Daily Tax Update - April 10, 2009


SOME ITEMIZERS MAY DEDUCT CREDIT AND DEBIT CARD FEES FOR TAX PAYMENTS:  According to the IRS, credit or debit card convenience fees charged for paying federal individual income taxes electronically are deductible for some taxpayers who itemize. The IRS said that federal law bars the IRS from paying any fees associated with these credit or debit transactions. Card processors normally charge taxpayers convenience fees when they use their credit or debit card to pay taxes. Fees vary but average about 2.5% of the tax payment.

  • According to the IRS, “In reassessing a previous position, the IRS decided that the convenience fees associated with the payment of federal tax, including payment of estimated tax, can be included as a miscellaneous itemized deduction. However, only those miscellaneous expenses that exceeded 2% of the taxpayer’s adjusted gross income can be deducted. Not everyone who pays the fees will be able to deduct them. Taxpayers first must be eligible to file a Form 1040 Schedule A to itemize their expenses. And, taxpayers must have enough miscellaneous expenses to exceed the 2% threshold. These expenses include items such as tax preparation costs, job search expenses, and unreimbursed employee expenses.”
  • For details on claiming miscellaneous deductions and figuring the 2% limit, see IRS Publication 529. The fees are deductible in the tax year they occur. For example, fees charged to payments made during 2009 can be claimed on the 2009 return filed next year. Most individuals still pay their federal tax obligations by check, but last year more than 4 million taxpayers paid their taxes electronically.

TAXPAYERS NEED TO FILE EXTENSION REQUESTS BY APRIL 15TH:  The IRS reminded taxpayers who need more time to complete their returns that they should submit their requests for an automatic extension electronically by April 15th.

  • The IRS said that anyone, regardless of income, can e-file their extensions at no cost from a home computer using IRS traditional FreeFile or FreeFile Fillable Forms. E-filing a request for an extension using either form of FreeFile is convenient, safe and secure, and taxpayers receive confirmation to keep with their records. Taxpayers can get an automatic six-month extension of time to file their tax returns by filing Form 4868, Automatic Extension of Time to File.

Notice 2009-36 (released today) Pursuant to the Home Affordable Mortgage Program, the US Government may make certain payments to a real estate mortgage investment conduit (REMIC), one of the types of securitization vehicles that hold pooled mortgages.  This notice states that if those payments are “contributions” subject to the 100 percent contribution tax set forth in the statutory rules governing REMICs, and if none of the exceptions set forth in those rules apply, then regulations will be issued that will provide an exception for such payments. 

Revenue Procedure 2009-23 (released today)  On March 4, 2009, the United States Government released details about the Home Affordable Modification Program (HAMP), which will apply to mortgage loans held by real estate mortgage investment conduits (REMICs) and fixed investment trusts.  This revenue procedure describes the conditions under which modifications to mortgage loans pursuant to the HAMP will not cause the IRS to challenge the tax status of REMICs or fixed investment trusts or to assert that those modifications to mortgages held by a REMIC give rise to a prohibited transaction.

Revenue Procedure 2009-24 (released April 9th) provides the depreciation deduction limitations for owners of passenger automobiles first placed in service during calendar year 2009 and amounts to be included in income by lessees of passenger automobiles first leased during calendar year 2009.  The revenue procedure includes tables detailing these depreciation limitations and lessee inclusion amounts that reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code.

As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

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