"Administration of the First-Time Homebuyer Credit"



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October 22, 2009


Washington, DC



Statement of

The Honorable J. Russell George

Treasury Inspector General for Tax Administration


before the




Image of the Recovery.gov seal


"Administration of the First-Time Homebuyer Credit"


October 22, 2009



Chairman Lewis, Ranking Member Boustany, and Members of the Subcommittee, I thank you for the opportunity to testify on the Internal Revenue Serviceís (IRS) administration of the First-Time Homebuyer Credit (Credit).My comments will focus on the Treasury Inspector General for Tax Administrationís (TIGTA) oversight of the IRSís efforts to administer the Credit and on recommendations TIGTA has made to improve the administration of the Credit.

Background on the First-Time Homebuyer Credit

The American economy is in the midst of recovering from a severe economic crisis in which millions of Americans have lost their jobs. In light of this economic predicament, the President signed into law on February 17, 2009, the American Recovery and Reinvestment Act of 2009 (Recovery Act), a nationwide effort to create jobs and revitalize the American economy.[1]This legislation represents one of the most ambitious efforts to stimulate the American economy in our Nationís history.Section 1006 of the Recovery Act revised and extended the First-Time Homebuyer Credit originally provided for in the Housing and Economic Recovery Act of 2008 (HERA).[2]

HERA established a new tax credit for first-time homebuyers. The tax credit was intended to address concerns over excess home inventory and falling home prices.[3]The new credit was originally available for a limited time only, applying to taxpayers who purchased a principal residence after April 8, 2008, and before July 1, 2009.[4]HERA allowed eligible taxpayers to claim a Credit equal to ten percent of the purchase price of the home, limited to $7,500.[5]The Credit was fully refundable, meaning it would be paid out to eligible taxpayers even if they owed no tax or if the Credit exceeded the tax they owed.However, the Credit, as expressed in HERA, served as an interest-free loan to be paid back over a 15-year period beginning two years after the Credit was claimed.

Section 1006 of the Recovery Act extended the First-Time Homebuyer Credit to include purchases made on or after January 1, 2009, and before December 1, 2009; increased the maximum Credit to $8,000; and eliminated the repayment requirement as long as the taxpayer retains the residence for 36 months. [6]Taxpayers qualifying for the revised Credit may claim the $8,000 Credit on either their 2008 or 2009 individual income tax returns.

Benefits and Estimated Costs of the First-Time Homebuyer Credit

Congress allocated $13.6 billion for the First-Time Homebuyer Credit in HERA.The Joint Committee on Taxation estimated that $4.3 billion more would be paid to first-time homebuyers in Fiscal Years 2009 and 2010 as a result of the Recovery Act.As of October 9, 2009, more than 1.2 million tax returns claiming almost $8.5 billion in First-Time Homebuyer Credits had been processed by the IRS.[7]

The President has called on Federal agencies to ensure that Recovery Act funds are used for authorized purposes and every step is taken to prevent instances of fraud, waste, error, and abuse.The IRS has been charged with ensuring that the First-Time Homebuyer Credit is appropriately claimed and properly administered, and the Recovery Act mandates TIGTA to oversee the IRSís Recovery Act efforts.

Purchase Dates and Supporting Documentation for Claiming the First-Time Homebuyer Credit

To claim the Credit, eligible taxpayers must complete and file IRS Form 5405, First-Time Homebuyer Credit.[8]The IRS developed this new form for eligible taxpayers to calculate and claim the Credit. This form requires the taxpayer to provide the amount of Credit being claimed, the address of the home qualifying for the Credit, and the date the home was purchased.The form was updated after the passage of the Recovery Act to reflect the increased amount of the Credit, as well as to change the allowable period for purchasing a home.

In an attempt to ensure the accuracy of claims for the First-Time Homebuyer Credit, the IRS developed computer programs to reject electronically filed tax returns or temporarily suspend the processing of paper tax returns with the following conditions:

        Claims in excess of the maximum allowable Credit;[9]

        Claims in excess of allowable amounts for those taxpayers with an Adjusted Gross Income exceeding income limitations;[10] or

        Claims without a Form 5405 attached.

