The Long Wait for Tax Credit
Since last April, the First time Home Owner's Tax Credit has boosted home sales this year. The tax credit incentive is due to expire by end of November but Congress is contemplating extending it. However scores of taxpayers who have applied for this credit have yet to receive their credit checks from the IRS. This is because the IRS has been inundated with amended tax returns and fraud cases. What started out as a $7,500 loan repayable over 15 years for those who have not owned a home in the last 3 years, had attracted more than 1.4 million taxpayers who have claimed in excess of $10 billion. The credit amount has been increased to 10% of the purchase price of the house subject to a maximum of $8,000 and changed from a loan to an outright tax credit. To keep the amount paid to them, taxpayers just have to stay in their homes for at least 3 years.
The tax credit benefit turned out to be a double edged sword of sorts. On one hand, it resuscitated a flagging housing industry badly hit by the sub-prime mortgage fiasco but on the other hand, it opened the floodgates to a gamut of innocent mistakes and outright fraudulent applications for the credit. Thus far, the IRS has identified more than 160 possible cases of abuses of the credit. At the same time, the agency has also subjected more than 100,000 tax returns to audit.
The US Treasury Inspector General's report last week highlighted some startling cases of fraud among first time home owners' applications, among which included almost 74,000 successful applications by taxpayers who were actually ineligible for the credit, another 19,300 successful applications by those who have not actually bought a house and even an application by a 4 year old toddler.
Sadly, due to the actions of this unscrupulous lot, genuine eligible applicants' refunds now take much longer to be processed as the IRS tackles this huge array of possible abuses by implementing more stringent fraud checks. What used to be a 6 week wait for the check now takes at least 20 weeks.
The ease of gaming the system comes about mainly because no documentary proof of purchase of a house is required during application. The taxpayer merely has to fill up a form giving details like the address of the house, the date of purchase and the estimated amount of credit being claimed. Hence, some taxpayers innocently assume that they do not have to buy a house before applying for the tax credit and others do not realize that buying a house from a family member is disallowed. Besides these genuine mistakes, the IRS also has its hands full dealing with the real cheats.
The IRS has given Congress the assurance of their concerted efforts to pursue the frauds, correct erroneous applications while making credit refunds to genuine first time homeowners.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.
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Comments on The Long Wait for Tax Credit
NO, an IRS TAS agent told me they had run across very little fraud.
The IRS is using this as an excuse for having poorly changed, underproductive, slow government desk workers and the FED this Spring giving open license to the IRS to reject any rebate to anyone, anytime, for any reason(reasons are interpreted internal IRS rules not known to the public)
Many legal and legitimate claimant tax filer for the first home buyers rebate have become angrier over many long months.Caveat emptor! Do NOT accept partial IRS refunds, as YOU are then financing those rebate-refunds! Some filers will be fighting the IRS for one or two years to get their legal rebate due to IRS internal fraud. The IRS is overdramatizing the very few(if real) episodes of real taxpayer fraud;another FED Administration stall mechanism to warm up the money print presses, again.
The 101 Dumbest Moments In Business 2003 EDITION Whiffed pitch No. 6: blatant stereotyping. By Mark Athitakis April 1, 2003 (Business 2.0)– GRAND PRIZE WINNER, DUMBEST MOMENT OF 2002 In September, insurance company AmeriChoice brings trucks to blighted neighborhoods in New York City and gives away coupons for free chickens as an incentive for the underprivileged to switch their Medicare coverage. New York state senator Carl Kruger files a complaint with the state attorney general. The 101 Dumbest Moments In Business 2003 EDITION –
2009 2010
Philadelphia PA Mayor Nutter received two years in a row $60,000 in checks to help keep open and operate the city swimming polls. These checks came from AmeriChoice Health and on the surface seems like fine gifts. Yet,they are Bribes non the less, these checks come from a company who receives all its money from the Federal State Governments as a vendor for Medicare Medicaid services is not allowed to offer bribes inducements,kickbacks and money gifts of any kind in order to promote its share of the market place. This is also not allowed as a use of your taxpayers dollars, yes it happens. Americhoice Health has a long history of corruption Yet,it seems to be protected by those who are responsible to over see their actions why is that? Sorry must apologize just received a notice that AmeriChoice Health was under the impression they thought they were suppose to have started their very own stimulus and economic program package and the one they implemented, they had no idea it violated the Stark,Health and Kickbacks laws.
Among its provisions, the anti-kickback statute penalizes anyone who knowingly and willfully solicits, receives, offers or pays remuneration in cash or in kind to induce, or in return for: A. Referring an individual to a person for the furnishing, or arranging for the furnishing, of any item or service payable under the Medicare or Medicaid program; or B. Purchasing, leasing or ordering , or arranging for or recommending purchasing, leasing or ordering, any goods, facility, service or item payable under the Medicare or Medicaid program. Violators are subject to criminal penalties, or exclusion from participation in the Medicare and Medicaid rograms, or both. A violation of the anti-kickback law is a felony offense that carries criminal fines of up to $25,000 per violation, imprisonment for up to five years and exclusion from government health care programs.The federal anti-kickback statute, 42 U.S.C.§ 1320a-7b(b), prohibits individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid or any other federally funded program.
Since all Ameri-Choice checks come from the United Health’s home office they should be held equally responsible for any bribes, kickbacks, Stark, Fraud and inducements violations that may have occured. Federal and State Governments have developed such a depended position with this company, guess the laws and rules no longer apply for them. Protected vendor status sure, politics sure, limited government budgets sure, Federal and State officals looking the other way sure, and rather then stop these activities a strong desire not to rock the boat exists. The Government created this monster and now they don’t know what to do about it, like shooting yourself in your own foot etc. Tons of money to advance their national growth, its market positions, tons of money for political donations, tons of money to send 75 millon back to its home office from New York state alone, tons of money to suppot National TV shows, tons of money to pay hugh State fines, tons of money to hire the very best law firms, tons of money for hugh salarys and bonuses, all done on the back of the American taxpayor, you see this company receives all its money from the Federal State governments.
PS In New Jersey Licensed Agents were fired for refusal to deliver bribe checks.