested in the deal. Flush with cash from Portland’s red-hot housing market, Sackhoff and Remmers invested more than $14 million each in the breeding scheme in 2004 and 2005. They did so after Hanna issued a long tax opinion essentially endorsing the ClassicStar tax strategy.
Remmers and Sackhoff, founders and top executives of Beaverton-based Arbor Custom Homes, the Portland area’s largest home builder, were typical ClassicStar investors: successful with plenty of income.
In promotional literature, ClassicStar aimed its pitch directly at those in the upper-income tax bracket searching for ways to reduce their tax obligation. Calling itself the “ultimate tax solution,” ClassicStar offered the potential of significant horse-trading profits and a tax strategy that would generate large tax refunds.
It didn’t sell horses to its investors. Rather, the company leased the reproductive capacity of thoroughbred mares. If the mare gave birth during the investors’ lease, the investor would own the foal.
The company turned out to be a fraud. After running low on money, it attempted to pass off to investors quarter horses as thoroughbreds.
The case had just enough Portland connections that the U.S. Attorney’s Office here took on the prosecution.
Garten said in court Monday the IRS is going after ClassicStar investors in an effort to recover the money those clients should have paid in federal taxes.
“The government expects to recoup the losses it suffered,” he said.
Abolish the Income tax. Stop the Social security tax. Let the money we earn go into our pockets. All of it. Institute a %10 tax on all non food item(taxation on fuel is debatable). %5 will go to federal level administrations, as their needs are greater. %3 will go to the state and %2 will be given to the local level. All politicians pay will be based on the reinstated tariffs, so as to encourage them to protect American business.The squeeze too hard, they lose their pay, they don’t have a tight enough hold, they lose their pay.Also, with a flat tax, individual states save some money as there is no longer a need for the IRS(which is not even legal to begin with); therefore, they don’t have to shell out the millions it takes to keep these people paid.If the tax is on items, you can NEVER dodge taxes. Now, to put more control in the hands of the people, add an amendment to the constitution. The raising or lowering of this tax is handled by each state, and it takes a two thirds majority of voters going to the voting booths to alter the tax one way or the other.In other words, congress can’t try to shove something down our throats without us knowing.Tell me what you think without being insulting. Just give an honest opinion and let me know how you feel about this system.
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First of all, your rates are too low. For example, the current “Fairtax” proposal in Congress proposes a 30% national sales tax and that only replaces the federal taxes (Income, Social Security and Medicare). Realistically, it would probably have to be closer to 34-35%. If you wanted to include state and local taxes, the rate would be 40-45%
Secondly, whatever tax system we have, there would be a need for enforcement and collections. Many, many businesses cheat on their sales tax currently and there would be plenty of incentive to cheat if you were taking in 40-45% extra on every sale.
Lastly, sales taxes are regressive. A national sales tax would shift the tax burden down from the rich to the lower and middle class. For example, while a wealthy person would, on a dollar basis, pay more taxes on a Lexus than a lower income person would pay on a Ford Focus, those taxes on the Lexus represent a lower percentage of the rich persons total income than the taxes on the Focus represent to the lower income person.
Like it or not, the “fairest” form of taxation is a progressive income tax similar to what we have today.
Kathleen Mueller has never seen such a rush.
Spurred by an $8,000 federal tax credit for first-time homebuyers, her clients have been entering the market in droves to take advantage of the program.
“All of my first-time buyers are moving because of the tax credit,” said Mueller, owner/broker of Mueller Realty in San Gabriel. “It’s made them get real serious. But not all of them have succeeded because if they’re not in escrow by now they won’t get into the program.”
Mueller’s buyers aren’t the only ones looking to get a break.
Nationwide home resales in September clocked the largest monthly increase in 26 years as buyers scrambled to complete their purchases before the tax credit expires on Nov. 30.
Sales jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million last month from a downwardly revised pace of 5.1 million in August, the National Association of Realtors reported Friday.
The association says the first-time homebuyer tax credit program has generated an extra 355,000 home sales.