During our review of the 2009 Filing Season,[11] we confirmed that IRS programming was effectively identifying the above conditions.[12]However, some key controls were missing to prevent an individual from erroneously or fraudulently claiming the Credit and receiving an erroneous refund of up to $8,000. For example, date of purchase information from electronically filed Forms 5405 was not used to verify eligibility for the Credit until late in the 2009 Filing Season.Furthermore, the IRS did not request that taxpayers attach additional documentation to tax returns to verify eligibility before allowing the Credits.For example, attaching a Form HUD-1, U.S. Department of Housing and Urban Development Settlement Statement,[13] received at closing, would enable the IRS to verify the purchase of a residence, the date of purchase, the purchase price, and the location of the residence.Although the submission of additional documentation would not substantiate the taxpayer as a first-time homebuyer, it would provide some level of deterrence for ineligible taxpayers.

In a memorandum that TIGTA issued to the IRS on November 25, 2008, we recommended the IRS ensure that information on each line of the Form 5405 was transcribed for paper returns and that the information from the form be used to validate claims for the First-Time Homebuyer Credit. [14]We also recommended the IRS require that taxpayers attach documentation to substantiate a home purchase in order to verify eligibility for the Credit.

In a response to our memorandum, the IRS disagreed with both of TIGTAís recommendations. Because of the extensive programming requirements and the late passage of HERA, the IRS did not transcribe the information from each line of Form 5405 into its computer system.The IRS responded that other strategies being employed would mitigate our concerns.The IRS also stated that a requirement to supply documentation with the tax return would be burdensome for both the taxpayer and the IRS.

The IRS considers the requirement to supply documentation burdensome because if taxpayers do not provide documentation, the IRS must still process the claim for the Credit. The IRS does not have math error authority to disallow the Credit during processing.[15]The IRS also noted that requiring documentation would preclude many taxpayers from electronically filing their returns.We disagree with the IRSís assertion that requiring documentation would preclude e-filing.Taxpayers claiming the Credit who wish to e-file their returns would still be able to do so, provided they separately mail a paper copy of the additional documentation.Furthermore, requiring taxpayers to provide documentation would discourage abuse of the Credit before it occurs, much in the same way that requiring documentation to substantiate certain noncash charitable contributions discourages abuse.

The law requires that a home be purchased before the Credit may be claimed. However, we identified more than 19,300 electronically filed 2008 tax returns on which taxpayers claimed the First-Time Homebuyer Credit for a home which had not yet been purchased, but allegedly would be in the future.Had the IRS timely implemented our recommendations to both capture and use the purchase date from the Form 5405, these claims would not have been paid.The amount of the Credits inappropriately claimed via e-filing totaled more than $139 million.We have not yet determined the number of paper returns with similar claims.

During the 2009 Filing Season, the IRS implemented computer programming to reject claims electronically filed with a future purchase date.Controls were also implemented to identify and disallow claims filed on paper tax returns with future purchase dates.However, at the time we completed our report, the IRS had not decided whether to go back and review or correct the more than 19,300 electronically filed tax returns with future purchase dates or try to identify paper returns meeting the same criteria that may have been processed before controls were put into place.According to the IRS, the filters and controls they put into place to identify post-refund erroneous claims should identify all erroneous claims, including those with home purchase dates in the future.

The IRSís plans to address this issue are not adequate.The IRSís filters will allow some taxpayers the use of money to which they were not entitled, and may never be entitled.In addition, the criterion used by the IRS will not ensure that a home purchase was made.

We recommended that the IRS initiate actions to determine whether those 19,300 taxpayers known to have claimed the Credit for a future home purchase have actually purchased a home.If not, steps should be taken to recover the erroneous Credits.The IRS agreed with this recommendation.The IRS has identified the issue of taxpayers claiming the Credit for future home purchases as an important element of the overall examination and compliance plan.The IRS agreed to flag these tax returns for necessary follow-up with the taxpayers involved.

Although the IRS does not have authority to reject claims for the Credit made by taxpayers who do not provide documentation, it does have the authority to audit those claims.The fact that a taxpayer could not, or would not, provide the requested documentation, such as a HUD-1 form, would be a strong indicator that the claim for the Credit was highly questionable and may warrant a pre-refund audit.

The IRS also contends that our conclusion that it improperly paid out $139 million to taxpayers claiming the Credit for future purchases is premature because the taxpayers may ultimately purchase a home.The IRSís reasoning on this issue is not correct according to law.At the time the IRS paid the Credit to these taxpayers, the taxpayers did not qualify for the Credit.As noted earlier, the law does not provide for prepayment of the Credit, and by making these payments the IRS did not properly administer the tax law, regardless of whether or not the taxpayers will subsequently purchase a home.

