On November 18, 2010, George E. Burns, Commissioner for the State of Nevada Department of Business and Industry, Financial Institutions Division, gave the citizens of Nevada a slice of fairness. Commissioner Burns signed an Order that officially halts the seemingly tyrannical behavior of Home Owners Associations collections agencies (hereinafter HOA’s) across Nevada. Pursuant to the Order, a collection agency acting on behalf of the HOA may not charge more than nine (9) months of assessments. It should be noted that this nine (9) month cap does include extraneous fees such as interest, fines, and penalties.
The Internal Revenue Service announced on July 29, 2009, its first successful prosecution related to fraud involving the first-time homebuyer credit (FTHC). On its website, the IRS warned taxpayers to beware of this type of scheme.
On Thursday, July 23, 2009, tax preparer James Otto Price III, from Jacksonville, Florida, pled guilty to falsely claiming the first-time homebuyer credit on a client’s federal tax return. Price faces the possibility of up to three years in jail, a fine of as much as $250,000, or both.
The IRS is investigating dozens of cases of potential instances of fraud involving the credit. How does it find these fraudulent returns? The IRS has a number of sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time homebuyer credit.
“Taxpayers should be wary of anyone who promises to get them a big refund,” said Eileen Mayer, Chief, IRS Criminal Investigation. Mayer publicly announced “We will vigorously pursue anyone who falsely tries to claim this or any other tax credit or deduction.”
Whether a taxpayer prepares his or her own return or uses the services of a paid preparer, it is the taxpayer who is ultimately responsible for the accuracy of the return. Fraudulent returns may result not only in the required payment of back taxes but also in penalties and interest.
First-Time Homebuyer Credit
The IRS explains the proper use of the First-Time Homebuyer Credit on its website, www.irs.gov. The FTHC was originally passed in 2008, and modified in 2009. The law provides up to $8,000 for first-time homebuyers. The purchaser, however, must qualify as a first-time homebuyer, which for purposes of this credit means someone who has not owned a primary residence in the past three years. If the taxpayer is married, this requirement also applies to the taxpayer’s spouse. The home purchase must close before December 1, 2009, to qualify, and the credit may not be claimed on the purchaser’s tax return until after the taxpayer closes and has purchased the home.
Different rules apply for homes bought in 2008.
-Carlos L. McDade, Esq.