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Isaacson Isaacson
Sheridan & Fountain, LLP
101 W. Friendly Ave., Suite 400
Greensboro, NC 27401
(336) 275-7626
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Greetings!
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GAO: IRS Confronts Homebuyer Tax Credit Fraud; Not Doing Enough to Deal with COBRA Subsidy Errors
The Government Accountability Office (GAO) said in a report released on
Feb. 10 that the IRS is taking steps to deal with widespread fraud among
persons claiming the homebuyer tax credit. According to GAO, as of Feb. 1, IRS had frozen
some 140,000 refunds pending civil or criminal examination. In addition, as of
Dec. 2, 2009, IRS had identified 175 "criminal schemes" and had 123 criminal
investigations open. The GAO said that "although
IRS addressed some challenges with the credit in these ways, it still needs to
finalize a way to identify individuals who fail to report home sales and might
be required to repay part of the credit because their homes ceased to be their
principal places of residence within 3 years of purchase."
The report also found that IRS had not taken
definitive action to ensure that employers stop claiming the credit for COBRA
(Consolidated Omnibus Budget Reconciliation Act) premium subsidies when former
employees lose their eligibility. "A cost-effective option to help IRS with
unresolved compliance issues exists-expanding a planned project to determine if
employers are claiming the subsidies for longer than allowed," the report said.
"If they are, IRS could send all employers letters reminding them of their
obligations and urging them to correct any errors they have made," it added.
GAO praised IRS for responding quickly to the challenges posed by the 54
tax-related provisions of the American Recovery and Reinvestment Act of 2009
("ARRA"). Some of those provisions
affected the 2009 filing season, with most affecting the 2010 and 2011 filing
seasons. Within six months of the ARRA's enactment, IRS had issued guidance or
instructions for more than 80% of the provisions, the report noted. "However,
responding quickly entailed trade-offs, such as not making some computer
changes to collect data, and subsequent improvements were required," GAO said.
The full report is available at http://www.gao.gov/new.items/d10349.pdf.
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About the Writer
Desmond G. Sheridan is a partner in the Greensboro law firm of Isaacson Isaacson Sheridan & Fountain, LLP and is a certified public accountant. His practice areas are business transactions, tax, corporations, limited liability companies, commercial real estate and estate planning. Sheridan has served on the Board of Directors of the North Carolina Association of Certified Public Accountants and has been recognized as a "Best Lawyer in America," a North Carolina "Super Lawyer" and a member of the "Legal Elite" by Business North Carolina. He has given numerous continuing education presentations to CPAs and attorneys. |
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Some disclaimers: First, nothing in this email should be construed as legal advice. Second, an attorney-client relationship may only be established by a formal engagement with our firm. Third, this email is informational only; you should not act on any legal matters except with the specific advice of your counsel.
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