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The IRS is having problems processing the returns of those who got the 2008 homebuyer tax credit. It's a small but vocal group.

By Kay Bell Mar 23, 2011 6:31PM

This has not been a good filing season for the Internal Revenue Service.


First, Congress screwed around into December before passing tax laws that apply to 2010 returns. That forced the IRS to push back the start of the 2011 filing season for many taxpayers as it reprogrammed its computers.


Then, thanks to a glitch in those computers, the IRS erroneously demanded payments of folks whose direct tax debits are in the works.


Now there's a passel of first-time homebuyer credit claimants who are not happy about another IRS glitch that's placed their tax returns and, in some cases, their refunds  in limbo.


The problem is with filers who claimed the original $7,500 homebuyer credit for the 2008 tax year. It wasn't really a credit back then. Instead, it was a 15-year, no-interest loan that has to be paid back, starting with 2010 tax returns. 


Man, did we ever see this repayment chaos coming!


Relatively few filers affected, but all are angry


When the IRS notified tax professionals last week about the homebuyer credit hold-up, it noted that it was "aware of a programming issue delaying the processing of a small percentage of returns." The agency isn't getting any more specific than that on the number of affected filers.


Instead, an IRS spokesman pointed to filing data through mid-March showing processing of more than 66 million returns, of which 59 million resulted in the issuance of refunds.


And in the grand scheme of the millions of returns that flood IRS offices this time of year, the number of taxpayers affected by this programming problem is no doubt small.


Still, as I often tell the patient and long-suffering hubby, I know a lot more people have a lot worse problems, but my problems are what I'm stuck with and they matter to me!


That appears to be the attitude of taxpayers dealing with the first-time homebuyer credit repayment glitch. In a social media version of misery loves company, more than 1,000 of them have banded together on a special Facebook page,  2011 Tax Refund Delays (5405 form, 1301 or 1481 Error codes), to share their concerns and complaints.


As for when they might get some relief, and their refunds, the official IRS word is, "We are working quickly to resolve this issue and update our systems within the next few weeks, which will allow us to process these impacted returns. The IRS regrets this delay for impacted taxpayers."


Form 5405 special instructions


If you're paying back the 2008 homebuyer credit this filing season but haven't yet filed, the IRS has some advice on how to make things go more smoothly when you do.


For couples filing jointly but where the credit was claimed by just one spouse back in 2008, send in one Form 5405 showing that husband's or wife's Social Security number.

And where a couple bought the home and claimed the credit jointly, send in a separate Form 5405 for each spouse, equally dividing repayment on each form.

More from Don't Mess with Taxes and MSN Money:


Mar 24, 2011 12:34AM
Just another fed agency that doesn't know it's a** from a hole in the ground...we need to put an end to the madness...abolish the IRS. Just think how much money the taxpayers would save...
Mar 23, 2011 11:38PM
Here's the BEST move, FLAT TAX! NO IRS! The Rich can't dodge it either! That is why we don't have flat tax!
Mar 23, 2011 8:34PM
I do read what i get. The 2008 credit was a credit and i knew it had to be repayed. Our problem is that the IRS was not ready to receive the repayment. Them not being ready for it has caused a delay in people's refunds. Not to mention that every time someone in our group calls the IRS, we get a different answer or are told to wait 30 days. If a definite date were set for this to be over and refunds deposited, many of us would not be nearly as aggravated. Run-arounds and no information are a big problem for most people who are just wondering why 2 years after the credit was taken, the system is not in place to give the money back.
Mar 23, 2011 11:46PM
Grace Best! THE Government should start telling the truth FIRST! It might rub off!
Mar 24, 2011 5:11PM

Having a flat tax is too simple. The IRS as we know it would be abolished. Everyone pays say 15% on everything they purchase, 8% goes to the Feds, 5% to your respective state, and 2% to your county/city. This is much too simple and everyone would have to pay. The more you spend, the more tax you incur. No more getting back thousands for some that didn't pay it in the first place, and no more loopholes for the wealthy. I guess being fair to everyone at every level of income is just too complicated!  

Mar 23, 2011 10:15PM
Although recognition has been given to this IRS goof up, the writer failed to mention numerous details. First and most important the IRS has been lying to everyone telling them any story that they can think up. Secondly, the IRS was not even told their own employees, including the IRS commissioner what is going on. Thirdly, like was mentioned earlier, any small percentage of 300 million is a lot of people waiting for their returns.Forth, we are not angry, we are frustrated with being told lie after lie about when to expect our refunds. It has been everywhere from 30 days( that was 30 days ago) to 6 months. Some of us have gotten a DD date of March 25 and April 5, we will see if this is another lie on the part of the IRS. I cant imagine what kind of trouble any of us would be in if we lied to the IRS!
Mar 23, 2011 11:06PM
my tax return was accepted by the irs on Feb 16, which results in my return being direct deposited on Feb 25, a week later when I called I was told I shouldn't have called until it was a month late!!!?? yeah,right!! then she told me my return was held up because I itemized, and it would be processed by the next wednesday and paid not that friday but the following.  when that passed I called again and was told what I already knew (I used to work for them) that if it was accepted it has already been processed. now they tell me a month after my return was due that I am in this boat that they can't  get the $500 payment system to work, he said days go by that no one even works on the problem and there is absolutely no timeline in which I  could receive my payment.  could be a month, could be 4.  I asked if I would be paid interest and he laughed.   they sure would  charge me interest if I owed themthousands of dollars for over 2 months.  I told this guy that I'm about to lose the house that I got the stupid credit for in the first place, he told me to call their advocate hotline, which told me that was wimpy of him 'cause they aren't even writing down calls about this problem 'cause they're is nothing they can do.  I filed my return on Feb 2, and way back then lied to about why it was taking so long to be accepted.  So, I've been lied to 3 times so far, by a gov't trying to gain back trust. it is now Mar 23rd and I have no idea when I'll receive money I am owed.  What a way for the Fed Gov't to help a crippled economy, ey?
Mar 24, 2011 11:43AM

I am so sick of dealing with this monkey butt stuff we call government. If any of us owed the IRS they would be knocking on our door days before we had to pay them back to get their money, but it is okay for them to take months for our moneys due. They should be incarcerated just like we would be if we did not pay our money that is due. For the people that receive taxes back they look forward to that money at the beginning of the year to pay backed bills, to fix a roof and much more. There is no good reason that we do not have our money yet. Basically we need our money more than they need theirs and they are just harboring it.