We also recommended that the IRS perform a review to determine the extent to which these improper claims occurred on paper-filed returns.If warranted, the IRS should identify all paper-filed returns claiming First-Time Homebuyer Credits for future purchases and ensure the purchases have taken place or the Credits are recovered.The IRS agreed with this recommendation and stated it would develop a plan to determine and assess the compliance risk associated with paper-filed returns claiming the Credit for future purchases.According to the IRS, the compliance program has already commenced and will extend into calendar year 2010.

Indications of Prior Home Ownership

The law defines a "first-time homebuyer" as any individual (and spouse, if married) who had no ownership interest in a principal residence during the three-year period prior to the purchase of the home to which the Credit applies.TIGTA developed computer programs to identify taxpayers who may not have qualified as first-time homebuyers but claimed First-Time Homebuyer Credits on their 2008 tax returns.As of July 25, 2009, using these computer programs, we identified almost 74,000 First-Time Homebuyer Credit claims attached to an original Form 1040, U.S. Individual Income Tax Return, totaling more than $500 million, that were claimed by taxpayers who had indications of prior home ownership within the preceding three years.[16]

The almost 74,000 taxpayers had entered information on their individual income tax returns for one of the prior three years indicating they may have owned a home. These entries included deductions for home mortgage interest, real estate taxes, deductible points and qualified mortgage insurance premiums.While these entries indicate home ownership, the homes involved may or may not have been the taxpayersí principal residences, so the deductions do not automatically disqualify the taxpayers from receiving the First-Time Homebuyer Credit. However, we believe they warrant scrutiny by the IRS.

The IRS reported that as of May 17, 2009, it had initiated the use of computerized filters to identify such taxpayers for examination.It plans to work the cases identified by these filters before a refund is paid.In such cases, the portion of the taxpayerís refund associated with the First-Time Homebuyer Credit is frozen until the IRS verifies that the taxpayer qualifies for the Credit.The IRS reported that as of May 24, 2009, 10,000 pre-refund cases totaling $75 million were stopped.In addition, during the period that it was developing its computerized filters, the IRS identified 10,000 questionable cases for examination to be worked on a post-refund basis.

We identified more than 70,000 questionable claims for First-Time Homebuyer Credits, totaling almost $480 million, received by the IRS prior to the initiation of its computerized pre-refund examination filters.We reviewed the tax accounts of a random sample of 50 of these taxpayers.None of the accounts had received scrutiny from either the IRSís Questionable Refund Program or the Examination function relative to their claims for the First-Time Homebuyer Credit.

At the time we issued our interim report, the IRS had not decided whether or not the claims for the more than 70,000 Credits will be subject to post-refund examinations.We found that more than 12,000 of the approximately 70,000 Credits were claimed by taxpayers who had claimed the Residential Energy Credit on one of their prior three tax returns. [17]This increases the likelihood that the taxpayers owned a principal residence and do not qualify for the First-Time Homebuyer Credit since the Residential Energy Credit generally is only available for qualified expenditures made on a taxpayerís principal residence.

We recommended that the IRS initiate actions to recover the First-Time Homebuyer Credit, when appropriate, from taxpayers who had previously claimed the Residential Energy Credit, the District of Columbiaís First-Time Homebuyer Credit,[18] or the Mortgage Interest Credit[19] on their individual income tax returns and develop a plan to review the other questionable claims that were processed prior to the IRS filters being implemented.[20] The IRS agreed with this recommendation and stated that currently all returns are screened for questionable First-Time Homebuyer Credit indicators and stored in a database that will be used to select cases for examination in accordance with the IRSís overall compliance plan.

First-Time Homebuyers Younger Than 18 Years Old

Through July 25, 2009, we identified more than 580 taxpayers younger than 18 years of age who claimed almost $4 million in First-Time Homebuyer Credits.The youngest taxpayers receiving the Credit were four years old. Contract law generally exempts children under the age of 18 from being bound by the terms of a contract. Therefore, it is unlikely that these taxpayers would have entered into an armís-length transaction for the purchase of a home.

As of May 17, 2009, the IRS implemented examination filters to identify potentially erroneous claims for the First-Time Homebuyer Credit.The age of the taxpayer receiving the Credit was not one of the specific filters implemented by the IRS to screen claims for the Credit on originally filed returns.The IRS believed that its filter identifying taxpayers claiming the Credit who had Adjusted Gross Incomes below certain levels would catch these questionable claims.

