Accounting News

Friday, October 14, 2011
Late Tax Changes Cause Problems

Congress can change the tax code but moving too fast will inevitably lead to problems. In 2008 after the slowdown in the housing market, Congress passed the Homebuyer Credit to stimulate sales. The legislation provided a credit for buying a home in 2009. It was subsequently extended to 2010. The IRS had trouble catching up to the changing laws and tax filers made a significant number of mistakes when claiming the credit.

As a result 5.2 million people incorrectly claimed the credit. Those people were notified that they would have to  repay the money. Along with the correct notices, almost twenty eight thousand people were incorrectly notified that they had to return the credit. Another sixty one thousand people should have been notified and were not. These numbers were calculated by the Treasury Inspector General for Tax Administration. [report]

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