PARAMOUNT MORTGAGE - LENDER'S BLOG

Senate Extends Tax Credit Closing Deadline to September 30

Washington - An extension of the closing deadline passed unanimously in the Senate just hours before the June 30, 2010 closing deadline expired on an estimated 180,000 first-time and repeat home buyers nationwide.

House lawmakers easily passed the standalone bill earlier this week on Tuesday. The bill, HR 5623, extended the deadline for closing to September 30.

The Senate however, saddled the legislation with an amendment extending unemployment benefits, complicating efforts to get the deadline extended. The unemployment benefits extension was eventually stripped out of the final version.

The National Association of Realtors (NAR) estimated that 3,600 Missourians would have been affected by the original June 30 deadline. These home buyers had signed contracts, but were not able to close by the required deadline.

Once the deadline extension becomes law, tax credit buyers need not worry. Language in the bill to extend the deadline to September 30 would apply retroactively.

Separately, the U.S. Senate also passed the National Flood Insurance Program Extension Act of 2010 (H.R. 5569), which extends the National Flood Insurance Program until September 30. The House passed the bill last week.

The bill will retroactively cover the lapse period from June 1 to the date of enactment of the extension.

1,295 Prison Inmates Got Home Buyer Tax Credits

As Congress debated the extension of the closing deadline for legitimate home buyers, USA Today's, Sandra Block reported Thursday the "IRS is tracking thousands of fraud cases" involving "millions of dollars in home buyer credits."

The IRS tightened reporting requirements for taxpayers who claim the credit in response to earlier reports of widespread fraud. According to the Treasury's Inspector General, "additional controls are needed."

Among the fraud reported:

1,295 prisoners, including 241 serving life sentences, received $9.1 million in credits even though they were still incarcerated at the time they reported they purchased their home.

2,555 taxpayers received $17.6 million in credits for homes purchased before the dates allowed by law.

10,282 taxpayers received credit for homes that were also used by other taxpayers to claim the credit. In one case, 67 taxpayers used the same home to claim the credit.

To address concerns that prison inmates have been claiming the homebuyer tax credit, Senate Democrats announced a substitute amendment to HR 4213. The amended bill has a provision to allow the Internal Revenue Service to disclose tax-return information to officers and employees of state agencies charged with the administration of prisons.