In this case, the CNN.com article is out-of-date but, assuming it was prepared by the writer over a week ago (I'll give him benefit of doubt), was accurate until January 8, 2010.

A 'revised' Form 5405 and Instructions are available on the IRS website as of that date, for sales made after November 6, 2009. I have no doubt my tax software will include it in its next update.
The revised form requires certain proof documents be sent with your return so that IRS can verify the taxpayer actually qualifies (blame the numerous frauds reported last fall for this change). The proof required is a copy of the settlement statement (usually Form HUD-1) or other specified documents for the 'first-time' credit and, if the 'long-time resident' homebuyer credit, five years of mortgage information OR property tax records OR proof of insurance on the property. A nuisance to be sure, and I can only repeat...blame the numerous frauds.
AND the form and tax return to which it is attached (the Form 1040 for 2009) must be filed on paper, since these extra documents cannot be processed by electronic filing. So while if currently takes IRS 16-20 weeks to process the credit and send the money (on the old form), the timeframe on processing the new ones is unclear. It will no doubt be at least that long on the revised version.

I want to give IRS a pat on the back. They said they expected a revision to form and instructions by early January. They met that timetable and the requirements aren't unexpected. I do hope they're making the personnel available to handle the work (that's my expectation, not necessarily theirs).
As for staff writer Christie and cnn.com, I wonder if he's waiting for his own homebuyer tax credit payment.

ADDITIONAL NOTE: THE CNN.COM ARTICLE HAS NOW BEEN UPDATED TO REFLECT THE AVAILABILITY OF THE FORM. THE DELAY IN PROCESSING TIME AND REQUIREMENT TO FILE PAPER RETURNS IS ACCURATE.

Individual taxpayers are allowed a personal income tax credit in 2009 and 2010 (called the "nonbusiness property credit") equal to 30% of the sum of (1) amount paid or incurred by the taxpapyer during the year for qualified energy efficiency improvements, and (2) amount of residential energy property expenditures paid or incurred by the taxpayer during the tax year. No credit is allowed to the extent that an excluded energy conservation subsidy (one provided by a public utility to a customer to buy or install an energy conservation measure)was provided for the expenditure.

The dwelling unit must be owned by the taxpayer and used as his principal residence, and must be met at the time of installation (i.e., credit available only for existing homes).

The aggregate amount of nonbusiness energy credits allowed for tax years beginning in 2009 and 2010 cannot exceed $ 1500. This is a non-refundable credit, meaning it can only be used to reduce your tax liability to zero.

Th types of purchases that can qualify include insulation material or systems, exterior windows, skylights, ro doors, metal or asphalt roofs. The key thing to know is that each different type of product type and category has a specified minimum criteria. The seller's representation that an item is 'energy efficient' is not satisfactory; in order to be qualifying, specific values must be met, and the seller/manufacturer should be able to provide the documentation you need. (If they cannot, I recommend you shop elsewhere). A complete list of the tax credits and criteria is available at www.energystar.gov/taxcredits.

Similar but different are the Residential Energy Efficent Property Credits, currently available thru 2016, which provide credits for qualifying (key word again) solar electric property, solar water heating property, small wind energy property, greothermal heat pump property, fuel cell property, Property must be originally placed in service by the taxpayer (must be new, cannot be used).

The rules are complex and very detailed (at the energystar website noted above). If you are investing your money in these types of improvements/replacements for your home, take the time to insure that they qualify for the tax credit.

Now the effects of all this deficit spending and ever-increasing government debt has at least some bureaucrats and politicians talking of...new taxes to pay for it all. Some of the suggestions are clearly political and probably won't go anywhere, but something will have to be done: as other countries come out of recession, they will raise their interest rates and pressure will increase for the U.S. to do the same (it's already begun). Higher interest rates mean higher debt service costs (in that way at least, the government is no different than the individual). Therefore, part of the pressure is beyond the control of the U.S. Government.

If Congress cannot raise enough revenue to pay the bills by increasing taxes on 'the rich' (the $ 200,000 to $ 250,000 a year crowd, as they define it), they have to lower the threshhold.

The pressure from Congress and the White House on the IRS to 'close the gap' is tremendous. In addition to tax changes, the government has increased most of its fees and many of its penalties, with more to increase for the 2009 tax year (what we'll file in 2010). For example, the minimum late-filing fee for a personal income tax return is now $ 125 (and IRS DOES assess it, even on very small tax levels). For business returns filed late in 2010, penalties will be based on time late and, where K-1s are involved, the number of K-1s; the penalty amounts are doubled. And interest is charged.