One hundred sixty-five (28 percent) of the more than 580 taxpayers under age 18 that we identified claiming the Credit did not meet the IRSís Adjusted Gross Income screening criteria.In 64 of these cases, other IRS filters flagged the claim for further scrutiny. However, 101 of the claims for the First-Time Homebuyer Credit made by children under the age of 18 did not meet any of the IRS screening criteria.[21]The total amount of these Credits was almost $627,000.

We recommended that the IRS add age to the filters for pre-refund examinations of claims for First-Time Homebuyer Credits filed with original returns.The IRS agreed with this recommendation and indicated that it would develop additional age filters to capture residual returns not captured by existing filters.

First-Time Homebuyers with ITINs

The IRS issues Individual Taxpayer Identification Numbers (ITIN) to help individuals comply with U.S. tax laws and to provide a means to efficiently process and account for tax returns.Only individuals who have valid filing requirements or are filing tax returns to claim refunds of over-withheld taxes are eligible to receive ITINs.ITINs are issued regardless of an individualís immigration status.An ITIN does not indicate that an individual is authorized to live or work in the U.S.To be eligible to work in the U.S., a taxpayer must have a Social Security Number that is valid for work.In calendar year 2006, resident aliens accounted for 93 percent of the total number of ITINs issued.Through July 25, 2009, we identified more than 3,200 taxpayers claiming First-Time Homebuyer Credits totaling over $20.8 million on tax returns filed with ITINs.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996[22] prohibits aliens residing without authorization in the U.S. from receiving most Federal public benefits.[23]The Recovery Act specifically denies the First-Time Homebuyer Credit to individuals who are nonresident aliens.However, the Recovery Act is silent as to the eligibility for the Credit of resident aliens without a Social Security Number that is valid for work.In a report issued earlier this year, we noted that legislation is needed to clarify whether or not refundable tax credits may be paid to filers without a valid Social Security Number, and if these credits may not be paid, to provide the IRS with additional math error authority to disallow associated claims for the credits.[24]

Amended Returns Claiming the First-Time Homebuyer Credit

Taxpayers have several options to claim the First-Time Homebuyer Credit.One option is to amend their 2008 tax returns. Taxpayers who buy homes after they have already filed their 2008 tax returns but purchased them within the designated time frame can file amended returns.The amended tax returns will allow them to claim the Credit on their 2008 returns without waiting until 2010 to claim them on their 2009 returns.

We believe that amended returns are also vulnerable to erroneous claims for the First-Time Homebuyer Credit.During our audit of the First-Time Homebuyer Credit, we recommended that the IRS implement controls to ensure that taxpayers claiming the Credit on amended tax returns have not owned a principal residence within the prior three years.We suggested that the IRS perform research of historical taxpayer account data to ensure that taxpayers claiming the Credit do not have indications of prior home ownership that would disqualify them from claiming the Credit.

The IRS agreed with our recommendation and informed us that it was already in the process of developing criteria to identify amended returns with claims for the First-Time Homebuyer Credit for review by its Examination function.The IRS requested and was provided specific cases and details of our criteria for identifying questionable claims for the Credit. The criteria were incorporated into the Internal Revenue Manual on
June 16, 2009.[25]Along with the criteria in the Internal Revenue Manual, the IRS enhanced its automated tool used to process amended tax returns.The tool was enhanced to automate research of IRS records for indications of prior home ownership over the past three years and other predetermined criteria that, if present, make the claim questionable.

Claims for Less than the Full Allowable Amount of the Credit

As of July 25, 2009, we identified approximately 48,500 taxpayers who appear to have not claimed or received the full amount of the First-Time Homebuyer Credit to which they may have been entitled.Many of these taxpayers claimed $7,500 rather than $8,000 for homes purchased in calendar year 2009.In our opinion, it is highly unlikely that these taxpayers purchased homes for exactly $75,000.The lesser amounts were claimed most likely because either the taxpayers filed their returns before the Recovery Act was passed or they did not realize that the new law increased the Credit amount to $8,000 for homes purchased in calendar year 2009.As of July 18, 2009, only about 7,900 (16 percent) of these taxpayers have amended their returns to claim the
additional $500.

