TIGTA Reports on More IRS Screw-Ups

TIGTA Reports on More IRS Screw-Ups

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The Treasury Inspector General for Tax Administration (TIGTA) has issued another report on IRS inefficiency, which, no doubt, will be met by the Commissioner’s demand for more funding (see Related Posts, below).

TIGTA reports that some taxpayers received multiple refunds for their First-Time Homebuyer Tax Credit claims, while others changed the acquisition date of their homes on their amended returns to avoid having to repay the refunds they had improperly claimed, according to a new report:

The report, by the Treasury Inspector General for Tax Administration, said the Internal Revenue Service needs to do more to prevent erroneous claims for the tax credit from getting through on amended tax returns. The IRS has taken some steps to prevent fraud in the program, the report acknowledged. However, some of those fraud control steps have also resulted in legitimate claims for the First-Time Homebuyer Tax Credit from being processed on a timely basis (see IRS Works on Fix for Homebuyer Credit Tax Refund Problems).
 
TIGTA identified 1,225 cases in which a taxpayer originally filed a claim for the homebuyer credit on a tax year 2008 Form 1040 using a calendar year 2008 purchase date, and the IRS subsequently processed an amended return for the taxpayer claiming a change to the original homebuyer credit with an identifier now indicating a calendar year 2009 or 2010 purchase year. TIGTA took a closer look at a sample of 43 of those 1,225 claims, and found that 22 appeared to be legitimate changes of purchasing years, while 15 appeared to be invalid.
 
In another 607 cases, the taxpayer’s homebuyer credit was originally claimed on an amended return reporting a home purchased in calendar year 2008, but a subsequent amended homebuyer credit claim was processed with an identifier indicating a calendar year 2009 or 2010 home purchase. TIGTA again examined a sample of 45 of those cases, and found that in 36 of them, the year of purchase on the original amended return had been recorded inaccurately by IRS computers or employees, and another nine cases in which the taxpayer amended the year of purchase for various reasons.
 
Some taxpayers also received multiple refunds of the homebuyer credit that exceeded the amounts allowed by law, the report noted, and many questionable claims for the homebuyer credit were not appropriately sent to IRS examiners for scrutiny. TIGTA identified 70 taxpayers who received a homebuyer credit for both tax years 2008 and 2009.
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About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida