Tax breaks and ensuing confusion at IRS
The intention is good but the execution is not that successful. This is how one can perceive about the stimulus package enacted by the Obama government last year. The new tax breaks announced by the US Treasury Department is causing confusion among not only the public, but also posing enforcement problems for the Internal Revenue Service as well.
The deadline for filing individual tax returns nearing, the government issued a report last Thursday, which contains details of the erroneous credits being granted, arising out of the prevailing confusion at IRS. The Treasury inspector general for tax administration, J. Russel George, admits in the report that in Making Work Pay Tax credits the IRS gave out $24.2 million as of March 5.
Totally $25 billion worth of credits were issued by the IRS during the period. The error rate is just less than one-tenth of 1 percent to give out wrong credits.
According to the report which covers returns processed by IRS as of March 5, there were nearly 61 million and they expect to receive about 140 million returns this year.
The IRS spokesperson Terry Lemons said whenever there is major tax changes, you will see some confusion over it and assured the IRS is doing “everything they can” to work through problems and to process returns faster.
The stimulus package of Obama government enacted last year posed many challenges and made the tax system – more complex than before. Tax breaks were announced for qualified families while buying new homes.
Congress extended and expanded the home buyer tax credit in November because it was so popular. Home buyers were eligible for tax credit up to $6,500, if they had owned their current homes for over 5 years; first-time home buyers can get up to $8,000. Home buyers have to sign purchase agreements before May 1 and close the deal before July 1 to qualify for this tax credit.
The government report says the fastest way to get tax refund is to file the return electronically and have the refund deposited into your bank account within approximately 10 days.
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