type: contracts

jurisdiction: EU

text:
2021 9 23
 LT
 Europos Sąjungos oficialusis leidinys
 L 337/26
 EEE JUNGTINIO KOMITETO SPRENDIMAS Nr. 235/2018
 2018 m. gruodžio 5 d.
 kuriuo iš dalies keičiamas EEE susitarimo II priedas (Techniniai reglamentai, standartai, bandymai ir sertifikavimas) [2021/1502]
 EEE JUNGTINIS KOMITETAS,
 atsižvelgdamas į Europos ekonominės erdvės susitarimą (toliau – EEE susitarimas), ypač į jo 98 straipsnį,
 kadangi:
 (1)
 į EEE susitarimą turi būti įtrauktas 2018 m. rugpjūčio 10 d. Komisijos įgyvendinimo reglamentas (ES) 2018/1122, kuriuo leidžiama pateikti rinkai pirolochinolino chinono dinatrio druską kaip naują maisto produktą pagal Europos Parlamento ir Tarybos reglamentą (ES) 2015/2283 ir iš dalies keičiamas Komisijos įgyvendinimo reglamentas (ES) 2017/2470 (1);
 (2)
 į EEE susitarimą turi būti įtrauktas 2018 m. rugpjūčio 10 d. Komisijos įgyvendinimo reglamentas (ES) 2018/1123, kuriuo leidžiama pateikti rinkai 1-metilnikotinamido chloridą kaip naują maisto produktą pagal Europos Parlamento ir Tarybos reglamentą (ES) 2015/2283 ir iš dalies keičiamas Komisijos įgyvendinimo reglamentas (ES) 2017/2470 (2);
 (3)
 į EEE susitarimą turi būti įtrauktas 2018 m. rugpjūčio 13 d. Komisijos įgyvendinimo reglamentas (ES) 2018/1132, kuriuo leidžiama pakeisti naujo maisto produkto sintetinio zeaksantino pavadinimą ir specialiuosius ženklinimo reikalavimus pagal Europos Parlamento ir Tarybos reglamentą (ES) 2015/2283 ir iš dalies keičiamas Komisijos įgyvendinimo reglamentas (ES) 2017/2470 (3);
 (4)
 į EEE susitarimą turi būti įtrauktas 2018 m. rugpjūčio 13 d. Komisijos įgyvendinimo reglamentas (ES) 2018/1133, kuriuo leidžiama pateikti rinkai džiovintas antžemines smulkiažiedžių hudijų (Hoodia parviflora) dalis kaip naują maisto produktą pagal Europos Parlamento ir Tarybos reglamentą (ES) 2015/2283 ir iš dalies keičiamas Komisijos įgyvendinimo reglamentas (ES) 2017/2470 (4);
 (5)
 šis sprendimas susijęs su teisės aktais dėl maisto produktų. Teisės aktai dėl maisto produktų netaikomi Lichtenšteinui tol, kol jam taikomas Europos bendrijos ir Šveicarijos Konfederacijos susitarimas dėl prekybos žemės ūkio produktais, kaip nustatyta EEE susitarimo II priedo XII skyriaus įžangoje. Todėl šis sprendimas Lichtenšteinui netaikomas;
 (6)
 todėl EEE susitarimo II priedas turėtų būti atitinkamai iš dalies pakeistas,
 PRIĖMĖ ŠĮ SPRENDIMĄ:
 1 straipsnis
 EEE susitarimo II priedo XII skyrius iš dalies keičiamas taip:
 1.
 124b punktas (Komisijos įgyvendinimo reglamentas (ES) 2017/2470) papildomas šiomis įtraukomis:
 „-
 32018 R 1122: 2018 m. rugpjūčio 10 d. Komisijos įgyvendinimo reglamentu (ES) 2018/1122 (OL L 204, 2018 8 13, p. 36),
 -
 32018 R 1123: 2018 m. rugpjūčio 10 d. Komisijos įgyvendinimo reglamentu (ES) 2018/1123 (OL L 204, 2018 8 13, p. 41),
 -
 32018 R 1132: 2018 m. rugpjūčio 13 d. Komisijos įgyvendinimo reglamentu (ES) 2018/1132 (OL L 205, 2018 8 14, p. 15),
 -
 32018 R 1133: 2018 m. rugpjūčio 13 d. Komisijos įgyvendinimo reglamentu (ES) 2018/1133 (OL L 205, 2018 8 14, p. 18).“.
 2.
 Po 140 punkto (Komisijos įgyvendinimo reglamentas (ES) 2018/1293) įterpiami šie punktai:
 „141.
 32018 R 1122: 2018 m. rugpjūčio 10 d. Komisijos įgyvendinimo reglamentas (ES) 2018/1122, kuriuo leidžiama pateikti rinkai pirolochinolino chinono dinatrio druską kaip naują maisto produktą pagal Europos Parlamento ir Tarybos reglamentą (ES) 2015/2283 ir iš dalies keičiamas Komisijos įgyvendinimo reglamentas (ES) 2017/2470 (OL L 204, 2018 8 13, p. 36).
