IRS MAY PROBE FORGIVEN MORTGAGE DEBT
Washington, D.C. - The Internal Revenue Service could collect more taxes from forgiven mortgage debt by expanding its information reporting and revising some of its forms, according to a study from the General Accountability Office.
IRS Statistics of Income officials estimate that for tax year 2008, the most current for which data is available, about 126,000 to 169,000 returns included a Form 982, excluding between $15.2 billion and $24.6 billion of forgiven debt from taxable income. The IRS estimates suggest that for about 61,000 to 93,000 of the returns with a Form 982, forgiven debt for a qualified principal residence was the only type of forgiven debt, and taxpayers excluded about $6.4 billion to $11.8 billion from taxable income.
In addition, because taxpayers excluding multiple types of debt from income are only required to report the total amount being excluded and not the amount for each individual type, the IRS lacks the data to determine the dollar amount of forgiven mortgage debt excluded for these taxpayers.
The IRS faces several compliance challenges in administering this complicated tax provision, the GAO noted. IRS officials reported that it may be difficult to collect additional taxes on forgiven debts, particularly when taxpayers are already insolvent and defaulting on debts.
SPEEDTAX INTEGRATES WITH NETSUITE
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