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Homebuyer Assistance Improvement Act Signed into Law
July 13, 2010Passed by the House of Representatives (409-5) and unanimously by the Senate on June 30, 2010, The Homebuyer Assistance and Improvement Act of 2010 (HR 5623) was signed into law by President Obama on July 2, 2010.
The Homebuyer Assistance Improvement Act provides a three-month reprieve and a second chance for eligible taxpayers who contracted to buy a home and qualified for the first-time homebuyer credit but could not meet the June 30, 2010 closing deadline. Those who entered into a binding purchase contract prior to May 1st to close on the purchase of the home prior to July 1st will now have until September 30, 2010, an extra 90 days, to close the transaction.
“The House Ways & Means Committee estimates that 180,000 additional homebuyers will utilize the credit with the new deadline extension.” The bill’s goal is to aid, not penalize, prospective homeowners who may have missed the closing deadline due to delays within the financial sector.
To offset the Homebuyers Credit extension, the law adds three revenue- raising provisions:
-Travel Promotion Act: The new provision delays the deadline for the Department of Homeland Security (DHS) to transfer initial set up fees for its new Travel Promotion Board by one year, delay the Board’s fund matching by one year, and the fee collection will sunset now in 2015.
-Prisoner Return Disclosure: The provision regulates reported instances of fraud as identified in a report by The U.S. Treasury Inspector General for Tax Administration (TIGTA). In June 2010, TIGTA released a report estimating that 4,608 inmates attempted to claim homebuyers credit while in jail, while an estimated 1,295 prison inmates received more than $9 million in fraudulent first-time homebuyer tax credits. Under the new law, the IRS will now be able to disclose tax return information to officers and employees of State agencies charged with the administration of prisons.
-Bad Check Penalty: The provision clarifies application of the bad check penalty to electronic payments.
This article was prepared by William Tucker, from Hull Barrett’s Transaction Group. More details on claiming the credit can be found in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page on IRS.gov. Read the Homebuyer Assistance and Improvement Act of 2010.
Disclosure under IRS Circular 230: Unless expressly stated otherwise, nothing contained in this communication is intended or written to be used, nor may it be relied upon or used, (1) by any taxpayer for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code, and/or (2) by any person to support the promotion or marketing of or to recommend any Federal tax transaction(s) or matter(s) addressed in this communication. Any taxpayer should seek independent tax advice with respect to any Federal tax transaction or matter addressed herein.
