President Obama signed the Worker, Homeownership & Business Assistance Bill of 2009 (H.R. 3548) on November 6, 2009. The original bill, titled the “Unemployment Compensation Extension Act of 2009, was passed by the House on September 22, 2009, then amended by the Senate and passed November 4. The House accepted the amendments on November 5.

The Bill extends unemployment benefits and has other tax-related provisions, including extending the Homebuyer’s Tax Credit. Workers in all states would receive a 14 week extension of unemployment benefits, while those in states with unemployment rates over 8.5% will receive an additional 6 weeks of unemployment benefits for a total of 20 weeks. The Federal Unemployment Tax Act (FUTA) surtax (0.2%) is being extended until June 30, 2011, to cover the $2.4 billion cost of the unemployment benefit extensions. Thus, FUTA will continue at 6.2% until the new expiration date of the surtax.

Extension of Homebuyer’s Tax Credit

The same Bill extends the $8,000 tax credit for first-time homebuyers, original expiration of November 30, 2009, to April 30, 2010. Eligibility for the tax credit was amended to include homeowners who have lived in their current residence for any consecutive 5 years within the 8 years from the home’s purchase date. These homeowners will receive a reduced credit of $6,500 for homes purchased between November 7, 2009, and April 30, 2010.

The new Bill prohibits homeowners’ dependents from claiming the tax credit and requires that taxpayers submit documentary proof of the home purchase with their returns. Retroactive to April 9, 2009, the IRS was given “Math Error Authority” to automatically assess taxes, thus immediately beginning collection procedures in suspected fraud cases to reduce the time frame for collecting the money.

Business Tax Provisions

There are several business-related provisions in the bill, including increased penalties for S-corporations and partnerships (and LLCs treated as partnerships) filing late returns. These fees were raised from $95 to $195 per month per shareholder (or per partner).

In addition, all businesses can now carryback Net Operating Losses (NOL) for up to 5 years, whereas previously the carryback was limited to small businesses with revenues of $15 million or less.

Mandatory Electronic Filing for Tax Professionals

All professional tax practitioners (i.e. CPAs, professional tax preparers, tax attorneys, others), filing 10 tax returns or more, must electronically file all individual, estate and trust returns. There is no requirement for individual taxpayers preparing their own tax returns to do so electronically.

Additional information is available from the IRS and from CPAs, professional tax preparers or other tax practitioners.

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