first time home buyers credit drama

[chad]

oh, boy. what a shitstorm we have brewing here folks.

okay, so i bought a homestead about a month back. was going to buy it anyway + was not influenced by the home buyers credit, but since it's there, i applied for it anyway.

so, the cpa calls me this morning all hot + pissed off telling me my application was denied. apparently he found out 2 weeks ago i was denied, but he was holding off telling me because he went to an IRS meeting in chicago last week, and he wanted to ask some questions about why.

so, he tells me the word in chicago is that the government is denying applications left and right ahead of the deadline at the end of june. they're trying to get out of paying them. the government denies them, then sends back a letter listing "an item" that has to be re-submitted to get the credit. however, they do not give you the whole "item" list at one time. you send one in, they deny it, get you another one, etc. looks like they are trying to stall for time so that on june 30 at midnight, you'll not have everything in, and whamo- denied for good.

so, he asks around and gets the full list. here's what i have to submit in 2 weeks:

1) 5 years of tax records from my previous address
2) 5 years of utility bills from my previous address
3) utility bills from new address
4) new driver's license from new address
5) all bank purchase info
6) schedule visit from home inspector, notary letter that i really live there
7) pictures of residence

and then he tells me that they are sending ATF agents to houses to verify that you really live there after you have everything in.

i was all cool with it until he told me about ATF agents randomly visiting people. WTF? for real?

anyway, take this for what it's worth.

[Heimdhal]

The ATF thing sounds kinda weird, but when you consider they were formed under the IRS, it makes a little more sense and its probably more of a scare tactic to get people to just forget the tax credit.

I wouldnt worry about it too much. If they start getting nosy and want to see inside your gun safe, tell em to get a warrant. ;)

[chad]

i just looked it up, and the nearest atf place from is almost 200 miles away, so i doubt they would randomly check me. moving forward.

i wonder what type of drama is going to happen on july 1 when people find out they are screwed on this...

[k-os]

That is a pain in the ass, chad, but I would expect nothing less from our dear government. I know you didn't buy your property for the purpose of the tax credit, and I don't blame you for applying for it. However, when you take (or apply for) handouts from the government, there is a certain amount of compliance that is required of you. I'd check the fine print for the ATF visits.

It seems like they are following in the path of insurance companies . . . deny, deny, deny until you have to put out. Most people give up after the first one or two denials.

[chad]

that's EXACTLY what he said k-os, that they are acting like insurance companies just flat-out denying submissions.

[k-os]

that's EXACTLY what he said k-os, that they are acting like insurance companies just flat-out denying submissions.


They've got to practice so as to refine the art of rejecting claims.

[skidmark]

That long list is not required for the first time home buyer, but for the Long-Time Resident credit. It does not have to be approved by the IRS by 6-30-10, you can even claim it on next years return in 2011.

Did he submit any documentation with your claim?

See the rules here:

First-Time Homebuyer Credit


Legislative changes in November 2009 expanded and extended the credit and also added documentation requirements for claiming the credit. Due to increased compliance checks by the IRS, failure to submit documentation will slow down the issuance of any applicable refund.
For Qualifying Purchases in 2010

For qualifying purchases in 2010, you have the option of claiming the credit on either your 2009 or 2010 return.
Deadlines

* You must have bought — or entered into a binding contract to buy — a principal residence on or before April 30, 2010.
* If you entered into a binding contract by April 30, 2010, you must close (go to settlement) on the home on or before June 30, 2010.

Filing Requirements
2009 Tax Return

Because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (see the instructions for help with the form), and a properly executed copy of a settlement statement used to complete the purchase.

* Purchasers of conventional homes should include a copy of Form HUD-1, Settlement Statement, or other settlement statement, showing all parties' names, property address, sales price and date of purchase.
* Purchasers of mobile homes who are unable to get a settlement statement should include a copy of the executed retail sales contract showing all parties' names, property address, purchase price and date of purchase.
* Purchasers of newly constructed homes where a settlement statement is not available should include a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Note Regarding Signatures: While the Form 5405 instructions indicate that a properly executed settlement statement should show the signatures of all parties, the IRS recognizes that the elements of the settlement document, often a Form HUD-1, may vary from jurisdiction to jurisdiction and may not reflect the signatures of the buyer and seller. The settlement statement that must be attached to the return is considered to be properly executed if it is complete and valid according to local law. In locations where signatures are not required the IRS encourages the buyer to sign the settlement statement prior to attaching it to the tax return even in cases where the settlement form does not include a signature line.

Long-Time Residents: The November 2009 legislation extends the credit to long-time residents of the same main home if they purchase a new main home. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. For long-time residents claiming the credit, the IRS recommends attaching, in addition to the documents described above, any of the following documentation of the five-consecutive-year period:

* Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
* Property tax records or
* Homeowner’s insurance records.


http://www.irs.gov/newsroom/article/0,,id=204671,00.html

[chad]

i met all of the criteria and filled out all of that. nowhere, anywhere, did it say i needed to submit pictures, notarized letters from building inspectors, 5 years of tax bills, 5 years of electric bills, etc.

i've been googling it, turns out there are LOTS of stories like mine.

[skidmark]

If you are a 1st time home buyer you would not have five years of property tax bills.

If you submitted all the paperwork the first time, try resubmitting directly with the taxpayer advocate office in your area.

Hope you get your 7k soon.