Notes from the Tax Practitioner Stakeholder Specialist
Thoughts on the 2008 tax season and new legislation
As tax professionals, your role is to help taxpayers determine their tax obligations while also guiding them to take advantage of the full range of tax benefits and credits. With the many changes that occur during the year–end when new legislation is passed, it is sometimes difficult to keep up. This year California’s Legislature passed AB 650, requiring employers to also share the burden of keeping up with new laws. Beginning January 2008, all employers that are required to provide unemployment insurance must now also notify all employees that they may be eligible for the Earned Income Tax Credit (EITC). Tax preparers play an important role in helping taxpayers understand and appropriately claim the EITC, and in light of this new legislation many more of your clients may be inquiring about this credit to see if they qualify. Check the IRS’s Webpage "EITC Information for Tax Preparers" for tips on due diligence, helpful resources, and how to help your clients avoid the four most common EITC errors.
Another area of potential change in legislation involves the alternative minimum tax (AMT). For the 2008 filing season, FTB is keeping watch on progress with the federal AMT legislative patch. The IRS is preparing contingency plans for the possibility of a significant delay to the start of their filing season. According to the Federation of Tax Administrators "the delay in finalizing changes to the AMT will in all likelihood delay the beginning of the 2008 filing season. IRS projects that it will need seven weeks from the time an AMT bill is finalized to be able to accept and process returns - either electronically or on paper."
While FTB systems and processes will be ready to accept California returns on January 2, we may also experience delays in the flow of returns to us, due to the fact that federal and state returns are often filed at the same time. We are aware of this potential delay and are planning accordingly. As we go to press, it appears that AMT HR 4351 passed the house, although the White House threatens a veto.