For a change, the IRS are the ones who got audited. A recent article in the Los Angeles Times stated that Â an audit raises questions about the IRS ability to track home buyers credit. The auditor found that the IRS lacks a system to keep track or to monitor on the individuals who claimed the home buyers tax credit. In fact, the auditors identified that the IRS had incorrectly recorded Â purchase dates on 73,1119 out of 1.77 million credit filed in 2009 with the following breakdown:
- 59,802 claims were incorrectly recorded as having purchased during 2008, or no year was identified.
- 9,122 credit recipients bought their homes during 2008, but the IRS recorded the purchases as occurring in 2009.
- 4,195 recipients’ claim forms had no purchase date stated or the purchase occurred before 2008.
The audit findings indicate potential tax revenue losses to the government of around $31 million since individuals might not be asked to repay the home buyer credit over 15 years even though their 2008 purchase date required them to do so.Â On top of the above numbers, the auditors also identified 514,987 tax credit requests contained purchase dates that “cannot be verified” because the data were not “captured” by IRS computers.
Other issues found by the auditors is that the IRS lacks the system:
- to enforce the various “recapture” and “accelerated repayment” provisions included in the housing tax credit programs.
- to identify situations that allow certain taxpayers to bypass recapture rules, such as the death of the homeowner, foreclosures where there is no gain to the taxpayer and extended overseas duty assignments of armed forces and other personnel that prevent them from occupying their houses.
- to handle tax credit claims from applicants using the Social Security numbers of dead people. In the 2008 credit program, the audit found 1,326 Â taxpayers who claimed a total of $10.1 million when the home purchase date occurred after the purported claimant’s date of death.
It’s amazing how the IRS implemented the credit but they were not ready for the monitoring and recording required for the claims. A lot of people whoÂ fraudulently filed for the tax credit would still need to be audited so the IRS can recoup the revenue. It may take some time depending on the number of IRS resources.
Although the whole purpose of the home buyer’s credit is to stabilize the nose-diving real estate market and also to stimulate the economy, I don’t think it served it’s purpose. In some cases, it only expedited the home purchase of the people who are going to purchase the home anyways even without the credit. So in essence, this is not really helping the economy.