Housing and Urban Development Secretary Shaun Donovan testifies on Capitol Hill in Washington, Tuesday, Oct. 20,2009, before the Senate Banking Committee hearing on the housing market.(AP Photo/Harry Hamburg)
As of Tuesday, October 20, 2009, Shaun Donovan, Secretary of the Department of Housing and Urban Development, told the Senate Banking Committee that the White House hadn’t make a decision on extending the tax credit and was looking at the costs.
Uh, oh. And, guess what? They don’t know what the costs have been so far. Why? Eligible refunds show up on tax returns. Tax filing season doesn’t start until next year. But Donovan said he expects to get cost data in the next few weeks. “We understand the urgency of this situation,” he said.
Guestimates at this time are that it would cost about $1 billion a month to extend the existing credit. This is according to congressional estimates. Cost for a bill to extend the credit to June 30, 2010, is estimated at $16.7 billion. So the government, what, prints more money?
And, guess how it’s being extended? There is an amendment sponsored by Sen. Johnny Isakson (R-GA) and by Senator Christopher Dodd (D-CT) that is scheduled to be attached to Senate legislation extending unemployment compensation that would create an expanded version of the tax credit. It’s not even being introduced on it’s own.
The stimulus-package credit allows first-time homebuyers to reduce their federal income taxes by 10 percent of the price of a home, up to a maximum of $8,000. The current $8,000 first-time home buyer tax credit is scheduled to end on November 30, 2009.
The Isakson-Dodd proposal would also remove the first-time home buyer requirement and raise the eligibility income limit to $150,000, or $300,000 for a couple.
That bill is likely to reach the Senate floor next week.
There are more problems as Congress looks to see what the costs of extending the tax credit will be. An audit found that 93 percent of the returns claiming credits for homes bought in 2009 were coded incorrectly, meaning those taxpayers could be incorrectly identified as liable for repaying the credit. The audit was released in September by the Treasury Inspector General for Tax Administration. It reviewed 47,276 electronically filed returns.
The IRS, in a response to the audit, said it plans to track the returns and confirm that taxpayers are liable to repay the credit before pursuing them.
The Internal Revenue Service has opened 107,000 examinations of questionable claims and identified 167 criminal schemes involving the tax credit since it was expanded as part of the economic stimulus package enacted in February.
But lawmakers understand the program is popular and has helped the struggling housing industry recover.
There is much debate on both sides about whether or not to extend the credit. With the expiration date only a month away, we shouldn’t have to wait long to find out Congress’ decision.
My question to you is, no matter what they decide, who pays?