The Obama administration has yet to indicate whether it will extend the program beyond the Nov. 30 deadline. But two local lawmakers support the idea.
“I’m co-sponsoring a bill to extend it,” Rep. Adam Schiff, D-Pasadena, said earlier this week.
“Given the very tentative nature of the economic recovery, giving a new boost may be important to create new jobs – particularly in Southern California
where so many losses have happened in the construction industry.”
The legislation Schiff referred to is HR 1993, the First Time Homebuyer Credit Extension Act of 2009.
Rep. David Dreier, R-San Dimas, also supports extending the program and wants to broaden it.
“I’m very enthused about the prospect of expanding this credit for first-time homebuyers to include everyone,” Dreier said Tuesday.
“The reason is that many of the people who have lost their homes and have moved in with their parents because of foreclosures are the ones we want to help. So going beyond first-time homebuyers is I think the right thing to do.”
Shelley Reesman, branch manager for Beachside Realtors in Whittier, said the tax credit has served as a catalyst.
“Whenever there is a time limit on something it gets people to not put it off,” she said. “I think people want to buy anyway. So they’re not buying just because of the tax credit. But if they were going to buy, they’re not putting it off.”
Prices, however, continue to be dragged down by foreclosures and short sales, where the mortgage exceeds the sales price. The nation’s median price last month was $174,900, down almost 9 percent from $191,200 a year earlier, and slightly lower than August’s median of $177,300.
Los Angeles County’s price decline has been more severe.
In August the county’s median price was $339,980, up 0.2 percent from the previous month but down 13.9 percent from $394,870 a year earlier, the California Association of Realtors reported.
California’s median price for August was $292,960, down 16.9 percent from $352,730 a year ago.
Reesman said she’s seeing multiple offers on lower-end homes.
“The prices get bid up,” she said. “Sometimes we have trouble getting an appraisal on a home because the price has been pushed up by 14 to 18 people bidding on the property.”
Reesman said she just listed a home that ultimately was priced $20,000 higher than comparable homes. But the house still received two offers because inventory is so tight.
“REOs are not getting released because there was a moratorium on foreclosures, and it takes a long time for things to move through the pipeline,” she said. “We’re also trying to work the short sales as best we can, but we feel the banks are understaffed and overwhelmed. And they have people who are under-trained.”
The competition for low-priced foreclosures has become fierce in places like Las Vegas and Southern California.
Aldo Martin, 28, of Covina, had to put offers on 16 houses before having one accepted this week.
“We’d go look at eight houses and if we liked five of them, make offers,” said Martin, a sales supervisor. “Your odds are better. We got aggressive.”
Marty Rodriguez, owner of a Century 21 real estate brokerage in Glendora, said half of her transactions last month were low-priced foreclosures and short sales, where the sales price is lower than the mortgage balance.
“You have so many buyers in that lower price range,” she said. “Sometimes my agents are writing five offers for one buyer on different properties just trying to get one property – and not getting accepted. It’s a little crazy.”
The Associated Press contributed to this story.
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fedral tax deduction table for 2009,federal tax deduction table for 2009
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In addition to 2009 federal tax rates, you might be interested in our other articles
10 tips last-minute checklist for error-free tax return
Marginal tax rate: How can I lower my taxes?
Capital gains tax rates
Marginal and average tax rate
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| Where can employees of Wendy’s and Arby’s receive W-2 information? | |
| Wendy’s US: www.getmytaxform.com/wendysus Wendy’s Canada: www.getmytaxform.com/wendyscanada Arby’s: groupargpayroll@arbys.com |
The ticker symbol for Wendy’s/Arby’s Group, Inc. is WEN. You can see a scrolling indicator of current WEN share prices (delayed 20 minutes) at http://ir.wendysarbys.com. Prior to the merger on September 29, 2008, Wendy’s/Arby’s Group, Inc. was named Triarc Companies, Inc. (NYSE: TRY, TRY.B). To get a historical price for Wendy’s International, Inc. prior to September 29, 2008, click here. To get a historical price for Triarc Companies, Inc. prior to September 29, 2008, click here.