 142.
 32018 R 1123: 2018 m. rugpjūčio 10 d. Komisijos įgyvendinimo reglamentas (ES) 2018/1123, kuriuo leidžiama pateikti rinkai 1-metilnikotinamido chloridą kaip naują maisto produktą pagal Europos Parlamento ir Tarybos reglamentą (ES) 2015/2283 ir iš dalies keičiamas Komisijos įgyvendinimo reglamentas (ES) 2017/2470 (OL L 204, 2018 8 13, p. 41).
 143.
 32018 R 1132: 2018 m. rugpjūčio 13 d. Komisijos įgyvendinimo reglamentas (ES) 2018/1132, kuriuo leidžiama pakeisti naujo maisto produkto sintetinio zeaksantino pavadinimą ir specialiuosius ženklinimo reikalavimus pagal Europos Parlamento ir Tarybos reglamentą (ES) 2015/2283 ir iš dalies keičiamas Komisijos įgyvendinimo reglamentas (ES) 2017/2470 (OL L 205, 2018 8 14, p. 15).
 144.
 32018 R 1133: 2018 m. rugpjūčio 13 d. Komisijos įgyvendinimo reglamentas (ES) 2018/1133, kuriuo leidžiama pateikti rinkai džiovintas antžemines smulkiažiedžių hudijų (Hoodia parviflora) dalis kaip naują maisto produktą pagal Europos Parlamento ir Tarybos reglamentą (ES) 2015/2283 ir iš dalies keičiamas Komisijos įgyvendinimo reglamentas (ES) 2017/2470 (OL L 205, 2018 8 14, p. 18).“.
 2 straipsnis
 Europos Sąjungos oficialiojo leidinio EEE priede skelbtini įgyvendinimo reglamentų (ES) 2018/1122, (ES) 2018/1123, (ES) 2018/1132 ir (ES) 2018/1133 tekstai islandų ir norvegų kalbomis yra autentiški.
 3 straipsnis
 Šis sprendimas įsigalioja 2018 m. gruodžio 6 d., jei pateikti visi pranešimai pagal EEE susitarimo 103 straipsnio 1 dalį (*).
 4 straipsnis
 Šis sprendimas skelbiamas Europos Sąjungos oficialiojo leidinio EEE skyriuje ir EEE priede.
 Priimta Briuselyje 2018 m. gruodžio 5 d.
 EEE jungtinio komiteto vardu
 Pirmininkė
 Oda Helen SLETNES
 EEE jungtinio komiteto
 sekretoriai
 Hege M. HOFF
 Mikołaj KARŁOWSKI
 (1) OL L 204, 2018 8 13, p. 36.
 (2) OL L 204, 2018 8 13, p. 41.
 (3) OL L 205, 2018 8 14, p. 15.
 (4) OL L 205, 2018 8 14, p. 18.
 (*) Konstitucinių reikalavimų nenurodyta.


type: caselaw

text:
10.3.2007
 DA
 Den Europæiske Unions Tidende
 C 56/19
 Anmodning om præjudiciel afgørelse indgivet af House of Lords (Det Forenede Kongerige) den 20. december 2006 — Stringer m.fl. mod Her Majesty's Revenue and Customs
 (Sag C-520/06)
 (2007/C 56/33)
 Processprog: engelsk
 Den forelæggende ret
 House of Lords
 Parter i hovedsagen
 Sagsøger: Stringer m.fl.
 Sagsøgt: Her Majesty's Revenue and Customs
 Præjudicielle spørgsmål
 1)
 Betyder artikel 7, stk. 1, i direktiv 2003/88/EF (1), at en arbejdstager, der har sygeorlov på ubestemt tid, er berettiget (i) til at betegne en fremtidig periode som årlig betalt ferie og (ii) til at afholde årlig betalt ferie — i begge tilfælde i løbet af en periode, der ellers ville være sygeorlov?
 2)
 Hvis en medlemsstat udøver sin skønsbeføjelse til at erstatte den minimale årlige betalte ferieperiode med en finansiel godtgørelse ved arbejdsforholdets ophør i henhold til artikel 7, stk. 2, i direktiv 2003/88/EF i en situation, hvor arbejdstageren har været på sygeorlov i hele eller en del af det ferieår, hvor arbejdsforholdet bringes til ophør, indeholder artikel 7, stk. 2, da noget krav til eller nogen kriterier for, hvorvidt godtgørelsen skal udbetales eller hvordan denne skal beregnes?
 (1) EUT L 299, s. 9.


