The House voted Tuesday to extend the closing deadline for taxpayers seeking the Homebuyer Tax Credit.
Under current law, taxpayers that entered into a written binding contract to purchase a home prior to May 1, 2010 are eligible for the Homebuyer Tax Credit so long as the sale is completed prior to July 1, 2010. H.R. 5623, the Homebuyers Assistance and Improvement Act of 2010, would extend the current deadline from June 30 to Sept. 30, 2010, enabling an estimated 180,000 additional homebuyers to utilize the credit.
Taxpayers that entered into a written binding contract prior to May 1, 2010 would have until Sept. 30, 2010 to complete their home purchase transactions in order to be eligible for the Homebuyer Tax Credit.
Taxpayers must have entered into a written, binding contract prior to May 1 to claim the credit. The legislation also includes an important provision to crack down on reported instances of fraud identified in a recent report by the U.S. Treasury Inspector General for Tax Administration that found prisoners claimed over $9 million worth of the credits (see Prisoners Claimed Millions in Bogus Homebuyer Tax Credits). The IRS would be allowed to disclose tax return information to officers and employees of state agencies charged with the administration of prisons.
Millions of American families have taken advantage of the Homebuyer Tax Credit, giving a boost to home sales at a time when our housing market needed it most, said House Ways and Means Committee Chairman Sander M. Levin, D-Mich., in a statement. The credit helped spur our economic recovery and also helped first-time buyers achieve their dreams of owning a home. Todays legislation helps ensure the credit works for people who followed the terms of the incentive and need a little more time to close on their pending contracts.
The $140 million 10-year cost of the legislation would be offset with a change to the Travel Promotion Act, delaying the timing of when the Department of Homeland Security is supposed to transfer an initial set-up fee of $10 million for the Travel Promotion Board. Another provision would clarify the tax laws to state that the bad checks penalty also applies to electronic payments. Under current law, a penalty is imposed on any taxpayer who attempts to satisfy a tax liability with a check or money order that is not duly paid. The penalty is 2 percent of the amount of the bad check or money order. If the bad check or money order is less than $1,250, the penalty is the lesser of $25 or the amount of the check or money order.The bill would clarify that the bad check penalty applies to electronic payments and other commercially acceptable instruments that are not duly paid.
Earlier this month, the Senate also passed an extension of the closing date of the First-Time Homebuyer Tax Credit (see Senate Passes Homebuyer Credit Extension). However, it was included as an amendment to the American Jobs and Closing Tax Loopholes Act, which has been repeatedly blocked in the Senate by a filibuster (see Senate Again Fails to Pass Tax Extenders Bill).
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