2010 Guidance and IRS Developments

 

IRS Makes Errors Involving the Homebuyer Credit; More Fraud Also Found

  • September 11, 2010 - The Treasury Inspector General for Tax Adminstration (TIGTA) has issued a report noting that IRS did not properly record the purchase date of homes for about 60,000 taxpayers that claimed the "popular" first-time homebuyer tax credit. The report notes that IRS improperly recorded the purchase date as having occurred in 2008 when the homes were actually purchased in 2009. That's important because the credit came with a 15-year recapture period for homes purchased in 2008 that required the credit to be paid back in full in equal installments over 15 years beginning with the second year after the home was purchased. So, the 2008 version really wasn't a credit, it was a zero percent downpayment assistance loan. The credit didn't have such a recapture rule for homes purchased after 2008. TIGTA has recommended that IRS fix the incorrect purchase dates. The TIGTA report also said that 1,386 taxpayers filed $10.1 million in credit claims using the Social Security numbers of dead people. IRS only caught 528 of these claims. TIGTA Report, August 16, 2010.

IRS Announces Tax Relief for Select Iowa Counties

  • August 18, 2010 - The IRS has announced that victims of flooding and tornadoes on June 1 in the following Iowa counties may qualify for federal tax relief:  Black Hawk, Cherokee, Clayton, Decatur, Delaware, Dubuque, Fayette, Franklin, Hamilton, Howard, Humboldt, Ida, Jackson, Jasper, Jones, Kossuth, Lee, Lucas, Lyon, Mahaska, Marion, O'Brien, Osceola, Polk, Ringgold, Sioux, Story, Taylor, Union, Warren, Webster and Wright. These counties have been declared disaster areas by the President, and the declaration allows the IRS to postpone specified filing deadlines for taxpayers that either reside or operate a business in the counties.  Deadlines that would have fallen on or after June 1, 2010 and on or before August 2, 2010 are postponed retroactively to August 2, 2010.  IRS is also waiving the failure-to-deposit penalties for employment and excise deposits due on or after June 1 and on or before June 16, as long as the deposits were made by June 16.  Also, IRS specified that taxpayers in the above counties that have deductible flood losses may claim them on amended an amended return for 2009 or on their 2010 return.  MIL-2010-15-IA (Aug. 16, 2010).
  • Note:  This announcement by the IRS has no application to the recent flooding in Central Iowa.    IRS may issue relief for that area in the future.

IRS Provides More Guidance on the Homebuyer Credits

  • July 9, 2010 - The IRS has issued numerous Information Letters concerning the homebuyer credits.  The Letters address many common questions concerning both the first-time homebuyer credit and the long-term homeowner credit. 

IRS Issues Regulations on "Tanning Tax"

  • June 13, 2010 - The IRS has issued an announcement (IR-2010-073) that it has issued regulations detailing the manner in which the new "tanning tax" created under the recently enacted health care bill is to be administered.  The tax is a 10 percent excise tax on indoor tanning services, and it kicks in on July 1.  Under the regulations, the IRS has said that the providers of indoor tanning services are to collect the tax at the time the tanning services are provided and paid for.  The service provider is to then pay the tax that is collected on a quarterly basis via IRS Form 720 - the Quarterly Excise Tax Return.  IRS, in the announcement, noted that the regulations specify that the tax does not apply to phototherapy services provided by a licensed medical professional on the professional's premises.  In addition, IRS says that the tax does not apply to certain physical fitness facilities that offer tanning as an incidental service to members that is included in such persons' membership fee.  The IRS is soliciting comments on the regulations.  Any comments must be received within 90 days after June 11, 2010. REG-112841-10, published in the Federal Register on June 11, 2010.

IRS Official Provides Insight

  • May 24, 2010 - An IRS official has recently provided some public comments of importance to tax practitioners.  We've got the details.