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Seven Facts about the Nonbusiness Energy Property Credit

Thinking about making some energy saving improvements to your home this summer? Taking some energy saving steps now may lead to bigger tax savings next year. The Nonbusiness Energy Property Credit, a tax credit for making energy efficient improvements to homes was increased as part of the American Recovery and Reinvestment Act of 2009.

Here are seven things the IRS wants you to know about the Nonbusiness Energy Property Credit:

  1. The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined.
  2. The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
  3. To qualify as “energy efficient” for purposes of this tax credit, products generally must meet higher standards than the standards for the credit that was available in 2007.
  4. Manufacturers must certify that their products meet new standards and they must provide a written statement to the taxpayer such as with the packaging of the product or in a printable format on the manufacturers’ Website.
  5. Qualifying improvements must be placed into service after December 31, 2008, and before January 1, 2011.
  6. The improvements must be made to the taxpayer’s principal residence located in the United States.
  7. To claim the credit, attach Form 5695, Residential Energy Credits to either the 2009 or 2010 tax return. Taxpayers must claim the credit on the tax return for the year that the improvements are made.

Homeowners who have been considering some energy efficient home improvements may find these tax credits will get them bigger tax savings next year.

For more information on this and other key tax provisions of the Recovery Act, visit IRS.gov/recovery.
Links:

Form 5695, Residential Energy Credits ( PDF)

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Deepwater Horizon Fund 20 Billion Dollars

WASHINGTON – Associate Attorney General Tom Perrelli issued the following statement on the Department of Justice’s negotiations to establish an escrow account for the Deepwater Horizon oil spill:

“Today, the department announced that it had completed negotiations to establish a $20 billion fund to provide the necessary resources to those suffering from the effects of the oil spill in the Gulf of Mexico. We are pleased that BP made an initial contribution and has taken an important step toward honoring its commitment to the President and the residents and business owners in the Gulf region. We have made clear that the company still needs to ensure that the necessary funds will be available if something happens to the subsidiary that established the trust and we look forward to completion of an appropriate security arrangement in the near future.”

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Do You Need to Amend Your Tax Return?

If you forgot to include some income or to take a deduction on your tax return – you can correct it by amending your tax return.

In some cases, you do not need to amend your tax return.  The Internal Revenue Service usually corrects math errors or requests missing forms – such as W-2s or schedules – when processing an original return. In these instances, do not amend your return.

However, you should file an amended return if any of the following were reported incorrectly:

  • Your filing status
  • Your dependents
  • Your total income
  • Your deductions or credits

You may also elect to amend your 2009 return if you are eligible to claim the first-time homebuyer credit for a qualified 2010 home purchase.  The amended tax return will allow you to claim the homebuyer credit on your 2009 return without waiting until next year to claim it on the 2010 return.

Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040, 1040A or 1040EZ. Be sure to check the box for the year of the return you are amending on the Form 1040X, Line B. If you are amending more than one tax return, prepare a 1040X for each return and mail them in separate envelopes to the appropriate IRS processing center.. The 1040X instructions list the addresses for the centers.

The newly revised Form 1040X (Rev. January 2010) now has only one column used to show the corrected figures. There is an area on the front of the form where you explain why you are filing Form 1040X.

If the changes involve other schedules or forms, attach them to the Form 1040X. For example, if you are filing a 1040X because you have a qualifying child and now want to claim the Earned Income Credit, you must attach a Schedule EIC, Earned Income Credit to show the qualifying person’s name, year of birth and Social Security number.

If you are filing to claim an additional refund, wait until you have received your original refund before filing Form 1040X. You may cash that check while waiting for any additional refund. If you owe additional tax for 2009, you should file Form 1040X and pay the tax as soon as possible to limit interest and penalty charges. Interest is charged on any tax not paid by the due date of the original return, without regard to extensions.

Generally, to claim a refund, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.

Form 1040X and instructions are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

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Small Business and Self-employment as Income Mobility Mechanisms‏

Earlier research on contributions of small businesses to the labor market entry,
skill training, and wage growth of youth confirmed that small businesses
provide most first-time job opportunities for young labor market entrants.
Moreover, the skills and experience of those entry jobs paid off handsomely for
the youth, as seen in their subsequent wage growth. This paper extends the
observation period for gauging income growth using the National Longitudinal
Surveys of Youth (NLSY). It tracks employment and income experiences in a
later phase of the typical work life and finds that relative income mobility
continued to be the norm even as workers grew older and more experienced. A
key specific finding is that the incidence and extent of mobility is higher for
self-employed individuals than for paid employees.

