The foregoing transmittal was prepared by Burt M. Romanoff. Burt Romanoff, John Compton and John Lopez comprise the Tax, Estate Planning and Probate Department in the Sarasota law firm of Norton, Hammersley, Lopez & Skokos, P.A. Founded in 1988, the firm has consistently provided quality legal services to clients throughout the State of Florida and the United States. With 11 attorneys and over 100 years in combined legal experience, the firm holds the Martindale-Hubbell Law Directory's highest attainable rating for legal services and ethics. Some of the firm's legal areas of expertise includes real estate development and leasing, banking and finance, alternative dispute resolution, general business and commercial litigation (with an emphasis in construction litigation), business organization law, tax, estate planning and probate. To learn more about the firm, and its various areas of practice, please visit our website at http://www.nhlslaw.com/. If you have any tax questions for Mr. Romanoff, please feel free to respectively e-mail him at bromanoff@nhlslaw.com.
2008 ECONOMIC STIMULUS PACKAGE: What does it all mean and where's my check?
Individual Tax Rebates
Uncle Sam might say that the "check is in the mail" but don't wait by your mailboxes just yet. Legislation was passed by the House on Tuesday, with the White House's blessing, that would give tax rebates to the majority of tax filers, in amounts ranging from $300 to $1,200 with most filers entitled to rebates of $600 (individuals) to $1,200 (joint filers), plus additional rebates for filers with dependent children ($300). The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps are higher for those with children. The Senate is also considering a similar bill that would send rebates of $500 to $1,000 per eligible filer who earned at least $3,000 last year with no phase outs for those with higher income. The Senate plan would include rebates for 20 million senior citizens not included in the House plan and could include an extension of unemployment benefits and other entitlements.
Leaders in both chambers have set a goal of Feb. 15 to send a measure for the President's signature. It should be noted that the Senate has not signed off on the deal and may seek to change the final legislation, as outlined above. Politicians would like to get checks in your hands as soon as possible but, with tax season approaching, the IRS will be busy for a few months and most estimates are that the first rebate checks will be mailed in June of this year at the earliest.
Interestingly, low income earners who did not pay taxes due to the Earned Income Tax Credit or whose taxes were less than the amount of the rebate will be entitled to a rebate. Nevertheless, the rationale behind the rebate is to stimulate economic growth. Statistically, lower income earners are more likely to spend the money rather than save it for a rainy day. Estimates are that of the roughly $150 billion dollars to be rebated to the American people, two-thirds of the rebates will be spent within six months of receipt, providing a measurable stimulus to the economy.
Business Incentives
Relief for businesses, small and large, is another aspect of the stimulus program. While the finer details of the package are still being worked out, the goal is to fast-track legislation and have it ready for the President's signature in the next couple of weeks. For the government, this is warp speed. The Congressional Budget Office's tax stimuli recommendations for businesses are as follows:
- Tax incentives and accelerated depreciation schedules for investment in plants and equipment.
- More generous expensing rules for small businesses.
- Extending carry back provisions for net operating losses beyond two years.
- A potential cut in corporate tax rates.
The foregoing is a brief summary of the proposed tax law changes. For specific advice, consult a tax professional.
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