Serving Bullitt, Henry, Jefferson, Oldham, Shelby, and Spencer counties in Kentucky
and Clark, Floyd, Harrison, Scott, and Washington counties in Southern Indiana.
Also serving as the home site of the Kentucky AARP Foundation Tax-Aide program with over 90 sites throughout Kentucky.

KY Individual Income Tax New Home Tax Credit

The new home tax credit provided by KRS 141.388 has been extended to Dec. 31, 2010. The credit cap has been lowered from $25 million to $15 million. Qualified buyer is now defined as “a resident who purchases a qualified principal residence.” Qualified buyers who purchased a qualified principal residence between Nov. 7, 2009 and June 4, 2010 have until July 6, 2010 to fax an application for approval. Homeowners who purchased a home between these dates may qualify for this credit even if they also qualified for the federal homebuyer credit. Qualified buyers that purchase a qualified principal residence outside of the above referenced dates are still required to fax the application for approval within seven (7) calendar days from the date of purchase. The fax number is (502) 564-3706. Additional questions regarding the changes to the credit may be answered by calling the Individual Income Taxpayer Assistance Section at (502) 564-4581 or using the Live Help service available on the main page of our Web site at www.revenue.ky.gov.

KY Motor Vehicle Usage Tax

The new car trade-in allowance was extended to June 30, 2011. The cap for the trade-in allowance remains at $25 million.  Source: KY Tax-Alert

State Property Tax Rate Set at 12.2 cents for 2010

The Kentucky DOR has set the 2010 State Real Property Tax Rate at 12.2 cents per $100 of assessed value. Kentucky Revised Statute 132.020 requires the DOR to set the real property rate no later than July 1 of each year. This rate is based on the revenue generated from the increase in taxable real property assessments from 2009 to 2010. If the increase in revenue is more than 4 percent after the exclusion of new property added to the tax roll during 2010, then the prior year rate must be reduced. Because the assessment increase for 2010 is estimated at .85 percent, the state rate will remain the same as the 2009 rate, 12.2 cents per $100 of assessed value.

All of the revenue generated from the state property tax rate will go into the state’s General Fund.

Information for the three preceding articles is from Kentucky Tax Alert which is published bi-monthly. Comments and suggestions should be addressed to the Office of Public Information, Finance Secretary’s Office, Frankfort, Kentucky, (502) 564-9165. The Department of Revenue can be found at www.revenue.ky.gov

Indiana Tax-Aide Leaders Training

Three Members of the District Leadership Team in Southern Indiana will join DC Jack Stuart at the Indiana Tax-Aide leaders training event in Bloomington on October 27-28. Those attending will include Ed Scharf, Frank Krider and Marla Kelley.

In other leader notes, Kelley will be the LC for New Albany and Pearl Pettyjohn will be the LC for Clarksville.

All Tax-Aide sites in both Indiana and Kentucky are recruiting volunteers to help prepare taxes. For more information, register on the “Contacts” tab, call 502-394-3443 or e-mail loutax-aide@insightbb.com. Information and orientation sessions are scheduled soon.

VOLUNTEERS NEEDED

Kentucky AARP Tax-Aide has an opening for a Communications Specialist that would serve as the primary contact for print, radio and TV media across the state. Prior experience in working in public relations would be a plus and the volunteer would work from their home and assist the leaders of the 12 districts of Tax-Aide. Specialized training is available immediately in preparation for the coming tax season. Interested persons can contact the KY State Coordinator, Delores Wathen, via phone at 502-394-3443 or e-mail LouTax-Aide@insightbb.com. The position description can be found at http://www.aarp.org/sk/taxaide/leadership.html.

Leadership openings also available include the District Coordinators for Louisville districts 10 and 11. Each DC oversees the local site coordinators in 8-10 sites in the metro area and supervises and directs the program for their respective districts. Prior experience with Tax-Aide is preferred and interested parties can contact Wathen. The position description can be found as above.

Jack Stuart, District Coordinator for Southern Indiana reports the following: “We are looking for one or two preparers who would like to expand his/her horizons by learning how to be an ERO.  And we are looking for experienced preparers (3 years+) who would like to teach a subject in our January training.  Our experienced trainers are present to help and support at all times.”

Volunteers interested the above or other roles can also register their interest by completing the form on the “Contacts” tab of this site. See the “Training” tab for a complete listing of volunteer opportunities. General orientation sessions are held in the fall and preliminary training begins in November.

