Interesting efile exception

[kcjenkins]

Considering the IRS’s current push to force e-filing upon preparers after 2010, it's interesting that the agency announced last week that persons who claim the first-time homebuyer credit on their 2009 return will not be able to e-file. News Release 2009-108 (11/25/2009).

[TaxCPANY]

Well, I'm going to start requesting the Service to reconsider, point out that attaching the closing-statement summary to Form 8453 should serve perfectly well. Thanks, kc, for pointing out this important step backwards.

[mcb39]

At the Tax School that I attended just 2 weeks ago, that is exactly what they taught us; that we could e-file the return and send the paperwork needed with the 8453. This does appear to be a step backward.

[jainen]

>>Form 8453 should serve perfectly well<<

You are thinking about effective tax administration, but that is never the only goal. Think of it in terms of the BANKS. That's what Treasury cares most about.

Oh, what a surprise! This refundable $8000, twice the EIC amount and not limited to low-income returns, has generated some fraud! The IRS has decided to review settlement statements, a process incompatible with Refund Anticipation Loans. The banks don't want to look like the bad guy on delayed refunds, so this credit has been entirely removed from the RAL system.

[mcb39]

It is a surprise and not a very happy one. In WI, we have been electronically filing Homestead Credit returns for several years now and upon acceptance, we send the paper copy of the Property Tax and/or properly executed rent receipt to the State. I, personally, have never known one of these to fall flat and the filers get their refund in a timely fashion. But, who am I to say that this "could" work when the IRS is obviously taking the stand that it won't. I never do RAL in any case, so guess they are just going to waste more of our time and energy. These homebuyer credits are coming back to haunt us as I am still dealing with some that were claimed in 2008 for 2008 purchases. None of us have the extra time for this especially in light of the rumors that are flooding the workplaces, barber shops, bars and social events. Everyone knows there is a credit, but nobody understands that there are specific dates accorded to each of the three different and explicit credits.

As you have probably heard, as of November 6 the First-time Homebuyer Credit has been extended and modified. I have attached a News Release from November 24 which discusses some of the changes.  An IRS Special Edition Tax Tip entitled 10 Important Facts about the Extended First-time Homebuyer Credit is also attached. 




In addition to the First-Time Homebuyer Credit there is now a $6500 credit for taxpayers buying a replacement home after November 6.  




The deadline for the credit has been extended.  Taxpayers must enter into a binding contract by April 30, 2010 and settle by June 30, 2010.




An important change is that for homes purchased after November 6, 2009 taxpayers must attach a properly executed settlement statement to their return. This means these returns cannot be filed electronically  they must be filed on paper.   




Remember that your best source of information about the Homebuyer Credit and other tax law changes is at IRS.gov.  As more information becomes available on the modifications to this credit, it will be posted on the website.

[mlinder42]

I just called NAEA to see if they can speak to the IRS to allow the e-filing and sending the info with an 8453. They said they will talk to the IRS and rep0rt back thru their weekly e-mail.

[Catherine]

At the Tax School that I attended just 2 weeks ago, that is exactly what they taught us; that we could e-file the return and send the paperwork needed with the 8453. This does appear to be a step backward.

The tax school I was at today said that sending the closing statement with the 8453 will not be allowed. Paper file return with HUD-1.

One suggestion they gave was, if the client otherwise would have a refund that they are eager for, leave out the credit, e-file, then paper file an amended later.

They also said that the IRS estimates up to 72% fraud on the $7500 home purchase credits, which is why they now require the HUD-1.

[SaraEA]

I don't think the 8453 will be changed to accept the closing statements for a very good reason. The IRS will have real people looking over the paperwork. Ever wonder what happens to all those 8453s you send in with 20 pages of stock transactions? I think they're probably still sitting there in the unopened envelopes. With all the highly publicized fraud attached to the homebuyer credits, they want to make sure that every single new claim is eligible BEFORE they send out the money. What a concept.

If you have clients who filed normal amended returns who are waiting months and months for their refunds, the reason is that IRS staff have been pulled from that function to examine homebuyer returns. Once again, the poor IRS is left to clean up a mess created by Congress. EITC fraud has long been a known problem. Yet Congress thought that giving people twice as much free money, without them having to go through the trouble to borrow a few kids or change addresses, wouldn't be just a little too tempting?