A copy of the report is located at: 
and the research summary
can be found here SBA Research Summary:

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Miami-Area Husband and Wife Plead Guilty in $13.7 Million HIV Infusion Clinic Fraud

Scheme Two Individuals Sentenced to Prison for Separate HIV Infusion Scheme in Miami

WASHINGTON – Miami-area husband and wife Modesto and Victoria de la Vega pleaded guilty today in U.S. District Court in Miami for their participation in a $13.7 million HIV infusion Medicare fraud scheme, announced the Departments of Justice and Health and Human Services (HHS).   Also today, two Miami-area residents were sentenced to prison for their participation in a separate HIV infusion Medicare fraud scheme.

Modesto de la Vega, 59, and his wife, Victoria de la Vega, 59, pleaded guilty before U.S. District Court Judge Adalberto Jordan to one count of conspiracy to defraud the United States, to cause submission of false claims to Medicare, and to pay health care kickbacks; one count of conspiracy to commit health care fraud; and three counts of submitting false claims, as charged in a March 2010 indictment.   At sentencing, scheduled for Nov. 5, 2010, Modesto and Victoria de la Vega each face a maximum penalty of five years in prison for the conspiracy to defraud the United States count and each false claims count, and 10 years in prison for the health care fraud conspiracy count.

According to plea documents, Modesto de la Vega was an owner and operator of T&R Rehabilitation Professional Corp., a Miami clinic that purported to provide expensive injection and infusion treatments to patients with HIV.   Victoria de la Vega was an office assistant at T&R.   Modesto de la Vega admitted at his plea hearing that he agreed with his co-defendants and others to enlist patient recruiters and patients, among others, into a scheme to defraud Medicare.   Modesto and Victoria de la Vega admitted that they knew the patients at T&R did not need and/or did not receive the purported services, and that it would be necessary to pay kickbacks and bribes to the patients so that T&R could bill the Medicare program for the HIV infusion services that were not medically necessary and/or were not provided.  

The defendants admitted that from approximately January 2003, through approximately July 2005, they and their co-defendants caused T&R to submit fraudulent claims to the Medicare program in the amount of approximately $13.7 million.   Medicare paid approximately $4.1 million of these fraudulent claims.

In a separate and unrelated case, two Miami-area residents were sentenced today by U.S. District Judge Ursulla Ungaro in the Southern District of Florida for their participation in a similar HIV infusion Medicare fraud scheme.   Keith Earnest Humes, a patient recruiter for a fraudulent HIV/AIDS infusion clinic known as Tendercare Medical Center Inc., was sentenced to 84 months in prison and three years of supervised release, and was ordered to pay restitution jointly and severally with co-defendants in the amount of $539,485.   Lawrence Edward Humes, also a patient recruiter for Tendercare, was sentenced to 33 months in prison and three years of supervised release, and was ordered to pay restitution jointly and severally with co-defendants in the amount of $222,967.   In addition, based on the court’s consideration of relevant conduct, Keith Humes was ordered to pay further restitution in the amount of $346,889.

According to court documents, Keith Humes and Lawrence Humes admitted that they conspired with each other and other individuals to defraud Medicare by submitting false claims for injection and infusion treatments that were medically unnecessary and that in most instances were not provided.   Keith Humes and Lawrence Humes paid kickbacks to beneficiaries in return for their Medicare numbers and signatures, which Tendercare used to submit the false claims.   Between January 2005 and December 2007, Tendercare submitted approximately $5.8 million in false and fraudulent claims to Medicare for treatments that were medically unnecessary or never provided.   Medicare paid Tendercare approximately $2.7 million.

Today’s guilty pleas and sentences were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies , Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

The cases were prosecuted by attorneys from the Criminal Division’s Fraud Section, including Trial Attorneys N. Nathan Dimock, Joseph Beemsterboer, Charles D. Reed, former Trial Attorney Michael Padula, former Fraud Section Assistant Chief John S. (Jay) Darden and former Fraud Section Special Trial Attorney Martha Talley, on detail from HHS-OIG.   The cases were investigated by the FBI and HHS-OIG and were brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.   

Since its inception in March 2007, the Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 810 individuals and organizations that collectively have billed the Medicare program for more than $1.85 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

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Five Facts about the Making Work Pay Tax Credit

 

1. This credit – still available for 2010 – equals 6.2 percent of a taxpayer’s earned income. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.

2. Eligible self-employed taxpayers can benefit from the credit by evaluating their expected income tax liability and, if they are eligible, by making the appropriate adjustments to the amounts of their estimated tax payments.

