Smile & Move

After several posts related to taxes here is something to truly smile about. smile&move is a call to positive action . . . to be happy and do something . . . a reminder of how we should approach our work (whether that work is done in the office, on the field, in the classroom or at home.)

And Happy St. Patrick's Day--after all Peggy is 1/8th Irish.

More News from the IRS

The IRS has sent two more email blasts which contain items that are on point as all of us are feverishly trying to complete our 2008 tax returns. If you want to get a head start on preparing 2009 tax returns join us on April 13th at Northwest Alpacas for our Alpaca Taxes and Business Plan Seminar.

Issue Number: TT-2009-51

Inside This Issue

Seven Important Points about Penalties

Taxpayers who do not file their return and pay their tax by the due date may have to pay a penalty. Here are seven things you should know about failure-to-file and failure-to-pay penalties.

1. The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return and explore other payment options in the meantime.
2. The penalty for filing late is usually 5 percent of the unpaid taxes for each month of part of a month that a return is late. This penalty will not exceed 25 percent of the taxpayer’s unpaid taxes.
3. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
4. You will not have to pay a failure-to-file penalty if you can show that you failed to file on time because of reasonable cause and not because of willful neglect.
5. You will have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid.
6. If you filed an extension and you paid at least 90 percent of your actual tax liability by the due date, you will not be faced with a failure-to-pay penalty.
7. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.

Link: Avoiding Penalties and the Tax Gap

Is it Too Good To Be True? Home-Based Business Tax Avoidance Schemes

NOTE: This headliner is current through the publication date. Since changes may have occurred, no guarantees are made concerning the technical accuracy after the publication date.

Headliner Volume 263-March 1, 2009

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. The home office deduction is available for homeowners and renters, and applies to all types of homes, from apartments to mobile homes.However, the Internet may provide a new medium for promoters to sponsor illegal tax avoidance schemes. Many of these schemes involve the use of fictitious online businesses including online retail and services, online auction sales, and bartering. Some of these tax avoidance schemes suggest the conversion of a hobby or recreational activity into a “business” in order to claim personal expenses improperly as business expenses.

Taxpayers should regard as highly suspect any investment scheme or promotion that claims to allow a person to deduct what would normally be personal expenses and not ordinary and necessary business expenses. As always, a business must truly exist prior to claiming any business expenses. Read on . . .

New Law Extends Net Operating Loss Carryback for Small Businesses

This was released by the IRS today--one note for those of us who farm for a living--the tax code already allows for a five year carry back on farm related losses--this will allow any non-farm losses to also be carried back five years.

IRS To Ensure Refunds Paid Timely

Washington – The Internal Revenue Service announced today that small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years.

To accommodate the change in tax law, the IRS today updated the instructions for two key forms – Forms 1045 and 1139 -- that small businesses can use to make use of the special carryback provision for tax year 2008. These forms are used to accelerate the payment of refunds.

The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a net operating loss (NOL) in 2008 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. The IRS released legal guidance today in Revenue Procedure 2009-19 outlining specific details. Some taxpayers must make the election to use this special carryback by April 17, 2009.

“The new net operating loss provisions could throw a lifeline to struggling businesses, providing them with a quick infusion of cash,” said IRS Commissioner Doug Shulman. “We want to make it as easy as possible for small businesses to take advantage of these key tax benefits.”

With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. The IRS is putting in special steps to ensure timely processing of these refunds to help small businesses during this difficult period.

Small businesses with large losses in 2008 may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns.

The normal two-year carryback remains available if the small business does not elect the special carryback provision. If the loss exceeds the income for the carryback period, the taxpayer can continue to carry forward the remaining balance of the NOL for up to 20 years.

For small businesses that use a fiscal year, this special carryback may be used for an NOL in either a tax year that ends in 2008 or a tax year that begins in 2008. Once a taxpayer makes this election, it may not be changed.

To qualify for the new five-year carryback provision, a small business must have no greater than an average of $15 million in gross receipts over a three-year period ending with the tax year of the NOL. Businesses with more than $15 million in gross receipts still qualify to carry back their 2008 NOL for two years.

There are several methods that a small business uses to elect the new provision as detailed in the Revenue Procedure.

If a small business previously elected to waive the carryback of 2008 NOL but now wants to elect this special carryback, the small business may revoke its previous election to waive the carryback. The election revocation must be made on or before April 17, 2009.

Generally small businesses that are not corporations (including sole proprietorships filing schedule C with their Form 1040) may accelerate a refund by using Form 1045, Application for Tentative Refund.

Corporations with NOLs may also accelerate a refund by using Form 1139, Corporation Application for Tentative Refund.

