0

New Tax Incentive for Small Businesses

On March 16th, 2009 the IRS released information on a new tax incentive to help small businesses with deductions in excess of their income. Small business owners who are realizing losses in 2008 can use a new tax provision to get a refund on taxes paid in prior years. The influx of cash is expected to boost this struggling economy by providing an avenue for owners to handle a tough year. Given the downturn in the economy, a record number of small businesses are expected to take advantage of new net operating loss tax provision, covered under the American Recovery and Reinvestment Act, to get a refund of taxes paid over the past five years instead of the usual two. “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.” Businesses that have been searching for their own government bailout program can consider this tax incentive a step in that direction. For some, it will provide a necessary boost to keep the shop running and allow more time for recovery. For others, it will only delay the inevitable demise of a struggling company. The program is only slated for the 2008 tax year, so if companies wish to take advantage of the opportunity they must do so in their current filing. To qualify for the five-year carryback, the business must have less than $15 million in gross receipts over a three-year period ending with the tax year of the net operating loss. Businesses with more than $15 million in gross receipts still qualify to carry back their 2008 NOL for two years. For more information, go to: http://www.irs.gov/newsroom/article/0,,id=205329,00.html Sign up for free CREFrontline updates, if you haven’t already. It's free and has absolutely no obligations.