type: other

jurisdiction: US

text: b'TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION\n\n\n\n\n RECOVERY ACT\n\n\n Control Weaknesses Over Amended Returns\n Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n June 24, 2011\n\n Reference Number: 2011-41-057\n\n\n\n\n This report has cleared the Treasury Inspector General for Tax Administration disclosure review process\n and information determined to be restricted from public release has been redacted from this document.\n\n Redaction Legend:\n 1 = Tax Return/Return Information\n 2(f) = Risk Circumvention of Agency Regulation or Statute\n\n\n\n Phone Number | 202-622-6500\n Email Address | TIGTACommunications@tigta.treas.gov\n Web Site | http://www.tigta.gov\n\x0c HIGHLIGHTS\n\n Income Tax Returns (Forms 1040X) are\nCONTROL WEAKNESSES OVER appropriately processed.\nAMENDED RETURNS ALLOWED SOME\n WHAT TIGTA FOUND\nINAPPROPRIATE CLAIMS FOR THE\nFIRST-TIME HOMEBUYER CREDIT TO The IRS has taken a number of positive steps to\nBE ALLOWED process Homebuyer Credits claimed on\n amended returns. Primary among these was\n development of criteria to identify amended\nHighlights returns with questionable claims before they are\n processed. However, additional issues need to\nFinal Report issued on June 24, 2011 be addressed for claims of the Homebuyer\n Credit on amended returns.\nHighlights of Reference Number: 2011-41-057 Taxpayers inappropriately changed their home\nto the Internal Revenue Service Commissioner acquisition date to avoid repayment of their\nfor the Wage and Investment Division. Homebuyer Credits. Some taxpayers received\n multiple refunds of the Homebuyer Credit. Many\nIMPACT ON TAXPAYERS\n questionable claims for the Homebuyer Credit\nHomebuyers who purchased a home in 2008, were not appropriately sent to the IRS\xe2\x80\x99s\n2009, or 2010 may be able to take advantage of Examination function for scrutiny.\nthe First-Time Homebuyer Credit (Homebuyer\n TIGTA also found that the IRS paid an estimated\nCredit). The Homebuyer Credit may be an\n $37 million in interest on claims for the time\ninterest-free loan or a fully refundable Credit\n period prior to actual home purchase dates. It is\ndepending on when the taxpayer purchased his\n unclear whether Congress intended for this\nor her home. Questionable Homebuyer Credits\n interest to be paid. Finally, some claims for the\ntotaling millions of dollars in refunds as well as\n Homebuyer Credit were significantly delayed.\nadditional interest amounts were issued on\namended claims. WHAT TIGTA RECOMMENDED\nWHY TIGTA DID THE AUDIT TIGTA recommended that the IRS ensure that\n taxpayers changing the year of purchase or\nThe Homebuyer Credit as expressed in the\n receiving more Homebuyer Credit than they are\nHousing and Economic Recovery Act of 2008\n entitled to are identified and invalid claims are\nhas been revised and extended by three\n recovered through examinations. The IRS\nsubsequent bills. Taxpayers may be confused\n should also ensure that employees are provided\nregarding which version of the Homebuyer\n proper training and perform quality reviews of\nCredit they qualify for and specifics on how to\n Homebuyer Credit claims. The IRS should\nclaim the Credit. Also, unscrupulous individuals\n identify interest-related issues on any future\nmay make fraudulent claims for the refundable\n legislation and work with the Department of the\nHomebuyer Credit.\n Treasury\xe2\x80\x99s Office of Tax Policy to request\nThe President of the United States has called on clarification from Congress if warranted.\nFederal agencies to ensure that recovery funds Further, the IRS should ensure that timeliness\nare used for authorized purposes and that every standards are adhered to when cases are\nstep is taken to prevent fraud, waste, error, and referred to the Examination function.\nabuse. The Internal Revenue Service (IRS)\n IRS management agreed with our\nfaces significant challenges to ensure that\n recommendations and has initiated appropriate\nrecovery funds it administers are used for\n corrective actions.\nauthorized purposes. This report contains the\nresults of our audit to determine whether the IRS\nhas controls in place to ensure that Homebuyer\nCredits claimed on Amended U.S. Individual\n\x0c DEPARTMENT OF THE TREASURY\n WASHINGTON, D.C. 20220\n\n\n\n\nTREASURY INSPECTOR GENERAL\n FOR TAX ADMINISTRATION\n\n\n\n\n June 24, 2011\n\n\n MEMORANDUM FOR COMMISSIONER, WAGE AND INVESTMENT DIVISION\n\n FROM: Michael R. Phillips\n Deputy Inspector General for Audit\n\n SUBJECT: Final Audit Report \xe2\x80\x93 Control Weaknesses Over Amended Returns\n Allowed Some Inappropriate Claims for the First-Time Homebuyer\n Credit to Be Allowed (Audit # 201040140)\n\n This report presents the results of our review to determine whether the Internal Revenue Service\n (IRS) had controls in place to ensure that First-Time Homebuyer Credits claimed on Amended\n U.S. Individual Income Tax Returns (Forms 1040X) were appropriately processed. This audit is\n included in our Fiscal Year 2011 Annual Audit Plan and addresses the major management\n challenges of Implementing Health Care and Other Tax Law Changes and Erroneous and\n Improper Payments and Credits. It presents selected information related to the IRS\n implementation of Section 1006 of the American Recovery and Reinvestment Act of 2009\n (Recovery Act).1\n The Recovery Act provides separate funding to the Treasury Inspector General for Tax\n Administration through September 30, 2013, to be used in oversight activities of IRS programs.