The IRS will be closely monitoring these filings and will provide additional staff as needed to process these forms. The IRS will work to issue refunds within 45 days or even earlier to the degree possible.

In addition, Frequently Asked Questions have been posted on the IRS.gov web site. Small businesses that file Form 1040 can also call 1-800-829-1040 with NOL questions. Corporations can contact 1-800-829-4933 with NOL questions.

Form 1045 or Form 1139, whichever the taxpayer uses, generally must be filed within one year after the end of the tax year of the NOL. In addition, the current year’s tax return must be filed by the date the Form 1045 or Form 1139 is filed. Form 1045 and Form 1139 are filed at the same place the taxpayer’s return is filed, as listed on the return instructions.

Accelerated refunds paid via Form 1045 or Form 1139 is described as “tentative” because the applications for refunds are potentially subject to review at a later date. Form 1045 Instructions and Form 1139 Instructions on http://www.irs.gov/ provide more information on the accelerated refund option.

Related Items:
Revenue Procedure 2009-19
Questions and Answers for ARRA - Section 1211 5-year Net Operating Loss Carryback Election for Small Businesses
Publication 536-Net Operating Losses for Individuals, Estates and Trusts

Five Tips to Avoid Tax Time Stress

Monday is the filing deadline for corporate returns--since the 15th falls on a weekend the deadline is moved to Monday, March 16th. For partnerships and individuals the deadline will be Wednesday, April 15th--no reprieves for the rest of us. So just in time to ease our tax frustration our friends at the IRS released the Tax Tips shown below.


Are you looking for ways to avoid the last-minute rush for doing your taxes? Here are some stress-relieving tips to help you.

1. Don’t Procrastinate – Resist the temptation to put off your taxes until the very last minute. Your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.

2. Visit the IRS Online – In 2008, there were more than 330 million visits to IRS.gov. Anyone with Internet access can find tax law information and answers to frequently asked tax questions.

3. File Your Return Electronically – Nearly 90 million taxpayers filed their returns electronically in 2008. Aside from ease of filing, IRS e-file is the fastest and most accurate way to file a tax return. If you’re due a refund, the waiting time for e-filers is half that of paper filers.

4. Don’t Panic if You Can’t Pay – If you cannot pay the full amount of taxes you owe by the April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options at 1-800-829-1040. The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise. More than 75 percent of taxpayers eligible for an Installment Agreement can apply using the Web-based Online Payment Agreement application available on IRS.gov. To find out more about this simple and convenient process type “Online Payment Agreement” in the search box on the IRS.gov homepage.

5. Request an Extension of Time to File – But Pay on Time If the clock runs out, you can get an automatic six month extension of time to file to October 15. However, this extension of time to file does not give you more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late payment penalty if you have not paid at least 90 percent of your total tax by that date. See IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return for a variety of easy ways to apply for an extension. Form 4868 is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). Taxpayers needing Form 4868 should act soon to be sure they have the item in time to meet the April deadline.

Links:

Official Payments Corporation
Link2Gov Corporation
Electronic filing
Free File
Electronic payment options
Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return (PDF)
Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns

Above courtesy of IRS Tax Tips Issue Number: TT-2009-50

Fiber Sorting Events Calendar

March 28-29, 2009 Seminar/Sort
Saturday - "Fiber Sorting for Maximum Profit" - Presented by Carrie Hull
Sunday - hands on assistance with sorting during shearing
Little Blessings Fiber Farm
79809 Stewart Creek Road
Clatskanie, OR 97016
Contact LaVeta Roberts
Phone: 503-701-1167
littleblessingsalpacas@gmail.com
www.littleblessingsalpacas.com/calendar.htm

April 3 thru 5, 2009
Fiber Symposium at Gaston College Textile Center in Belmont, NC.
Presentation of North American Alpaca Fiber Producers
Presenter: Robyn Kuhl
www.alpacafibersymposium.com/index.html

May 18, 2009
Sorting at Snowy River Alpacas
Colfax, CA
Certified Sorter: Robyn Kuhl
Contact Hailey Parker if you are interested in assisting with shearing.
Phone: 530-346-6885
snowyriver1@earthlink.net
www.snowyriveralpacas.com

June 27, 2009
Seminar: A Good Yarn
Certified Sorter: Carrie Hull
Registration: $50 per person includes course materials, snacks and lunch
Alpacas at Tucker Creek
36281 Tucker Creek Lane
Astoria, OR 97103
Contact Peggy Stevens
Click here for more details
Phone: 877-915-0522 Toll Free
peggy@alpacadigest.com
www.alpacadigest.com

June 28 and 29, 2009
Shearing
Certified Sorter: Carrie Hull
Alpacas at Tucker Creek
36281 Tucker Creek Lane
Astoria, OR 97103
Contact Peggy Stevens
If you are interesting in assisting with shearing please contact us by Friday, June 26th
If you are interesting in watching admission is a non-perishable food item for either the Clatsop County Food Bank or the Clatsop County Animal Control Shelter.
Click here for more details
Phone: 877-915-0522 Toll Free
peggy@alpacadigest.com
www.alpacadigest.com

To learn more about fibersorting and the Certified Sorted method check out these websites www.naafp.us and www.fibersorting.com. As we learn of other events we will post them here.

