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 October 28, 2009

Tougher Control on Tax Credit Urged by IRS
While Congress prepares to vote on whether or not to extend the current first-time buyer tax credit, the IRS wants tougher regulations implemented which would require credit claimants to prove that they actually closed on the home they have said they purchased.
The deputy commissioner of the Internal Revenue service, Linda Stiff reported to the House Ways and Means Oversight Subcommittee on October 22 that the IRS is in favor of requiring buyers who take advantage of the credit to provide copies of settlement documents from the United States Department of Housing and Urban Development (HUD). The form to be required is known as the HUD-1 form. Proof of settlement would need to be filed along with the HUD-1 form to help curtail fraud.

IRS auditors testified to the Oversight Subcommittee that they believe that fraudulent tax credits in excess of $135 million have been distributed since January 2009.