\n This audit was conducted using Recovery Act funds.\n Management\xe2\x80\x99s complete response to the draft report is included in Appendix V.\n Copies of this report are also being sent to the IRS managers affected by the report\n recommendations. Please contact me at (202) 622-6510 if you have questions or\n Michael E. McKenney, Assistant Inspector General for Audit (Returns Processing and Account\n Services), at (202) 622-5916.\n\n\n\n\n 1\n Pub. L. No. 111-5, 123 Stat. 115 (2009).\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n\n Table of Contents\n\nBackground .......................................................................................................... Page 1\nResults of Review ............................................................................................... Page 3\n The Internal Revenue Service Implemented Several Key Controls\n for Processing Amended Homebuyer Credit Claims .................................... Page 3\n Some Taxpayers Changed Their Home Acquisition Dates to\n Inappropriately Take Advantage of New Tax Law Changes........................ Page 4\n Recommendation 1:........................................................ Page 7\n Some Taxpayers Received Multiple Homebuyer Credits\n That Exceeded the Amounts Allowed by Law ............................................. Page 7\n Recommendation 2:........................................................ Page 9\n Not All Questionable Amended Claims Were Sent to the\n Examination Function for Scrutiny ............................................................... Page 9\n Recommendation 3:........................................................ Page 11\n Considerable Interest Amounts Were Paid on Amended\n Claims ........................................................................................................... Page 11\n Recommendation 4:........................................................ Page 12\n Some Delays Occurred in Processing Claims on\n Amended Returns.......................................................................................... Page 12\n Recommendation 5:........................................................ Page 13\n\nAppendices\n Appendix I \xe2\x80\x93 Detailed Objective, Scope, and Methodology ........................ Page 14\n Appendix II \xe2\x80\x93 Major Contributors to This Report ........................................ Page 18\n Appendix III \xe2\x80\x93 Report Distribution List ....................................................... Page 19\n Appendix IV \xe2\x80\x93 Outcome Measures............................................................... Page 20\n Appendix V \xe2\x80\x93 Management\xe2\x80\x99s Response to the Draft Report ....................... Page 22\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n\n Abbreviations\n\nHERA Housing and Economic Recovery Act of 2008\nIRS Internal Revenue Service\nTIGTA Treasury Inspector General for Tax Administration\nWHBAA Worker, Homeownership, and Business Assistance Act of 2009\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n\n Background\n\nThe First-Time Homebuyer Credit (Homebuyer Credit) is a refundable tax credit available to\ntaxpayers who purchase a principal residence. In order to qualify, taxpayers cannot have owned\na principle residence at any time during the 3 years prior to the date they purchased their new\nhome. The Housing and Economic Recovery Act of 2008 (HERA)1 allowed qualifying\ntaxpayers who purchased a principal residence after April 8, 2008, and before July 1, 2009, to\nclaim a credit equal to 10 percent of the purchase price of the home, limited to $7,500. The\nHomebuyer Credit, as expressed in this Act, served as an interest-free loan to be paid back over a\n15-year period beginning 2 years after the Credit was claimed and phased out for taxpayers with\nadjusted gross income of more than $75,000 ($150,000 for joint returns).\nSection 1006 of the American Recovery and Reinvestment Act of 2009 (Recovery Act)2 revised\nand extended the Homebuyer Credit to include purchases made on or after January 1, 2009, and\nbefore December 1, 2009; increased the maximum Credit to $8,000; and eliminated the\nrepayment requirements as long as the taxpayer retains the residence for 36 months.\nThe Worker, Homeownership, and Business Assistance Act of 2009 (WHBAA),3 signed into law\non November 6, 2009, extended and expanded the Homebuyer Credit allowed by the previous\nActs. Under the WHBAA, an eligible taxpayer must buy, or enter into a binding contract to buy,\na principal residence on or before April 30, 2010, and close on the home by June 30, 2010. The\nlaw maintained that the taxpayer would not be required to repay the Homebuyer Credit and kept\nthe maximum amount at $8,000. The law increased the Homebuyer Credit phase-out to adjusted\ngross income of more than $125,000 ($225,000 for joint returns), established documentation\nrequirements for claiming the Credit, and gave the Internal Revenue Service (IRS) the authority\nto deny taxpayer claims that are inconsistent with the eligibility for the Credit. Legislation\nenacted in July 2010 extended the closing deadline from June 30 to September 30, 2010, for\neligible homebuyers.4\nCongress estimated that $13.6 billion would be paid to taxpayers for the Homebuyer Credit in\nthe HERA. The Joint Committee on Taxation estimated that approximately $4.3 billion more\nwould be paid to first-time homebuyers in Fiscal Years 2009 and 2010 as a result of the\nRecovery Act and an additional $9.96 billion as a result of the WHBAA.