On November 6, President Obama signed into law H.R. 3548, the Worker, Homeownership, and Business Assistance Act of 2009. The new law extends unemployment benefits and includes a number of tax law changes for individuals and small businesses as well. If you would like more information about this new law and how it may affect you or your business, please do not hesitate to contact us.
Extended unemployment benefits: The extension provides for 14 weeks of extended benefit coverage for every state and an additional 6 weeks, for a total of 20 weeks, in high unemployment states where unemployment is over 8.5%
Extended and enhanced homebuyer credit: The new law gives a new lease on life to the first-time homebuyer tax credit by providing a one-time extension of the credit for homes purchased or under contract by April 30, 2010. It also includes a change allowing the credit to be claimed by existing homeowners who are “long time residents.” A credit of up to $8,000 will apply to qualifying first-time buyers, and a smaller credit of up to $6,500 will now apply to purchases after Nov. 6, 2009 by those who have lived in their homes for at least five years. For members of the uniformed services whose duty takes them overseas, an extension of a similar credit is available until May, 2011. For purchases after Nov. 6, 2009, the credit cannot be claimed for buying a residence if its purchase price exceeds $800,000. The new law also contains important measures to combat tax fraud and protect responsible homebuyers, including setting a minimum age for home purchase and requiring documentary proof of the purchase in order to receive credit.
NOL carryback: The American Recovery and Reinvestment Act of 2009 (2009 Recovery Act) allowed eligible small businesses (with average gross receipts of $15 million or less) to elect to carry back net operating losses (NOLs) from 2008 for three, four or five years rather than the standard two years. The new law provides a similar election to all U.S. businesses of every size to carry back NOLs up to five years but with a 50 percent income limit on NOL offsets in the fifth year.
The new, expanded election is available for NOLs incurred in either 2008 or 2009, but not for both years. However, an eligible small business that elected under the 2009 Recovery Act to carry back 2008 NOLs may make the election for an additional year, enabling the qualified small business to carry back NOLs from both 2008 and 2009 for up to five years.
Increased S-Corporation and Partnership late filing penalties: The new law increases the penalties for late-filing tax returns for S-corporations and partnerships, including LLCs treated as partnerships. The late-filing penalty has more than doubled, from $89 to $195 per month per shareholder or partner for each month that a return is filed after the deadline (including extensions). If you have an S-corp, partnership, or LLC, be sure to file those extensions.
FUTA surtax extended: The temporary surtax of 0.2% on the federal unemployment tax, scheduled to expire at the end of 2009, has been extended through June 2011. The FUTA rate continues to be 6.2%.