Deadline Extended to Sept. 30 for Homebuyer Credit

Edited from the IRS Newswire. Eligible taxpayers who contracted to buy a home, qualifying for the first-time homebuyer credit, before the end of April now have until Sept. 30, 2010 to close the deal.

The Homebuyer Assistance and Improvement Act of 2010 extends the closing deadline from June 30 to Sept. 30 for any eligible homebuyer who entered into a binding purchase contract on or before April 30 to close on the purchase of the home on or before June 30, 2010. The new law addresses concerns that many homebuyers might be unable to meet the original June 30 closing deadline.

The IRS reminds taxpayers that special filing and documentation requirements apply to anyone claiming the homebuyer credit. To avoid refund delays, those who entered into a purchase contract on or before April 30, but closed after that date, should attach to their return a copy of the pages from the signed contract showing all parties' names and signatures if required by local law, the property address, the purchase price, and the date of the contract.

Besides filling out Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, all eligible homebuyers must also include with their return one of the following documents:

• A copy of the settlement statement showing all parties' names and signatures if required by local law, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
• For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
• For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Besides providing a tax benefit to first-time homebuyers and purchasers who haven’t owned homes in recent years, the law allows a long-time resident of the same main home to claim the credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. Homebuyers claiming this credit can avoid refund delays by attaching documentation covering the five-consecutive-year period:

• Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
• Property tax records or
• Homeowner’s insurance records.

There are three options for claiming the credit on a qualifying 2010 purchase:

• If a 2009 return has not yet been filed, claim it on Form 1040 for tax-year 2009.
• If a 2009 return has already been filed, claim it on an amended return using Form 1040X.
• Whether or not a 2009 return has been filed, wait until next year and claim it on a 2010 Form 1040.

More details on claiming the credit can be found in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page on IRS.gov.

 TAXPAYER ADVOCATE REPORT

Edited and condensed from the IRS Newswire – Washington – National Taxpayer Advocate Nina E. Olson recently released a report to Congress that identifies the priority issues that the Taxpayer Advocate Service (TAS) will address during the coming fiscal year. The report expresses concern about the adequacy of the IRS taxpayer service, particularly as the IRS begins to implement health care reform, about new information reporting burdens facing small businesses and others, and about certain IRS collection practices.

Areas of particular concern and emphasis in FY 2011 are the following:

TAXPAYER SERVICES. Spending for IRS taxpayer service has been declining in recent years. At the same time, taxpayers are expecting and need more and more assistance. Phone service has declined dramatically from a high of answering 87% of calls in 2004 to a low of 53% in 2008. Walk-in service has also been similarly affected. More and more burden has been placed on the IRS i.e. administering social benefit programs such as Economic Stimulus payments, Making Work Pay credits, and First-Time Homebuyer credits.

The report states that many noncompliant taxpayers are baffled by complex rules and states that additional taxpayer service could improve tax compliance.

NEW BUSINESS AND TAX EXEMPT REPORTING REQUIREMENTS. The report expresses concern that a new reporting requirement contained in the Patient Protection and Affordable Care Act may impose significant compliance burdens on businesses, charities, and government agencies. About 40 million businesses will be subject to the new reporting requirements. The issue will be studied extensively during the current fiscal year and several proposals for modification are expected.

IRS COLLECTION PRACTICES. The report expresses continuing concern that IRS collection practices emphasize collection of past-due liabilities even when doing so inflicts unnecessary or disproportionate harm on taxpayers and jeopardizes future tax collection. Since 1999, lien filings have increased by 475% and levies by about 600%. During that same period, the IRS Collection function has declined by 7%.

ABOUT THE TAXPAYER ADVOCATE SERVICE. TAS IS AN INDEPENDENT ORGANIZATION WITHIN THE IRS WHOSE EMPLOYEES ASSIST TAXPAYERS WHO ARE EXPERIENCING ECONOMIC HARM, WHO ARE SEEKING HELP IN RESOLVING TAX PROBLEMS THAT HAVE NOT OTHERWISE BEEN RESOLVED. The TAS number is 1-877-777-4778 AND MORE INFO IS AVAILABLE AT www.irs.gov/advocate.

GETTING A NEW COMPUTER???

The AARP Foundation Tax-Aide program ( a 501c3 organization) would be pleased to receive your old computer – either desktop or preferably laptop or notebook. More and more taxpayers now prefer their returns to be filed electronically so the need for more computers increases each year.

Your gift will be appropriately recognized and you may be eligible for a deduction on your tax return if you itemize. In any case, it would be greatly appreciated. Contract Tax-Aide at 502-394-3443 or LouTax-Aide@insightbb.com.

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