IRS computer glitches, delays mar 2011 tax filing season

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.

Related posts:

• Homebuyer tax credit payback chaos?
• Filing season 2011 tax deadlines
• The federal homebuyer credit's 'exit strategy problem'
• 'Successful, costly' first-time-plus homebuyer credit ending
• The homebuyer credit: It's baaacckkk!
• Tax policy and the American homeownership dream

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[John Christopher Sunol]

Computer glitches can start world war 3

Twitter.com/johnsunol