\n\n\n\n\n1\n Pub. L. No. 110-289, 122 Stat. 2654 (2008).\n2\n Pub. L. No. 111-5, 123 Stat. 115 (2009).\n3\n Pub. L. No. 111-92, 123 Stat 2984 (2009).\n4\n Homebuyer Assistance Act of 2010, Pub. L. No. 111-198, 124 Stat. 1356.\n Page 1\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\nThe President of the United States has stated that every taxpayer dollar spent on the economic\nrecovery must be subject to unprecedented levels of transparency and accountability. The\nPresident has called on Federal agencies to ensure that recovery funds are used for authorized\npurposes and every step is taken to prevent instances of fraud, waste, error, and abuse. However,\nwith the various changes in the law, taxpayers may be confused regarding which version of the\nHomebuyer Credit they qualify for, when to file, what tax year to file for, and what forms and\ndocumentation to provide to claim the Credit. In addition, without proper controls, unscrupulous\nindividuals could make fraudulent claims for the refundable Homebuyer Credit.\nTaxpayers have several filing options to claim the Homebuyer Credit, one of which is filing an\namended tax return. This report contains the results of our audit to determine whether the IRS\nhad controls in place to ensure that Homebuyer Credits claimed on Amended U.S. Individual\nIncome Tax Returns (Forms 1040X) were appropriately processed. The IRS reported that as of\nJanuary 29, 2011, it had processed more than 1.4 million amended claims for Homebuyer Credits\ntotaling more than $10 billion.\nThis review was performed onsite at the IRS Ogden, Utah, Campus5 during the period\nFebruary 2010 through March 2011. It included a review of amended individual income tax\nreturns filed nationwide. We conducted this performance audit in accordance with generally\naccepted government auditing standards. Those standards require that we plan and perform the\naudit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and\nconclusions based on our audit objective. We believe that the evidence obtained provides a\nreasonable basis for our findings and conclusions based on our audit objectives. Detailed\ninformation on our audit objective, scope, and methodology is presented in Appendix I. Major\ncontributors to the report are listed in Appendix II.\n\n\n\n\n5\n The data processing arm of the IRS. The campuses process paper and electronic submissions, correct errors, and\nforward data to the Computing Centers for analysis and posting to taxpayer accounts.\n Page 2\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n\n Results of Review\n\nThe Internal Revenue Service Implemented Several Key Controls for\nProcessing Amended Homebuyer Credit Claims\nThe Homebuyer Credit was enacted, revised, and extended in four different legislative acts.\nEach act created, added, and modified rules to qualify for and claim the Homebuyer Credit. The\nIRS faced difficult and significant challenges to administer the Homebuyer Credit and ensure\nthat recovery funds were used for authorized purposes.\nThe IRS took the following steps to facilitate the accurate processing of Homebuyer Credits filed\non amended returns:\n \xe2\x80\xa2 Increased staffing resources to handle the significant number of Homebuyer Credit\n claims expected to be filed on amended returns.\n \xe2\x80\xa2 Organized staffing resources to address a significant number of telephone and\n correspondence inquiries expected for the Homebuyer Credit.\n \xe2\x80\xa2 Developed and updated employee instructions for processing Homebuyer Credit claims\n on amended returns.\n \xe2\x80\xa2 Implemented controls to process Homebuyer Credit claims on amended returns that\n would identify if the Credit was to be paid back.\n \xe2\x80\xa2 Updated forms and instructions necessary for taxpayers to claim the Homebuyer Credit,\n including the development of First-Time Homebuyer Credit and Repayment of the Credit\n (Form 5405).\nEarly in 2009, the Treasury Inspector General for Tax Administration (TIGTA) identified\nthousands of taxpayers with indications of prior home ownership claiming the Homebuyer Credit\non their original tax returns, and recognized that this same condition would likely occur as\ntaxpayers claimed Homebuyer Credits using amended returns. In April 2009, we recommended\nthat the IRS implement controls to ensure that taxpayers claiming Homebuyer Credits on\namended tax returns had not owned a principal residence within the prior 3 years.\nThe IRS agreed with our recommendation and stated that it was already in the process of\ndeveloping criteria to identify amended returns with questionable claims for the Homebuyer\nCredit for review by the Examination function. The IRS requested and was provided specific\ncases and details of our criteria for identifying questionable claims for the Credit. The IRS\xe2\x80\x99s\ncriteria were incorporated into the Internal Revenue Manual in June 2009.