At the time we issued our interim report, the IRS did not plan to contact these taxpayers or to track whether these taxpayers file amended returns.The IRS believed taxpayers are aware of the additional $500 made available as a result of the Recovery Act and would amend their returns if warranted. In our opinion, this approach is not consistent with the intent of the Recovery Act, which is to provide a specified amount to eligible taxpayers in order to stimulate the economy.

For 2007, the IRS developed Package 1040A-3, Information About Economic Stimulus Payments for Social Security, Veterans, and Other Beneficiaries, to provide certain taxpayers with information and examples on how to claim their economic stimulus payments.A similar package informing taxpayers of how to amend their First-Time Homebuyer Credit claims may be beneficial.

We also recommended that the IRS monitor the accounts of taxpayers known to have purchased homes in calendar year 2009 and who claimed First-Time Homebuyer Credits of $7,500 to determine if the taxpayers amend their returns.If the taxpayers do not amend their returns, we recommended that the IRS contact these taxpayers to inform them that they may be entitled to an additional refund if the purchase price of their home was greater than $75,000.

The IRS agreed with our recommendation and intends to send notices to taxpayers purchasing homes in calendar year 2009 and claiming a Credit of $7,500 but who have not amended their returns.The notice will inform taxpayers that they may be entitled to an additional refund. We also recommended that the IRS consider providing taxpayers with specific information detailing how to amend their tax returns to claim the full amount of the Credit to which they are entitled.The IRS agreed with this recommendation.The IRS will revise instructions for Form 1040, Form 1040X, Amended U.S. Individual Income Tax Return, and Publication 17, Your Federal Income Tax For Individuals, to include information to assist taxpayers in amending their returns if they did not claim the full amount of the Credit to which they were entitled.

Coding Tax Accounts to Distinguish Between Credits

We also determined that most of the approximately 48,500 taxpayers described above, who appeared to have not claimed or received the full amount of the Credit, did not have their IRS accounts properly coded to indicate that their homes were acquired in calendar year 2009.Proper coding is significant because it is the indicator that the IRS will use to distinguish between taxpayers who must repay the First-Time Homebuyer Credit over 15 years (in accordance with HERA) and taxpayers who will not be required to do so unless they sell their homes within 36 months (in accordance with the Recovery Act). Unless the IRS properly codes the accounts, these taxpayers may eventually be subject to IRS collection procedures.

We reported this issue as part of our audit of the IRS 2009 Filing Season and recommended that the IRS take steps to accurately code these taxpayersí accounts to properly indicate whether the taxpayers are required to repay their Credits.


The First-Time Homebuyer Credit continues to play a significant role for millions of American taxpayers.Most recently, on October 8, 2009, the U.S. House of Representatives voted 416 to 0 to pass H.R. 3590, the Service Members Home Ownership Tax Act of 2009.This legislation would provide certain American service members, Foreign Service personnel, and some members of the intelligence community an additional 12 months past the current November 30, 2009, deadline in order to claim the First-Time Homebuyer Credit.

Based on the administration of the Credit to date, I am concerned about the IRSís ability to effectively administer the Credits claimed within the original deadline, let alone within an extended deadline for certain taxpayers.Although the IRS developed Form 5405 for eligible taxpayers to calculate and claim the Credit and implemented some controls to ensure the accuracy of claims for the Credit, several key controls were not designed or implemented. We are pleased that the IRS agreed to improve its controls in response to our findings.However, given the control shortcomings noted by TIGTA auditors, we will continue to provide oversight of the IRSís efforts to effectively administer the Credit and any extensions or changes to it.We plan to issue our next report assessing the administration of the Credit in spring 2010.

Mr. Chairman and Members of the Committee, thank you for the opportunity to provide TIGTAís assessment of the IRSís administration of the First-Time Homebuyer Credit.In closing, I would like to emphasize that TIGTA will continue to closely monitor the IRSís administration of the Credit and will promptly alert the IRS of any problems or emerging issues.I would be pleased to answer any questions you may have at the appropriate time.


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[1] Pub. L. No. 111-5, 123 Stat. 115.

[2] Pub. L. No. 110-289.

[3] Congressional Research Service:The First-Time Homebuyer Credit:An Economic Analysis (2009).

[4] Only the purchase of a primary residence located in the United States qualifies for the Credit.Vacation homes and rental properties are not eligible. Taxpayers who owned a primary residence at any time during the three years prior to the date of purchase are not eligible for the Credit.For homes that taxpayers construct, the purchase date is the date they first occupy the home.