Mar 23, 2011 9:23PM
The people waiting for their refunds are not the only ones affected.  I wish someone doing a story on this subject would talk to one of the IRS agents whose job it is to answer the calls of the "small percentage" of people affected. These agents will tell you  very different story than the IRS spokesman who refuses to comment on the actual number of files affected.  They are tired of having to lie to taxpayers and haven't been given answers from their superiors to pass on to those who call.  Ask any of them and they will tell you that is is not a small number of Americans affected. The IRS agent I spoke to today laughed when I quoted him that line and said "even a small percentage of 300+ million Americans is still a really big number".
Mar 24, 2011 6:08AM
It's 530am, and I have to travel today for two hours to straighten out my tax return at an  IRS office.  Why?  Now I have to send my tax return to CA where some idiot contractor gets a bonus for screwing up my return and reducing my refund.  I could not get any help thru the IRS 800 number or on the IRS website.  I am retired, so my Social Security was attacked for more taxes. It says I did not calculate the worksheet correctly!!  Then to keep others and me from getting too mad, I was awarded over $700 in phony tax credits just to crunch the numbers so as not to take away too much of my refund.  And to think what might happen next year when I have to claim my 401k withdrawal!!!!  Wow!  This is a hell of a way to get people to go electronic where people like us have rotten computer internet service with power interruptions all the time and the IRS website leaves a person out in the cold.  So with all the deductions we must keep track of because of heavy medical bills for the wife and my disabled son we take care of, we just muddle on with the paper returns because the other deductions to our income we endure must be documented properly on paper where no computer wizardry has a handle on it yet!!!!!!!!!
Mar 24, 2011 8:48PM
I think if we have to pay late fees then it's only fair that the irs pays them also. I just read that they have a 85 page list of excuses that will not be tolerated anymore, how about if the tax payers give the irs a list of no longer acceptable excuses with the same penalties imposed? I wonder how they would feel with the shoe on the other foot. Just thinking out loud
Mar 23, 2011 11:36PM
It's like this folks> THEY HAVE NO MONEY! ANY TACTIC is to DELAY,DELAY,DELAY! The Government is FAMOUS for this! They do it at SS, V A, Please get mad or die! Then they win again!
Mar 24, 2011 4:59PM
ex·tor·tion  (k-stôrshn)
1. The act or an instance of extorting.
2. Illegal use of one's official position or powers to obtain property, funds, or patronage.
3. An excessive or exorbitant charge.
4. Something extorted
Mar 24, 2011 11:56AM
Gotta love how the government saves people. Gosh, bet that healthcare nightmere will be a real winner when it is fully implemented or is it more like a government stealing even more from the American people?  Yet Americans lie down and obediently say, "It's okay Guberment! You can have everything I worked for. Please take more and more and more!"  Oh, that's right you have to feed your families, oh yea! The government will do that. Well, curious, when the government has taken everything we all have then what? We live like Zimwabwe (or however you spell it!?)  This isn't America, this has become hell on earth!
Mar 24, 2011 12:46AM

I filed my return in early February (a paper return due to documentation requirements for some of the credits) and was told my refund would be direct deposited on March 11.  It never showed up and I finally found out that they made a typo and sent it to the wrong account number!!  They wouldn't tell me which account number they accidentally sent it to, so the bank can't even tell me if someone else has my money, and this is NOT a small refund!  I call the IRS everyday, spend 45 minutes on hold, and get a different answer everyday about what they plan on doing about it and how long it's going to take.  One agent even told me that if I had e-filed then this wouldn't have happened (not that it was even an option!).  The credits I claimed are for adopting a special needs child, and after the adoption was finalized, we found out the caseworker lied and she has much more special needs than we realized.  Now we're swamped with medical bills for ongoing treatment that insurance won't cover (no thanks to Obamacare) and were relying on the refund to help cover them.  No one at the IRS will even attempt to find my money or do anything other than give me inconsistent, rehearsed responses.

Mar 23, 2011 9:29PM
OHHHHHHHHHHHHHHHHHHHHH SNAP!!!!! We rock! It's about time we got a voice. T SHIRT TIME!
Mar 24, 2011 12:43PM
Yep, if the IRS would be dismantled, we all would breath easier.  We already have taxes taken out of our paychecks, and we pay taxes when we purchase items.  Why should we pay more?
Mar 24, 2011 8:11AM
I too was affected by errors,I didn't have home buyer credit.Couldn't get any answers for 5 weeks.Called Commisioners # finally found out that file was corrupted when it was sent thru electronically,but still getting conflicting stories from different IRS people.All anybody wanted was the truth,not excuses.
Mar 23, 2011 9:16PM
Wow - Allinone5, you should READ the article before commenting.  It says the IRS screwed up - it's not the fault of those that took the credit.  Sad if you have nothing better to do but troll around trying to piss people off.  I feel more sorry for you than the people waiting on their refunds.

Mar 23, 2011 9:10PM
I'm not poor and I'm not stupid - Allinone5 did you even read the article because your comment makes no sense?
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