\n\n Page 3\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\nAlong with the criteria in the Internal Revenue Manual, the IRS developed an enhancement to its\nautomated tool used to process amended tax returns (xClaim). The tool was enhanced to\nautomate research of IRS records for indications of prior home ownership over the past 3 years\nand other predetermined criteria that, if present, make the claim questionable. The IRS reported\nthat the research results will be forwarded to the Campus Examination function along with the\namended tax return, using the Correspondence Imaging System. In the interim, the Examination\nClassification function reviewed all Homebuyer Credit claims referred to them by the\nSubmission Processing function for indications of prior home ownership.\nThis report discusses several issues for Homebuyer Credit claims made on amended returns that\nthe IRS had not addressed.\nSome Taxpayers Changed Their Home Acquisition Dates to\nInappropriately Take Advantage of New Tax Law Changes\nWe identified a number of amended claims for Homebuyer Credits where the reported purchase\ndates of the homes were changed from what was reported on the original tax returns. The IRS\nimplemented controls to enter specific codes when adjusting a taxpayer account claiming a\nHomebuyer Credit on an amended return that would identify the reported year of purchase.\nWe identified 1,225 cases with the following characteristics:\n \xe2\x80\xa2 The taxpayer filed a claim for the Homebuyer Credit on an original Tax Year6 2008\n U.S. Individual Income Tax Return (Form 1040) using a Calendar Year 2008 purchase\n date as entered from Form 5405.\n \xe2\x80\xa2 The IRS subsequently processed an amended return for the taxpayer claiming a change to\n the original Homebuyer Credit with an identifier now indicating a Calendar Year 2009 or\n 2010 purchase year.\nAs mentioned earlier, the Homebuyer Credit enacted under the HERA served as an interest-free\nloan to be paid back over a 15-year period. Subsequent legislation modified the Homebuyer\nCredit and eliminated the repayment requirement for purchases made after December 31, 2008,\nas long as the taxpayer retains the residence for 36 months. Changing the year of purchase\nclearly benefitted taxpayers as they would now not be liable for the repayment of the total\namounts received for the Homebuyer Credits.\n\n\n\n\n6\n For most individual taxpayers, a tax year is synonymous with a calendar year. For the purposes of this report, we\nuse tax year when referring to the filing of a tax return and calendar year when referring to home purchase dates.\n Page 4\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\nWe reviewed a judgmental sample of 43 of the 1,225 amended claims for the Homebuyer Credit\nand identified the following:\n \xe2\x80\xa2 22 claims (51 percent) appeared to be legitimate changes of purchase years based on\n information we researched and obtained from third-party sources. However, only four of\n these taxpayers provided documentation with their amended return to support their\n amended date of purchase. The taxpayers generally stated the reason for filing the\n amended claim was that they originally reported or used the wrong purchase date on\n Form 5405 or originally listed the date of their construction loan and not the closed or\n occupied date. All of these taxpayers filed for and received original Homebuyer Credits\n using apparently incorrect purchase dates.\n \xe2\x80\xa2 15 claims (35 percent) appeared to be invalid changes of purchase years based on\n information we researched and obtained from third-party sources. None of these\n taxpayers provided documentation with their amended return to support their amended\n date of purchase. The taxpayers generally stated the reason for filing the amended claim\n was to claim the Tax Year 2009 Homebuyer Credit and that they had originally claimed\n the wrong credit, or they provided no explanation at all.\n Our research identified that 10 of the taxpayers appeared to purchase a home in Calendar\n Year 2008. All of these taxpayers inappropriately changed the year of purchase so that\n they would not be subject to the repayment provisions applicable to Calendar Year 2008\n purchases. According to the third-party records included in our research, the other **1**\n taxpayers did not have qualifying home purchases under either the HERA or the\n Recovery Act. Four of the taxpayers had no record of owning or purchasing a home and\n ***************************1**************************.\n \xe2\x80\xa2 6 claims (14 percent) were incorrectly processed by IRS employees. All six of these\n claims were amended by the taxpayers just to increase the amounts of their Homebuyer\n Credits. The taxpayers did not change their purchase dates from the dates originally\n reported, but IRS employees mistakenly changed the codes on the taxpayers\xe2\x80\x99 accounts to\n indicate a Calendar Year 2009 or 2010 purchase year rather than the correct Calendar\n Year 2008 purchase. Therefore, these taxpayers\xe2\x80\x99 accounts now incorrectly indicate that\n the taxpayers are not liable to repay their Homebuyer Credits. The IRS also incorrectly\n allowed an additional amount of Homebuyer Credit on four of these returns.\nWe identified an additional 607 cases with the following characteristics:\n \xe2\x80\xa2 The taxpayer\xe2\x80\x99s Homebuyer Credit was originally claimed on an amended return reporting\n a home purchased in Calendar Year 2008.\n \xe2\x80\xa2 A subsequent amended Homebuyer Credit claim was processed with an identifier\n indicating a Calendar Year 2009 or 2010 home purchase.