Better Business Blog

On November 5, 2009, the House of Representative passed H.R. 3548, the Worker, Homeownership, and Business Assistance Act of 2009″.  The measure was OK’d by the Senate on November 4, so it is cleared for the President’s expected signature.

The Act contains several changes for business. The two most significant changes that affect clients we serve are as follows:

Five-Year Carryback of NOLs Extended to Included 2009 NOLs
A net operating loss (NOL) is the excess of business deductions over gross income in a particular tax year.  In general, NOLs may be carried back two years and forward 20 years.  The new law extends the carry back period and provides an election for most taxpayers to increase the carryback period for an applicable NOL to 3, 4, or 5 years.

The amount of the NOL that can be carried back to the 5th tax year before the loss may not be more than 50% of the taxpayer’s taxable income for that 5th preceeding tax year.

Increased Penalty for Failure to File Partnership or S Corporation Returns
Civil penalties apply for failure to file partnership and S corporation income tax returns.  Currently the penalty is $89 times the number of partners or shareholders for each month the failure continues, up to a maximum of 12 months. That law went into effect for returns required to be filed after Dec. 31, 2008

The new law substantially increases this penalty to $195 per partner or shareholder per month the return remains unfiled, up to a maximum of 12 months.

Steve Trojan, CPA is owner of SMT & Associates, Inc, a Crystal Lake IL based tax and accounting firm, and Complete Payroll Inc, (www.completepayrollinc.com) a payroll processing firm.