Ever-increasing fees...that sounds like what the airlines do, to the frustration of many fliers.

The significant changes will more likely come in 2011 than 2010 (after the elections next year), but it's coming.

So what do we do, to plan for this and minimize the impact? Until the changes are known, it's hard to tax-plan more than a year or two out. At this time, we're planning end year 2009 and 2010, because those are known (we hope). Anything else is conjecture.

And no, none of my clients have been happy to hear this.

There are other limits, primarily that the home cannot cost more than $ 800,000. A number of loopholes that had been used by creative (or unscrupulous) taxpayers have been closed (sorry, your four year old cannot buy a home and qualify for the credit any longer).

If all these details and conditions sound confusing, it's because they are. This is typical of most tax credits, which are targeted. Compared to the Home Buyer Tax Credit, the Cash for Clunkers program earlier this yearwas pretty straight-forward.

So what to do? IF you qualify in 2009, you can take the credit on an amended 2008 return or a 2009 return, which allows you two opportunities to fit into the conditions and limitations; if you qualify in 2010, you can take it on the 2009 return or the 2010 return.

A side-note: as we've mentioned previously, the IRS is auditing more of these Home Buyer Tax Credit claims, by requiring copies of back-up documentation. We have begun including those copies with the tax return requesting the credit, to expedite the process at IRS and for our clients, which currently takes 16-20 weeks to get a taxpayer the money from the credit. The new law requires copy of the closing statement be attached, which indicates they are working to streamline the process.

We've had many clients call over the past several months, concerned that their take-home pay had increased too much and they might owe money to IRS in April 2010. In some situations, adjustments to withholding rates were made.

If anything about this realization by the Government surprises me, it's their belief that only approximately 15 million taxpayers will be caught in the anomolies; I believe it will be many more, if our client mix is a representative sample.

What can you do now? It's late in the year to fix 2009, but we can check your amounts for you and give you a guesstimate of where you stand. An Estimated Tax payment in January can help.

More importantly, the issue will recur in 2010 unless changes are made by the taxpayer.

Since the withholding table changes were required of all employers, it's possible (the issue has not be addressed) that IRS will be flexible on any underpayment penalties caused by this program. Wait and see...

So if you're used to a refund, expect a lesser one. If you tend to come out where withholding equals taxes with little due or refunded, you may well owe.

An important consideration is the purchasing of Capital Assets, which are depreciated over time, usually 5 years or more, as defined by law. For 2009, there is 'bonus depreciation' which allows 50% of the asset cost to be deducted in 2009, the balance recovered by regular depreciation; this is available for machinery, equipment, land improvements, and other things (anything with useful life 20 years or less). Also, the one-year expensing of capital assets significantly decreases in 2010 (up to $ 250,000, with limits, for 2009, only up to $ 134,000 for 2010). Review your spend for this year and your needs and budget for next year.

Bonuses paid...lots of rules here. Normally, you deduct the pay in the year paid, but you can accrue certain bonus expenses into 2009 and pay in early 2010. Rules and conditions depend on your accounting method and whether or not a 50% owner of the business.

Dividends...normally not issued from a small business as they are taxable to recipient but not deductible to the business paying them. But if the owner is in a low or the 0% tax bracket on long-term gains, it may make sense to do it.

And your net income may be subject to the Alternative Minimum Tax, which means you might want to do the opposite of the more logical 2009-tax-saving option.

If you have any questions about your particular situation, please give us a call.

More later...
Bob

Less has been made (although it did make the news) of the fraud that has been uncovered by people claiming the credit not entitled to it. The IRS has responded over the past few weeks with increased auditing of the claim requests, including the use of Form 886-H-FTHBC, which asks for additional detail to be provided before the credit will be paid. This additional information includes copies of the final closing contract (usually the HUD-1 Settlement Statement), with all signatures, and certain proofs that the property is the residence of the taxpayer.

As a preparer, any First Time HB Credit forms that I file going forward will include all this information as attachment, to expedite the IRS review process. Meantime, if you get the letter from IRS requesting the additional information, please provide the information as quickly as possible and keep a copy of everything for your files.

And still less has been made of the reality that the IRS processing time from filing the amendment for the credit to getting the money is currently running 16-20 weeks; there is much anecdotal information on websites and blogs. Given the number of folks requesting this credit and those who abuse the system, this is not a surprising time-frame.

So don't spend the $ 8,000 assuming that the credit check will be in your mailbox before your next credit card bill is due.

Bob