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Worst tax season ever

By Kay Bell ·
Tuesday, May 10, 2011
Posted: 3 pm ET

 Did you find filing your 2010 tax returns particularly troublesome? You're not alone.

National Taxpayer Advocate Nina Olson, speaking to a recent session of the American Bar Association Section of Taxation meeting in Washington, D.C., thinks so, too.

What made it so bad for the woman in charge of making sure the Internal Revenue Service is more responsive to taxpayers? The first-time homebuyer tax credit.

"I have to say this has been my worst filing season because the stories are heartbreaking," Olson told the tax attorneys. "You see this whole debacle that came from this provision that in my estimation had no business being in the Internal Revenue Code in the first place."

The tax credit didn't affect me personally, but I agree with Olson. Congress' insistence, following much pressure from the housing industry, to extend and expand this tax has been an administrative nightmare, both for taxpayers and the IRS.

The tax break was plagued by fraud, which prompted tougher verification standards, which made filing harder (no e-filing allowed for first-time homebuyer credit claimants), which produced IRS processing problems, which has left taxpayers waiting months for refunds.

Olson said she gets daily emails from folks who need the tax credit so they don't get evicted or because they have military spouses deployed abroad.

And speaking of the armed services, the tax break is not quite dead yet.

Members of the military and some federal employees serving outside the United States who signed a contract on a qualifying home by April 30 can claim the first-time homebuyer credit on their 2011 taxes if they close on the residence by June 30.

In addition to members of the uniformed services, individuals serving with the U.S. foreign service and employees of the intelligence community are eligible for this special rule.

It applies to any home purchaser in those fields who was on official extended duty service outside of the United States for at least 90 days from Jan. 1, 2009, through April 30, 2010.

If you qualify for this extended opportunity to claim the first-time homebuyer tax credit, good for you. But I, along with Olson, the IRS and lots of frustrated taxpayers, will be glad when this tax break finally ends.

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James Ventmiller
May 12, 2011 at 10:17 am

Someone had better fix the IRS comouter. I filed by internet without using a bought form. My tax was rejescted 3 times becaus the IRS did not agree with the information on it. Wrong zip code for that co.,wron id number for that co. etc. So I mailed it in & sent the copy of the 1099 R that they would not accept over they internet & my refund came in a week. My information was correct, but they refused it & accepted the document tht identical to what I filed. Someone should straighten this computer out so that it does not reject correct information

Jerry Hoefen
May 11, 2011 at 5:55 am

Most of issues facing today basiclly come down to this loss tax revenue an cost of goverment to run with out those revenues.We the people allowed in good faith our representives to sytematiclly end manufactoring in usa on broad sense too. Amazing how they could emagin that throw away trillions in manufactoring to become service ecomomy.Nothing fair in this world now cutting cost just wont make more taxs. Only way we people can change future is to become imformed an insist our represtives serve the people intrest first an fullfill their promise to serve good faith.Only then will those in goverment who serve own intrest leave office allow good people make changes to provide better world for our children

May 10, 2011 at 3:50 pm

Wow you dont say

Another red tape snafu