[5] The amount of credit is reduced for individuals with modified Adjusted Gross Income (AGI) of more than $75,000 ($150,000 for joint filers), and is zero for those individuals with modified AGI in excess of $95,000 ($170,000 for joint filers).

[6] In addition to Section 1006, the Recovery Act also included a provision to create Recovery.gov.Recovery.gov is a Web site that was created to provide unprecedented transparency about how Recovery Act funds are being used, and increase accountability to guard against fraud, waste, and abuse.Timely and accurate reporting by Federal agencies provides both Congress and taxpayers an ability to track and monitor all Recovery Act funds on Recovery.gov with the level of transparency and accountability envisioned in the Recovery Act. In compliance with the Recovery Actís principles and reporting requirements, TIGTAís initial audit report of the First-Time Homebuyer Credit is publicly available at www.Recovery.gov as well as www.tigta.gov, TIGTA¬ís Internet Web site.

[7] According to Recovery.gov, tax relief accounts for approximately $288 billion of the Recovery Act provisions, or about one-third of the benefits expected from the Recovery Act.The President has stated that every taxpayer dollar spent on the economic recovery must be subject to unprecedented levels of transparency and accountability.

[8] See Appendix I on page 12.

[9] The maximum allowable credit for claims under HERA is $7,500.The maximum allowable credit for claims under the Recovery Act is $8,000.

[10] See footnote 5 for Adjusted Gross Income limitations.

[11] A filing season is the period from January 1 through April 15 when most individual income tax returns are filed.

[12] The 2009 Filing Season Was Successful Despite Significant Challenges Presented by the Passage of New Tax Legislation (Reference Number 2009-40-142, dated September 21, 2009).

[13] See Appendix II on page 15.

[14] See footnote 12.

[15] Math error authority allows the IRS to assess and send a notice of assessment of additional tax without using deficiency procedures.The procedure called "notice of deficiency" (deficiency procedure) provides the taxpayer with a method of appealing tax and/or penalties to the United States Tax Court prior to their assessment.Math errors include addition and subtraction errors on the tax return, use of the incorrect tax table, omission of information required on the tax return to substantiate an entry, and missing or incorrect Taxpayer Identification Numbers for exemptions and certain Earned Income Tax Credit disallowances.

[16] Some of these questionable claims were filed by IRS employees.These cases were referred to TIGTAís Office of Investigations.

[17] Taxpayers may be eligible to claim a Residential Energy Credit for energy saving improvements made to their homes located in the United States.Taxpayers must reduce the basis of their homes by the amount of any credits allowed.

[18] In an effort to revitalize city neighborhoods, first-time homebuyers in the District of Columbia (the District) have been allowed a credit against their Federal income tax equal to $5,000 since 1997.A first-time homebuyer in the District is any taxpayer that has had no interest in a principal residence in the District within the last year.Non-District residents, including non-District resident homeowners, are eligible to claim the credit for a home purchased in the city.

[19] The Mortgage Interest Credit is intended to help lower-income individuals afford home ownership. If qualified, a taxpayer can claim the credit each year for part of the home mortgage interest paid.Taxpayers may be eligible if they were issued a Mortgage Credit Certificate (MCC) from their State or local government.Generally, an MCC is issued only in connection with a new mortgage for the purchase of a taxpayerís principal residence.The MCC will show the certificate credit rate taxpayers should use to figure the credit.It also will show the certified indebtedness amount.Only the interest on that amount qualifies for the credit.

[20] We are in the process of identifying taxpayers who claimed the District of Columbiaís First-Time Homebuyer Credit or the Mortgage Interest Credit in the prior three years as well.Both of these credits apply only to a principal residence.

[21] Sixty-seven of these cases were filed before the IRS screening criteria were put into place, but would not have met the criteria had they been implemented at the time the returns were filed.

[22] P.L. 104-193 Section 401(c).

[23] The law defines a Federal public benefit as any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United States; and any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States.The law provides an exception for specified emergency services and programs.

[24] Actions Are Needed to Ensure Proper Use of Individual Taxpayer Identification Numbers and to Verify or Limit Refundable Credit Claims (Reference Number 2009-40-057, dated March 31, 2009)

[25] The Internal Revenue Manual (IRM) is the primary, official source of the IRSís instructions to its staff relating to the administration and operation of the IRS. The IRM contains the directions to which employees must adhere when carrying out their responsibilities in administering tax laws or other agency obligations.