\n\n\n Page 5\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\nWe reviewed a judgmental sample of 45 of these amended claims for the Homebuyer Credit and\nfound:\n \xe2\x80\xa2 36 claims (80 percent) for which the year of purchase from the taxpayer\xe2\x80\x99s first amended\n return was recorded inaccurately by the IRS. These taxpayers filed amended returns to\n increase the amounts of their Homebuyer Credits, and only when the amended return was\n processed was the year of purchase corrected.\n o 18 of the original amended returns were processed before the IRS\xe2\x80\x99s computers\n were programmed to recognize any purchase year other than Calendar Year 2008.\n (The IRS also incorrectly allowed four of these taxpayers the Homebuyer Credit\n when they indicated the purchase of the home would take place in the future).\n o 18 of the original amended returns were processed incorrectly by IRS employees.\n The employees entered identifiers indicating a Calendar Year 2008 purchase year\n when the taxpayer had actually indicated a Calendar Year 2009 or 2010 purchase\n year. ***************************1********************************\n *****************************************************************\n ******.\n \xe2\x80\xa2 9 claims (20 percent) for which the taxpayer amended the year of purchase. The\n taxpayers generally stated that the reason for filing the amended claim was that they were\n claiming the Calendar Year 2009 Homebuyer Credit, originally reported the wrong date,\n or originally listed the date of their construction loan and not the closed or occupied date.\n ****************************************1****************************\n *********1*********************. We found from research of third-party\n information that six taxpayers appeared to purchase a home in Calendar Year 2009. We\n could not obtain information for the remaining three claims.\nPrior to enactment of the WHBAA, taxpayers were required to submit only Form 5405 with their\nreturn to claim the Homebuyer Credit. Form 5405 included a specific line to list the date the\nhome was acquired. Effective for homes purchased after November 6, 2009, the WHBAA\nrequires taxpayers to submit valid documentation to support the Homebuyer Credit claim. Along\nwith Form 5405, taxpayers must attach a copy of the settlement statement showing certain\ninformation about the home purchased, including the date of purchase. Without proper\ndocumentation attached to the amended return listing the purchase date of the home, IRS\nemployees had to rely on information provided by and attested to by the taxpayer.\nWe notified the IRS that some taxpayers were changing the year of purchase when filing an\namended return for the Homebuyer Credit and there appeared to be no control to address these\ncases. As of March 29, 2010, the IRS issued additional instructions to its employees for\nprocessing amended tax returns to potentially identify claims filed for the Homebuyer Credit\nwhere the year of purchase was changed. In addition, it developed enhancements to the xClaim\n\n Page 6\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\ntool to address these amended returns. The IRS also indicated that subsequent to our review, it\nreferred 166 of these cases to its Examination function for further scrutiny.\nThe Homebuyer Credits on all of the 1,225 and 607 taxpayer accounts have now been coded as\nexempt from repayment. In our samples, 27 percent of these accounts (24 of 88) were coded in\nerror. The combined amounts of the Credits on the original and subsequent amended returns\ntotaled $14.1 million. Our samples in this audit test were not statistically valid and cannot be\nprojected to the population overall with any statistical reliability. However, if the results of our\nsamples are representative of the rest of the population, $3.8 million in Credits will have been\nrecharacterized from interest-free loans to a nonrepayable refundable credit for these taxpayers in\nerror.\nRecommendation\nRecommendation 1: The Director, Reporting Compliance, Wage and Investment Division,\nshould identify those amended claims that changed the purchase year of the home and initiate\npost-refund examinations to ensure refunds for the invalid claims are recovered or the\nHomebuyer Credit is correctly classified. The TIGTA has provided the IRS with details on the\ncases previously described.\n Management\xe2\x80\x99s Response: IRS management agreed with this recommendation. An\n established method is in place to verify the actual purchase date of a home using\n third-party records. Claims for the Homebuyer Credit with purchase date inconsistencies\n will be considered for the post-refund examination pool.\nSome Taxpayers Received Multiple Homebuyer Credits That\nExceeded the Amounts Allowed by Law\nA number of taxpayers received Homebuyer Credits in more than 1 tax year. We identified\n70 taxpayers who received a Homebuyer Credit for both Tax Years 2008 and 2009. Of the\n70 taxpayers, we found:\n \xe2\x80\xa2 10 taxpayers (14 percent) received Homebuyer Credits as claimed on their original Tax\n Year 2008 return, then claimed second Homebuyer Credits on amended tax returns,\n which were processed and allowed by the IRS. The Homebuyer Credits totaled more\n than the $8,000 maximum allowed by law for 7 of the 10 taxpayers and less than the\n $8,000 maximum for the other 3 taxpayers. However, the 3 taxpayers did not appear to\n be entitled to the additional amount of Homebuyer Credit. All but **1**of the 10\n\n\n\n\n Page 7\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n taxpayers received all refund amounts with no subsequent IRS scrutiny. ***1******\n *********************************1***************************.7\n \xe2\x80\xa2 **1** taxpayers (31 percent) filed amended returns claiming the same Homebuyer Credit\n for both Tax Years 2008 and 2009. The Credits were processed by the IRS for both\n years. The Homebuyer Credits totaled more than the $8,000 maximum allowed by law\n for all of these **1** taxpayers.