How Do You Spell "Relief"?
The IRS is offering a number of adjustments as a result of the September 11 attacks, one of which allows you to claim quick refunds of estimated tax overpayments before you even file your tax return. This could help fiscal-year filers whose expected profits were reduced or eliminated. To apply for the quick refund, use Form 4466. You must file it by the 15th day of the third month after the end of your company's tax year, and before filing your tax return.
The IRS is also giving some extensions for businesses and individuals in the federally declared disaster areas of New York City and Arlington County, Virginia. For details, visit the IRS' Disaster Relief page at www.irs.gov.
Business taxpayers affected by September 11 may e-mail tax questions related to the disaster to the IRS at email@example.com
Businesses would get additional benefits from the economic stimulus package headed toward approval in Congress at press time. As passed by the House, the legislation would eliminate the corporate alternative minimum tax, change depreciation rules to encourage business investment, and cut the capital gains tax rate from 20 to 18 percent for most investors.
The changes in the depreciation rules represent the most attractive provisions for small businesses, says Hank Gutman, partner in charge of KPMG's Legislative & Regulatory Services Group in Washington, DC. One provision would allow companies to expense 30 percent of the value of assets placed in service starting on or after September 11. The bonus is available for 36 months.
Another beneficial change is an increase in the Section 179 expensing provision. Under this temporary rule, entrepreneurs could deduct the full cost of equipment purchases up to $35,000 starting in January 2002 and lasting through the end of 2003.
While the Senate version is expected to include more government spending and fewer tax benefits, Gutman expects the final package to contain the expensing and accelerated cost-recovery provisions-and that's good news for you.
Great Falls, Virginia, writer Joan Szabo has reported on tax issues for more than 15 years.
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