[FoCHAT] COX10 Airing of Last CHAT Mtg; RH and Taxes; Free Contractor Forum, Mar. 29, Contractor Rating Guide

Fri Feb 29 15:03:33 PST 2008

Dear Citizens Concerned about Rebuilding S. Louisiana,

  1. COX10 is showing the CHAT meeting from last Wed. evening about the Contractor Forum as well as Road Home Program issues of concern this coming week at the following times:

  Sun., March 2, 1:00 PM - 3:00 PM
  Mon., March 3, 1:30 PM - 3:30 PM
  Tues., March 4, noon - 2:00 PM
  Thurs. March 6, noon - 2:00 PM
  Fri., March 7, 1:30 PM - 3:30 PM
  Sat., March 8, 3:30 PM -5:30 PM

  2. An article about taxes on RH grants follows (Note emphasized portion in red, which might help those with Option 1 awards; we welcome comments from CPAs and other experts sent to chatlra at yahoo.com for us to share with Friends of CHAT):

  http://www.nola.com/news/index.ssf/2008/02/irs_can_offer_no_answers_on_ro.html

  Tax issues still murky for Road Home grant recipients
  by David Hammer, The Times-Picayune Friday February 29, 2008, 6:00 AM
  A mere six weeks before the April 15 federal income tax filing deadline, confusion still reigns among local accountants and even Internal Revenue Service officials about how to tax two large groups of Road Home grant recipients who claimed structural casualty losses from the 2005 hurricanes. 

  There are about 5,500 taxpayers who sold their homes to the Road Home in 2007 and about 38,000 Road Home recipients who collected additional compensation grants for low- to moderate-income families during the year. An unknown number of grant recipients from the two groups also claimed structural casualty losses on prior tax returns. 

  An IRS official told about 40 local tax preparers Thursday at a Kenner meeting to wait at least another two weeks before they handle the tax returns of Road Home recipients who face such issues. 

  "Just sit on it," said Aaron Steele, the agency's senior liaison between Louisiana and Mississippi tax professionals and IRS tax code lawyers in Washington. 

  But Steele's wait-and-see advice wasn't accompanied by any offer of an extension in the filing deadline. He said he would run that request up the bureaucratic flagpole. 

  'Dropped the ball' 

  Local accountants say the lack of a clear directive is holding up returns and forcing consumers, some of whom will likely owe thousands of dollars in federal income taxes, to wait until the final weeks of the filing season before learning exactly how much they will have to pay. 

  "The IRS has really dropped the ball on this," said Metairie certified public accountant Dennis Berner. "The IRS has really, in my opinion, been negligent." 

  Meanwhile, for residents who claimed structural casualty losses among 84,000 who got Road Home rebuilding grants, the federal agency months ago settled on a way to tax them under the "tax benefit rule." It essentially says the Road Home money, up to the amount that the structural casualty loss reduced a taxpayer's income, must be added to 2007 income, even if it pushes the taxpayer into a higher tax bracket. 

  Earlier IRS advisories led some to believe their tax would not increase any more than the amount of tax saved in the years they claimed losses. Nothing could be further from the truth for many shocked taxpayers. 

  "The money I saved in '05 by claiming the casualty loss doesn't even come close to what I'll have to pay now," said Yee Lau, who got a Road Home grant to rebuild her damaged New Orleans home. "It's the biggest mistake to claim the casualty loss." 

  Meetings urged 

  The IRS says to use Schedule 525 to figure out how much of the Road Home rebuilding grant proceeds must be added to 2007 income. But that instruction hasn't always filtered down to bewildered taxpayers. 

  The Louisiana congressional delegation, after failing to get recipients of homeowner hurricane relief a special right to amend previous tax returns to drop their casualty loss claim, sent a letter this week to acting IRS Commissioner Linda Stiff requesting town hall meetings in Lake Charles, Houma and New Orleans. The delegation also sought help for those who won't be able to afford the sudden tax increase, more caseworkers at local IRS offices and a toll-free hotline dedicated to Road Home tax issues. 

  Steele said the IRS could hold town hall meetings and consider ways to help taxpayers who can't afford the bills, but he said "staffing issues" could prevent the agency from setting up a hotline or adding caseworkers. The office of Sen. Mary Landrieu, D-La., said it has been told the same thing. 