Annual Shearing Days

Alpacas at Tucker Creek will be shearing on Sunday, June 28th and Monday, June 29th. If that seems a little late in the year to be shearing, check with anyone who was at the farm last year. They will share that Mother Nature did not care what the date was when she scheduled the weather for our very important weekend--it was very reminiscent of winter. So, the executive decision was made to shear later--don't know how much later we can go if this weekend doesn't work out but we are going to try the end of June.

Our annual fiber seminar will be held on Saturday, June 27th--see previous post for details.

Carrie Hull will be our resident certified sorter again this year. Several of the individuals who attended her seminar last year have started the two year apprenticeship program and will be joining her this year.

If you wish to help on either day please contact us no later than Friday, June 26th, so we can finalize our duty roster in advance of the event. Shearing on Sunday will begin at 1:00 pm (or whenever Armando arrives). Shearing on Monday will begin at 8:00 am and will be over whenever Armando is. Note the overriding theme here--it all begins and ends with Armando Victoria.

If you wish to watch the event but not get dirty (and we do tend to get dirty) the cost of admission is a nonperishable food item for the Clatsop Community Action Regional Food Bank or the Clatsop County Animal Control Shelter.

Look forward to seeing you there. It is a lot of work but it is our harvest and it is the culmination of all our year long efforts. And from the alpacas' point of view--they are just thrilled to get rid of all that fiber. Even little ones get shorn--here is a shot of Candy and her mom, Queen Amidala, after her tips were shorn at six days of age--you should come back this year just to see what she looks like now. Absolutely gorgeous!

A Good Yarn

Yarn is the base of all textiles. As a breeder of fiber producing animals, alpaca breeders need to understand how what you do affects this basic building block.

A Good Yarn walks you through how yarns are constructed, why they are constructed the way they are and the affect fiber health and fiber condition has on the yarns produced.

This three hour seminar will be presented by Carrie Hull from Coarse Broads at Alpacas at Tucker Creek in Astoria, OR on Saturday, June 27th as part of our three day shearing event. The cost of the seminar is $50 which includes course materials, continental breakfast and lunch. The cost of the course is included in the mentoring package for any clients of Alpacas at Tucker Creek.

As many of you may recall, 2008 was our first year to include fiber sorting in our shearing process. To say it was a success would be an understatement. In the big scope of things this service is worth so much more than the charge per fleece. Just knowing that by the end of shearing day all of the fiber is ready to go with recommendations for its highest and best use along with details we can use for future breeding decisions--makes us wish we had known about this years ago.

Another sorting event will find Peggy helping Hailey Parker at Snowy River Alpacas on May 18th in Colfax, CA, where Robyn Kuhl will be sorting her fiber. Find an event near you (be it a seminar or shearing event) and see what a huge benefit fiber sorting provides for your farm. A list of events is being compiled and will be posted soon. To learn more about the Certifed Sorted process go to www.naafp.us.

A Llama shares a Starburst

Starburst has a commercial including a llama. Not an alpaca--but still really cute. Sun Tzu would probably do this in a heart beat--but don't think it is a good idea to create such bad behavior in our star herdsire. He is bad enough with carrots.

Just thought you would all enjoy seeing this.

Tax Planning and Business Plans @ Northwest Alpacas

Alpaca Business and Tax Planning

Create Your Own Personal Business and Tax Plan

Instructors: Fred Kraft , Peggy Stevens

Date: Friday, March 20, 2009 Rescheduled for Monday, April 13, 2009

Course Description: Ideally, people who are considering purchasing their first alpacas will take this class before they spend their money. Most successful businesses start with a plan and we will help you create one for the alpaca business. The instructors have many years of experience as successful, profitable alpaca ranchers. (Includes a 10 year personalized business plan.) Click here to enroll.

Fred and Peggy generally present this seminar a couple of times each year. If you are thinking about buying your first alpacas this is a wonderful next step as you plan your operation. If you have been in the business and maybe are not accomplishing what you had hoped come to get a new focus on your business.

Look forward to seeing you there.