Senate Passes Homebuyer Extension - Gives IRS Added Authority

There's been a lot of buzz about the extension of the First Time Homebuyer's credit. Heck, there's been a lot of anger about the $600+ million in fraudulent claims that IRS allowed to be paid before clamping down on the money.

One source who says IRS does not want to demand verification of purchase hasn't done her homework. IRS's hands were tied. When Congress pased the original law, they didn't include authority for IRS to demand the documentation up front.

Three solutions were proposed in an AccountingWeb.com blog last month. Well, the Joint Committee on Taxation's summary of the new tax bill shows that two of the suggestions were implemented.

The bill makes a number of changes to expand the definition of mathematical or clerical error for purposes of administration of the credit by the Internal Revenue Service (IRS). The IRS may assess additional tax without issuance of a notice of deficiency as otherwise required in the case of: an omission of any increase in tax required by the recapture provisions of the credit; information from the person issuing the taxpayer identification number of the taxpayer that indicates that the taxpayer does not meet the age requirement of the credit; information provided to the Secretary by the taxpayer on an income tax return for at least one of the two preceding taxable years that is inconsistent with eligibility for such credit; or, failure to attach to the return a properly executed copy of the settlement statement used to complete the purchase.

Terrific. Two down, one to go. Will IRS have enough time to change the instructions to Form 5405 and to add a checkbox to Form 8453 in time for tax season? That remains to be seen!