  "We're getting deluged with calls about how you do this," said Landrieu spokeswoman Stephanie Allen. "If they want people to report correctly, they have to be more engaged in this. They can't just post FAQs (frequently asked questions) on the Web site, and they can't assume every person who has to deal with this issue has readily available Internet access." 

  Revenue hit 

  The congressional effort to resolve the Road Home tax issue has failed so far because federal budget analysts said it would cost the federal government $1 billion in expected revenue. But Marjorie Corcoran, an accountant from Metairie, said she wonders why the IRS couldn't simply let affected taxpayers take the amount of their tax savings from the year they claimed the loss and add it to their 2007 tax burden. Then, Corcoran said, they could pay accrued interest on the difference, just to make sure the U.S. Treasury gets the full benefit of the revenue it would have collected earlier. 

  Steele said he'd ask higher-ranking officials in Washington about the idea, but cautioned that the current tax code likely won't allow it. Allen said Landrieu would consider adding the projected interest payments to a bill to see if that would bring the $1 billion price tag down to a palatable level. 

  Steele said the IRS has had to adapt to almost constant changes in the Road Home program, which along with Mississippi's homeowner aid program is an unprecedented use of federal block grant money. He said the tax code has never before had to be interpreted for such payments. 

  Some accountants give the IRS credit for working with them for months to try to understand the myriad ways the tax code applies to Road Home benefits. 

  "They have been strong advocates for the people here," said Jerry Schreiber, a Metairie accountant who has played a lead role in working with the agency. "They are doing everything they can to help the people here." 

  Unique issues 

  But at several points Thursday, Steele, whose Uptown New Orleans home was damaged during Katrina, said higher-ranking officials in Washington don't always understand the complex issues Louisiana taxpayers are facing. 

  For instance, the IRS is considering applying a U.S. Tax Court case to figure out the tax implications for people who sold their homes to the Road Home, but no final ruling has been made, Steele said. He also said he told IRS lawyers about the additional compensation the Road Home pays to homeowners who make less than 80 percent of the local median income, but he said, "I don't think they fully grasp this one." 

  In fact, there are so many nuances, the local accountants also have trouble keeping track of them. For instance, some accountants at the Jefferson Parish meeting seemed surprised when Steele reminded them that only losses to the primary residence structure, not losses claimed for contents, detached garages, fences and landscaping, should be added to 2007 income. 

  "Most people weren't breaking it down that far, so that's another opportunity for us to try to limit the impact," said Metairie accountant David Huff. 

  Business editor Kim Quillen contributed to this report.
  David Hammer can be reached at dhammer at timespicayune.com or (504) 826-3322.

  3. Home Contractor Forum:  Sat. March 29, afternoon, location to be announced but in NOLA

  Sponsors: LouisianaREBUILDS and CHAT

  Organizers
  Deborah Cotton – editor-in-chief of LouisianaREBUILDS.info, a website and call center to help residents from the hurricane affected region get information about available recovery resources and assistance to help them rebuild their lives, homes and communities.   

  Randy Noel, member of the LRA Housing Task Force, of the Louisiana Home Builders Hall of Fame, and the Green Building Committee for the Home Builders Association of Greater New Orleans. He is also chairman of the Louisiana Statewide Uniform Construction Code Council.

  Melanie Ehrlich, Founder, CHAT 

  Building issues: elevation, getting permits, types of building and elevation techniques including setbacks and local ordinances and codes for building 

  Funding for elevating or storm-proofing your home: ICC and Road Home elevation and hazard mitigation funding

  Rebuilding Materials Price guide 

  Best Practices for hiring and negotiating with a contractor and how to avoid fraud

  How to find building contractors

  How to avoid subcontractor liens –

  How to minimize theft of construction materials

  How to possibly do some of the construction work yourself 

  Session on maintaining your home (plumbing, electrician, alarm systems)

  RSVP at: RSVP at louisianarebuilds.info or toll free (877) 527-3284

  Whether or not you can come to the forum, please rate your contractors, plumbers, electricians, gardeners and read other peoples ratings at:

     http://contractor.louisianarebuilds.info    

      Click on Rate A Contractor at the top

         Please write friend of CHAT at the beginning of your contractor review if you are responding to this message, whether or not you are a member of CHAT.

    Have a good weekend,

  Melanie 

  Melanie Ehrlich
  Citizens' Road Home Action Team (CHAT)

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