Tax News

CCH (cch.taxgroup.com) reports:

Responding to the growing subprime mortgage crises, President Bush on December 20 signed legislation to help homeowners who are facing foreclosure. The new law, the Mortgage Forgiveness Debt Relief Act of 2007 (HR 3648) creates a three-year exception to current law so that certain taxpayers do not have to pay federal taxes for debt forgiveness on their troubled loans.
"Clearly it is unfair to tax people on income that doesn't exist. This is particularly true at a time when they have experienced a substantial economic loss on the most significant asset they own and have no way to pay the tax," noted Sen, George V. Voinovich, R-Ohio, a bill co-sponsor attending the White House signing ceremony.
Bush called HR 3648 "a tax reform" bill because it allows homeowners to secure lower mortgage payments without facing higher taxes. The new law also extends a provision allowing homeowners to deduct mortgage insurance payments from their taxable income and eases restrictions on cooperative housing corporations.
Other provisions include tax relief for volunteer firefighters and emergency medical technicians and tax protection for homeowners after the death of a spouse. The new law is fully offset by increased penalties for failure to file S corporation or partnership returns and new requirements for corporate estimated tax payments.
By Paula Cruickshank, CCH News Staff