Reading Gail Perry's article today got me steamed up again. She published the information from the TIGTA report that explains why IRS's hands are tied.
Frankly, the reasons are nonsense. And if those are the reasons, Congress has time to fix them right now, while they are preparing the First Time Homebuyer Credit extension and expansion for a vote next week.
So I called my Congressman's office and left him a message to call me. To save time, I sent him an email outlining my proposed solution. You are welcome to send an email to your legislator, too.
Here is the letter:
Dear Mr. Sherman,
Since you are both a CPA and an attorney, you have a pretty good grasp of what goes on at IRS.
This $600+ million worth of fraud could easily have been prevented.
http://www.marketwatch.com/story/home-buyer-tax-credit-refunds-delayed-f...
And if you're about to vote on another round of funds for new homebuyers and those who already own homes, it's time to incorporate a fix the legislation up for vote next week.
In the TIGTA report, IRS presents the following excuses - to which the solutions are simple:
1) The tax agency was given authority by Congress to pay the credits, but not to require documentation of an actual, qualifying home purchase.
2) Requiring documentation would preclude people from filing electronically.
3) The IRS doesn’t have “math error authority” to disallow a credit during processing, based on incorrect math in the application.
Solution to problem #1 - have Congress authorize IRS to require document of actual, qualifying home purchase before releasing the funds.
Solution to problem #2 - Simple. Put a checkbox on Form 8453 that there are attachments to Form 5405 to prove the taxpayer has qualified for the credit. Put instructions on Form 5405 describing what documentation to send. (read http://www.marketwatch.com/story/home-buyer-tax-credit-refunds-delayed-f... )
Solution to problem #3 - Have Congress give IRS “math error authority” to disallow a credit during processing, based on incorrect math in the application.
You have time to incorporate these suggestions into the new legislation.
Please, please, pretty please with a cherry on top - add this in and save us all time, heartache, audits and more fraud.
Right now, IRS is holding up refunds for about 4 months - on electronically filed 2008 returns. Imagine what this is going to be like when 2009 returns start pouring into the IRS campuses.
Thanks for considering my suggestion.
Best wishes
Eva Rosenberg, MBA, EA
Northridge, CA member NAEA, CSEA
www.taxmama.com Where taxes are fun!
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Waiting on updated 5405
In typical IRS style, they make changes before the forms are ready. I just had a client that sent in an ammendment a month ago (the middle of November) that had her paperwork returned. The papers from the IRS said to use the new form that "should" be available the end of December. I had her include a copy of the HUD settlement papers which has helped speed up my other clients ammendments. But in this case she has to wait for a form that probably has a place for her to check that she has included a copy of the HUD settlement papers.
-- Bill Coen Alpha to Omega Tax Services, LLC www.a2oTax.com
Fixing the First Time Homebuyer Credit
As you may have noticed, the new tax bill passed.
The first time homebuyers credit is extended and expanded to include non-first-time buyers - folks who owned a home for at least 5 years out of the last eight years.
Did you notice?
The two fixes we recommended that Congress include (see above blog post) are included in the new tax bill.
Thanks for all your efforts alerting your legislators!