3. Taxpayers who fall into any of the following groups during 2010 should review their tax withholding to ensure enough tax is being withheld. Those who should pay particular attention to their withholding include:

  • Married couples with two incomes
  • Individuals with multiple jobs
  • Dependents
  • Pensioners
  • Workers without valid Social Security numbers

Having too little tax withheld could result in potentially smaller refunds or – in limited instances –small balance due rather than an expected refund.

4. The Making Work Pay tax credit is reduced or unavailable for higher-income taxpayers. The reduction in the credit begins at $75,000 of income for single taxpayers and $150,000 for couples filing a joint return.

5. A quick withholding check using the IRS Withholding Calculator on IRS.gov may be helpful for anyone who believes their current withholding may not be right. Taxpayers can also check their withholding by using the worksheets in IRS Publication 919, How Do I Adjust My Tax Withholding?. Adjustments can be made by filing a revised Form W-4, Employee’s Withholding Allowance Certificate. Pensioners can adjust their withholding by filing Form W-4P, Withholding Certificate for Pension or Annuity Payments.

For more information about this and other key tax provisions of the Recovery Act, visit IRS.gov/recovery.
Links:

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Dietary Supplement Maker to Pay $5.5 Million to Settle FTC False Advertising Charges

FTC Challenges Claims that Supplements Cause Weight Loss and Treat or Prevent Colds, Flu, Allergies, and Hay Fever

As part of its ongoing efforts to stop bogus health claims, the Federal Trade
Commission is requiring a major marketer of dietary supplements to pay $5.5 million to settle charges that it falsely advertised that its supplements could help consumers lose weight and treat or prevent colds and other illnesses.

The $5.5 million will be used for refunds to consumers who purchased Accelis, nanoSLIM, and any Cold MD, Germ MD, and Allergy MD product.  These supplements were sold over the Internet and were widely available at retail stores.  In addition, the settlement requires the marketer to stop making deceptive health claims about the products.

The FTC charged Iovate Health Sciences U.S.A. and two affiliated Canadian
companies with deceptively advertising their supplements using television ads, Internet websites, and print ads in national magazines. 

Using photos of white-coated individuals depicted as medical doctors, Iovate’s ads claimed that dietary supplements Cold MD and Germ MD treat or prevent colds and flu, and that Allergy MD treats or prevents allergies and hay fever, according to the FTC complaint.  Some ads also proclaimed that the products’ effectiveness was clinically proven.  The FTC complaint alleges that these claims were false and unsubstantiated.

The FTC also charged that Iovate falsely advertised that one of the supplements – Allergy MD Rapid-Tabs – was homeopathic. 

The Iovate companies also ran ads with deceptive claims that their weight-loss supplements Accelis and nanoSLIM caused weight loss, and were clinically proven to do so, according to the FTC complaint.  The ads said consumers could “Lose 32 lbs. FAST” using nanoSLIM, or one to two pounds per week using Accelis.  The ads falsely claimed that Accelis was scientifically proven to increase the body’s metabolism, and featured testimonials from users claiming they had lost significant amounts of weight, according to the FTC.

The settlement bars the Iovate companies from:

  • claiming that any drug or dietary supplement they advertise or sell is effective for diagnosing, curing, mitigating, treating, or preventing any disease unless the claim is approved by the Food and Drug Administration;
  • claiming that Allergy MD Rapid-Tabs is homeopathic unless the claim is truthful, and unless the product is recognized under the Federal Food, Drug, and Cosmetic Act as homeopathic;
  • representing that their products cause weight loss or rapid weight loss unless the claims are truthful and backed by at least two adequate and well-controlled human clinical studies;
  • claiming that their products provide any other health-related benefit unless the claim is supported by competent and reliable scientific evidence; and
  • misrepresenting the results of any test or study. 

Although FDA approval of health-related claims generally is not required for compliance with the FTC Act, in this case, the FTC determined that requiring FDA pre-approval before the defendants make disease claims for dietary supplements and drugs will provide clearer guidance that will facilitate the defendants’ compliance with the FTC order and make the order easier to enforce.

The complaint against Iovate Health Sciences USA also names its Canadian parent company, Iovate Health Science Group, Inc. (now known as Kerr Investment Holding Corp.), and a Canadian subsidiary of that company, Iovate Health Sciences, Inc., as defendants in this case. 
The Commission vote to authorize the staff to file the complaint and stipulated final order was 5-0.  The FTC will file its complaint and stipulated final order in the U.S. District Court for the Western District of New York.   

NOTE:  The Commission files a complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.  The complaint is not a finding or ruling that the defendants have actually violated the law.  A stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation.  A stipulated final order requires approval by the court and has the force of law when signed by the judge.

