The temptation of claiming the $8000 First time Home Buyers Tax Credit proved to be too much for some tax preparers in Miami-Dade. The Medina Group in Miami filed false claims on behalf of 174 taxpayers. The Internal Revenue Service reviewed 30 tax returns filed by the Medina Group and determined that only one had actually bought a home. An injunction against the company has been filed in Federal Court. A review of 30 returns filed by To The Max Tax Professionals, Inc. of Miami Gardens revealed that none of the taxpayers actually qualified for the credit. The firm has filed 363 returns claiming the tax credit that are now suspect.
YOUR TAX RETURN HAS TO MAKE SENSE.... 
The tax credit is part of the Federal Stimulus Pakcage designed to make home purchases more attractive to First Time and Repeat Home buyers offering a credit of $8000 to First time homebuyers, and $6500 to repeat home buyers (who have not purchased a home in the last three years) If a home was purchased after April 8, 2008, that purchase would be eligible under the Tax Credit Law.
The Department of Justice said that To The Max Tax Professionals listed nonexistent addresses purportedly purchased and had discovered the tax preparer had listed the same address on separate customer's returns. A customer of the Tax Preparer claimed that she was told the tax credit was for homeowners facing foreclosure.
The complain alledges that the To The Max Tax Professionals, Inc filed returns in March 2009 and falsely claimed homes had been bought months later, in other cases homes had not been bought at all in 2008 and 2009.
A Treasury Inspector General for tax administration told a U.S. House subcommittee that more than 19,000 people had filed false claims, and had not purchased homes at all. There were reports that children had also attempted to claim the Tax Credit.
NEW RULES WILL APPLY.
At the time these returns were filed, there was no provision for proof of purchase to validate the claim. That policy has changed. The IRS now requires documentation and will not allow taxpayers to file their claims electronically if they are claiming the Tax Credit for a home purchase.
The IRS is also revising rules designed to regulate the Tax Preparation industry.
While the Tax Credit Incentive was designed to boost the housing market and stmulate demand, it has had little impact according to a National survey of Realtors®. Real Estate professionals across the country have reported that the Incentive has failed to jump start the market as the Government had hoped it would have at the onset.
Sales are being made, but they are primarily bank owned properties being sold at reduced prices as result of foreclosures. The tax credit has offered no relief to the millions of homeowners who are behind in their mortgage payments and are facing foreclosure. Nor does it aid or assist homeowners whose homes are now worth substantially less than paid.
These homeowners have received little relief. Realtors® on a local level wonder if the Government may have missed the mark. Instead of offering a First Time Home buyers Tax Credit ($8000) and a Repeat Home Buyers Tax Credit ($6500) would it not have been prudent to include a credit for distressed property owners whose homes have depreciated at 30-50% from the market high of 2006?
The government has infused Billions of dollars into the housing market in hopes it would revitalize the sluggish economy. However consumer confidence remains low, compounded with increasing job losses (10% unemployment) which is doing little to stimulate economy according to economists and finance experts.
Of the 90% of consumers who are employed, many feel they cannot transition into another home without taking a severe loss on their current homes value. Those people who have had long term property holdings, in other words purchased their properties before the boom and bubble bursting, who did not max out their available equity under lose lending practices are in the best position to sell and transition into another home at this time.
Similarly, Renters who have been waiting for the market to bottom may also discover they too are in a perfect position to move into home ownership and can still take advantage of the Tax Credit legitimately. Home must be under Purchase Agreement by April 30, 2010 and close by June 30, 2010.
Comments(9)