Home-Buyer Credit Is Focus of Inquiry


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>   
>   (email exchange)
>   
>   On Tue, Oct 20, 2009 at 12:13 AM, Russell wrote:
>   

Reference article:

Home-Buyer Credit Is Focus of Inquiry

>   
>   The Internal Revenue Service is examining more than 100,000 suspicious
>   claims for the first-time home-buyer tax break …
>   
>   The tax credit is completely refundable, even if the homebuyer has no tax
>   liability – and this makes it a target for fraud. From the IRS:

Link

>   
>   ”[The tax credit is] fully refundable, meaning the credit will be paid out
>   to eligible taxpayers, even if they owe no tax or the credit is more than
>   the tax owed.”
>   
>   Also, the credit is separate from the closing, and the WSJ article suggests
>   this is contributing to the “widespread” fraud.
>   
>   Bonnie Speedy, national director of AARP Tax-Aide … suggested that abuse of
>   the home-purchase credit appeared to be widespread …
>   
>   And – not mentioned in the article – the homebuyers are required to pay back
>   the tax credit if they do not own and live in the home for three years … so
>   there will probably be more fraud in the future. More IRS:

Link

>   
>   The obligation to repay the credit on a home purchased in 2009 arises only if
>   the home ceases to be your principal residence within 36 months from the date
>   of purchase. The full amount of the credit received becomes due on the return
>   for the year the home ceased being your principal residence.
>   

Right, critical parts of any legislation include compliance/enforcement.

All of my proposals look to reduce real compliance and enforcement costs, and to minimize the potential for fraud.

For example, the payroll tax holiday has none of those issues, nor does it place any demands on govt.
Same with the per capita revenue sharing. The main risk is States that may somehow inflate their population estimates, but that is trivial, and the distributions are done on past estimates.


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