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Administration Announces Regulations Requiring New Health Insurance Plans to Provide Free Preventive Care

The Departments of Health and Human Services (HHS), Labor, and the Treasury issued new regulations today, requiring new private health plans to cover evidence-based preventive services and eliminate cost sharing requirements for such services.  The new rules will help Americans gain easier access to services such as blood pressure, diabetes, and cholesterol tests; many cancer screenings; routine vaccinations; pre-natal care; and regular wellness visits for infants and children.

“Today, too many Americans do not get the high-quality preventive care they need to stay healthy, avoid or delay the onset of disease, lead productive lives, and reduce health care costs,” said HHS Secretary Sebelius.  “From the Recovery Act to the First Lady’s Let’s Move Campaign to the Affordable Care Act, the Administration is laying the foundation to help transform the health care system from a system that focuses on treating the sick to a system that focuses on keeping every American healthy.”

Chronic diseases, such as heart disease, cancer, and diabetes, are responsible for 7 of 10 deaths among Americans each year and account for 75 percent of the nation’s health spending – and often are preventable.  Nationally, Americans use preventive services at about half the recommended rate.  An estimated 11 million children and 59 million adults have private insurance that does not adequately cover immunization, for instance.  Cost sharing, including deductibles, coinsurance, or copayments, has been found to reduce the likelihood that preventive services will be used. 

“Getting access to early care and screenings will go a long way in preventing chronic illnesses like diabetes, heart disease, and high-blood pressure,” said First Lady Michelle Obama.  “And good preventative care will also help tackle an issue that is particularly important to me as First Lady and as a mother – and that is the epidemic of childhood obesity in America today.  These are important tools, and now it’s up to us to use them.”

“One of the best ways to improve the quality of your life – and control health care costs – is to prevent illness in the first place,” said Dr. Jill Biden. “Focusing on prevention and early treatment makes more sense than trying to play catch-up with a potentially deadly disease. Quite simply, these preventative services will save lives.”

Under the regulations issued today, new health plans beginning on or after September 23, 2010, must cover preventive services that have strong scientific evidence of their health benefits, and these plans may no longer charge a patient a copayment, coinsurance or deductible for these services when they are delivered by a network provider.  Specifically, these recommendations include:

  • Evidence-based preventive services: The U.S. Preventive Services Task Force, an independent panel of scientific experts, rates preventive services based on the strength of the scientific evidence documenting their benefits.  Preventive services with a “grade” of A or B, like breast and colon cancer screenings, screening for vitamin deficiencies during pregnancy, screenings for diabetes, high cholesterol and high blood pressure, and tobacco cessation counseling will be covered under these rules. 
  • Routine vaccines: Health plans will cover a set of standard vaccines recommended by the Advisory Committee on Immunization Practices ranging from routine childhood immunizations to periodic tetanus shots for adults.
  • Prevention for children: Health plans will cover preventive care for children recommended under the Bright Futures guidelines, developed by the Health Resources and Services Administration with the American Academy of Pediatrics.  These guidelines provide pediatricians and other health care professionals with recommendations on the services they should provide to children from birth to age 21 to keep them healthy and improve their chances of becoming healthy adults.  The types of services that will be covered include regular pediatrician visits, vision and hearing screening, developmental assessments, immunizations, and screening and counseling to address obesity and help children maintain a healthy weight. 
  • Prevention for women: Health plans will cover preventive care provided to women under both the Task Force recommendations and new guidelines being developed by an independent group of experts, including doctors, nurses, and scientists, which are expected to be issued by August 1, 2011.

Today’s announcement builds on other provisions in the Affordable Care Act that support prevention, including the creation of a first-ever National Prevention, Health Promotion and public Health Council tasked with developing a national strategy and a Prevention and Public Health Fund to invest in prevention initiatives and, this year, policies to increase the number of primary care professionals to help ensure access to these services.  The Affordable Care Act also helps make it easier and more affordable for Americans enrolled in Medicare or Medicaid to access critical preventive screenings and services.

More information on the Affordable Care Act’s new rules on preventive care can be found at: http://www.healthcare.gov/law/about/provisions/services/index.html.

The regulations can be found at: http://www.healthcare.gov/center/regulations/prevention/regs.html.

