On April 16, 2012, the Treasury Inspector General for Tax Administration, (TIGTA) will publicly release its Interim Filing Season Report. As part of its oversight of the Internal Revenue Service (IRS), TIGTA protects the integrity of the United States system of tax administration and prevents waste, fraud, and abuse in the administration of the nation’s tax laws.
Since the inception of the American Reinvestment and Recovery Act of 2009 (Recovery Act), TIGTA has conducted extensive oversight work on related funds. You can easily access these reports here.
Each year TIGTA completes an audit of the IRS’s “filing season,” which is the critical time of year when most individuals file their income tax returns and contact the IRS if they have questions about specific tax laws or filing procedures. TIGTA reports initial filing season results in March, resulting in the so-called “interim filing season report,” and then again in the early fall on the complete filing season. Here is an example of Recovery Act oversight that is included in today’s Interim Filing Season Report:
First-Time Homebuyer Credit: TIGTA has issued several reports on the IRS’s implementation of the First-Time Homebuyer Credit (Homebuyer Credit). The Housing and Economic Recovery Act of 2008 (HERA) allowed first-time homebuyers who purchased a principal residence after April 8, 2008, and before July 1, 2009, to claim a refundable credit equal to 10 percent of the purchase price of the home, limited to $7,500. The Homebuyer Credit served as an interest-free loan to be paid back over a 15-year period beginning two years after the Homebuyer Credit was claimed.
Section 1006 of the Recovery Act extended the Homebuyer Credit to include purchases made on or after January 1, 2009, and before December 1, 2009, increased the maximum Homebuyer Credit to $8,000, and eliminated the repayment requirement as long as the taxpayers retain the home as their principal residence for at least 36 months. Individuals who purchased a home between April 9 and December 31, 2008, and claimed the credit were required to repay the credit in installments beginning with their Tax Year 2010 tax return.
As part of our Interim Filing Season report, TIGTA reviewed the IRS’s performance in collecting taxpayer repayments of the Credit. As of March 7, 2012, a total of 535,344 taxpayers reported Homebuyer Credit repayments totaling more than $175 million.
TIGTA found that the IRS improved its processing of Homebuyer Credit installment repayments; however, some were still not processed accurately. This resulted in more than $1.6 million being either refunded erroneously or not assessed. More than 4,100 tax returns were impacted by this error. TIGTA notified the IRS of this issue on February 21, 2012 and recommended changes be made to ensure that Homebuyer Credit installment repayments are correctly assessed.
In response, the IRS said it will analyze tax return data to identify affected taxpayers and to correct the tax returns.
To read TIGTA’s complete Interim Filing Season report, or recent audits of the Homebuyer Credit, visit TIGTA’s website.
— J. Russell George, Treasury Inspector General for Tax Administration
We regularly get questions from those of you who want to know what Recovery opportunities might be available. Recovery.gov has an opportunities page as well as a list of benefits and tax credits that answer many of these questions. But another federal website – Grants.gov – has a page called Recovery Act Money and You!, which provides much more detailed information.
There, you can find out if you, your family, business, organization, or community could be eligible for Recovery funding and/or benefits.
We’ve received many emails asking whether Social Security recipients, veterans, and railroad retirees will receive a $250 payment in 2011, as they did in 2009.
Answer: In July 2010, a new bill was introduced that would provide the one-time $250 in 2011 in the event that no Social Security cost-of-living adjustment is payable next year.
In October 2010, the Social Security Administration announced that there would be no cost-of-living increase in 2011. Some members of Congress are seeking a vote on the bill introduced in July before the end of the year.
Check back for updates.
Tax credits and benefits make up $288 billion of the $787 billion allocated by the Recovery Act. See if you might qualify for any of these tax credits:
College expenses – The American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers. It also adds course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of just two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.
Energy-efficient improvements — The Residential Energy Property Credit increases the credit rate to 30 percent of the cost of improvements, such as added insulation, energy efficient exterior windows, and energy-efficient heating and air conditioning systems. The maximum credit limit is $1,500 for improvements made in 2009 and 2010. Frequently asked questions about the program are listed on the Energy Star website.
Alternate energy equipment installation – If you install solar hot water heaters, geothermal heat pumps or wind turbines at your home, you might qualify for the Residential Energy Efficient Property Credit that allows for a credit equal to 30 percent of the cost of the qualifying equipment’s installation.
Working Individuals and Families – If you make a low to moderate income and file a tax return, you could qualify for the Earned Income Tax Credit.
Parent(s) with children – If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.
Working Individuals — Making Work Pay provides for a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns.
We’ll be keeping you up to date on any additional tax credits and changes to those listed here.