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U.S. Sues Missouri Lawyer to Halt Alleged Tax-Fraud Schemes

St. Louis Tax Lawyer Allegedly Helped Clients Evade Income Taxes and Illegally Circumvent Roth IRA Contribution Limits

WASHINGTON – The United States has asked a federal court to permanently bar Philip A. Kaiser, a St. Louis tax lawyer, from promoting several allegedly fraudulent tax schemes, the Justice Department announced today. According to the civil injunction suit, filed in the U.S. District Court in St. Louis, Kaiser has sold schemes that help wealthy clients:

  • Use sham transactions to claim massive charitable contribution deductions, with little or no money actually going to any legitimate charity;
  • Evade income tax on business earnings by using sham transactions with sham corporations to reduce customers’ reported federal income tax liabilities;
  • Illegally circumvent the contribution limits for Roth IRAs; and
  • Evade federal income tax on gains from stock sales by using the Derivium tax scheme to disguise the sales as “loans.”

In an example detailed in the government complaint, two Chesterfield, Mo., dentists allegedly used Kaiser’s charitable-contribution scheme to claim more than $750,000 in charitable tax deductions for purported contributions for the benefit of two St. Louis-area private schools when in fact, according to the complaint, the schools have received less than $2,000.

Under another scheme, referred to as the PIRAC scheme, Kaiser allegedly helps customers with existing businesses evade Roth IRA contribution limits, and later withdraw funds from their Roth IRAs without paying income tax. An example in the complaint alleges that a Clayton, Mo., couple who owned an executive search firm participated in Kaiser’s PIRAC scheme. The IRS allegedly audited the couple’s tax returns, and the couple agreed to pay additional tax, interest and penalties of $74,123, relating to their participation in Kaiser’s scheme. The complaint says that the couple has sued Kaiser alleging legal malpractice. Trial of that case in the Circuit Court for St. Louis County, Mo., is scheduled for May 3, 2010.

The complaint alleges that the IRS conducted an investigation of 75 self-directed Roth IRA accounts established under Kaiser’s direction. The investigation revealed that, for 56 of those accounts, approximately $145,000 in customers’ initial Roth IRA contributions grew to over $9,979,921. The other 19 customers were able to turn their initial contributions into $35.5 million.

The Internal Revenue Service’s recently announced list of the “Dirty Dozen” tax scams for 2010 includes abusive Roth IRA schemes.

Since 2001, the Justice Department’s Tax Division has obtained more than 460 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department Web Site.

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Ten Last Minute Filing Tips

 

With the tax filing deadline close at hand, the IRS offers 10 tips for those still working on their tax returns:

  1. File Electronically Consider filing electronically instead of using paper tax forms. If you file electronically and choose to have your tax refund deposited directly into your bank account, you will have your money in as few as 10 days. Virtually everyone can prepare a return and electronically file it for free.   For the second year, the IRS and its partners are offering the option of Free File Fillable Forms.   Another option is Traditional Free File.  About 98 million taxpayers – 70 percent of all taxpayers – are eligible for the IRS Traditional Free File.
  2. Check the Identification Numbers When filing a paper return carefully check the identification numbers — usually Social Security numbers — for each person listed. This includes you, your spouse, dependents and persons listed in relation to claims for the Child and Dependent Care Credit or Earned Income Tax Credit. Missing, incorrect or illegible Social Security numbers can delay or reduce a tax refund.
  3. Double-Check Your Figures If you are filing a paper return, you should double-check that you have correctly figured the refund or balance due.
  4. Check the Tax Tables If you are filing using the Free File Fillable Forms or a paper return you should double-check that you have used the right figure from the tax table.
  5. Sign your form You must sign and date your return. Both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it.
  6. Mailing Your Return Use the coded envelope included with your tax package to mail your return. If you did not receive an envelope, check the section called “Where Do You File?” in the tax instruction booklet.
  7. Mailing a Payment People sending a payment should make the check out to “United States Treasury” and should enclose it with, but not attach it to the tax return or the Form 1040-V, Payment Voucher, if used. The check should include the Social Security number of the person listed first on the return, daytime phone number, the tax year and the type of form filed.
  8. Electronic Payments Electronic payment options are convenient, safe and secure methods for paying taxes. You can authorize an electronic funds withdrawal, or use a credit or a debit card. For more information on electronic payment options, visit IRS.gov.
  9. Extension to File By the April due date, you should either file a return or request an extension of time to file. Remember, the extension of time to file is not an extension of time to pay.
  10. IRS.gov Forms and publications and helpful information on a variety of tax subjects are available around the clock at IRS.gov. You can also check the status of your refund after you file your return by clicking on Where’s My Refund?.

Links:

  • Form 4868, Application for Extension of Time to File U.S. Individual Income Tax Return (PDF 76K)
  • Form 9465, Installment Agreement Request (PDF 100K)
     
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