\n Of the **1** duplicate claims processed in error:\n o **********************1*************************************.\n o 12 taxpayers returned the refund checks or paid back the duplicate Credit.\n o 5 taxpayers\xe2\x80\x99 Credits were reversed, creating a balance due on the taxpayers\xe2\x80\x99\n accounts.\n o The remaining 4 taxpayers received all refund amounts with no subsequent IRS\n actions.8\n \xe2\x80\xa2 16 taxpayers (23 percent) filed only 1 amended return but IRS employees mistakenly\n applied the same Homebuyer Credit to 2 tax years.\n o 9 of these taxpayers returned one refund check or paid the refund amount back to\n the IRS.\n o 3 taxpayers\xe2\x80\x99 Credits were reversed, creating a balance due on the taxpayers\xe2\x80\x99\n accounts.\n o The remaining 4 taxpayers received all refund amounts with no subsequent IRS\n actions.\nBecause source documents were not available, we could not determine the reason the remaining\n**1** cases received Homebuyer Credits in 2 consecutive years. We made multiple attempts to\nobtain these source documents.\nIRS employees did not perform adequate research when processing these amended claims for the\nHomebuyer Credit, or simply processed the claims incorrectly. As a result, these taxpayers, and\npossibly more, received erroneous refunds.\n\n\n\n\n7\n Subsequent to our review, the IRS reversed the Credits on five of these accounts, creating a balance due on the\ntaxpayers\xe2\x80\x99 accounts.\n8\n Subsequent to our review, the IRS reversed all four of these Credits, creating a balance due on the taxpayers\xe2\x80\x99\naccounts.\n Page 8\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\nRecommendation\nRecommendation 2: The Director, Reporting Compliance, Wage and Investment Division,\nshould identify those taxpayers who received multiple Homebuyer Credits and initiate\npost-refund examinations to ensure the refunds are valid and any questionable refunds are\nrecovered. The TIGTA has provided the IRS with details on the cases previously described.\n Management\xe2\x80\x99s Response: IRS management agreed and has taken significant steps\n to strengthen controls and reduce risks of duplicate/erroneous refunds. The IRS has\n implemented an unpostable check and filters to screen original and amended returns for\n pre-refund examinations to prevent duplicate/erroneous Homebuyer Credit refunds. Of\n the 739 taxpayers the TIGTA identified as receiving duplicate credit for both Tax Years\n 2008 and 2009, 59 were adjusted/reversed, ********1*********************, and the\n remaining 12 were referred to the Examination function for appropriate action.\nNot All Questionable Amended Claims Were Sent to the Examination\nFunction for Scrutiny\nFor qualifying homes purchased in Calendar Year 2008, the Homebuyer Credit could be claimed\non an original filed Tax Year 2008 individual income tax return or by amending a Tax Year 2008\nreturn using Form 1040X. For qualifying homes purchased in Calendar Years 2009 or 2010, the\nHomebuyer Credit could be claimed on an original filed Tax Year 2008,10 2009, or 2010 return,\nor taxpayers could elect to amend their prior year tax return using Form 1040X. Amending the\nprior year tax return allows taxpayers to claim the Homebuyer Credit for a home purchased in\nCalendar Year 2009 or 2010 without waiting to claim it on their Tax Year 2009 or 2010 return.\nThe IRS developed specific criteria to identify questionable claims for Homebuyer Credits on\namended returns and implemented controls to apply these criteria during processing of the\namended returns. The IRS reported that the controls were implemented on June 10, 2009. The\ncontrols were designed, in part, to identify taxpayers who had indications of home ownership\nwithin the last 3 years and route these returns to the Examination function for further scrutiny.\nWe found that the IRS\xe2\x80\x99s criteria to identify cases for Examination scrutiny overlooked certain\ncases. The Recovery Act increased the maximum Credit provided in the HERA from $7,500 to\n$8,000 and eliminated the requirement to repay the Credit. Some taxpayers who originally\nclaimed the $7,500 repayable credit amended their returns to claim the additional $500, which\nalso changed their Credit from repayable to nonrepayable. Many of these taxpayers amended the\npurchase dates of their homes, which was discussed earlier in this report. ****2(f)****\n\n9\n Preliminary data provided to the IRS contained **1**cases. During in-depth review of the data, TIGTA\neliminated **1** cases and, therefore, referred to only **1** cases in our report.\n10\n Homes purchased in Calendar Year 2009 before the Tax Year 2008 return was filed could be treated as purchased\nin Calendar Year 2008 and claimed on an original Tax Year 2008 return.\n Page 9\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n*************************************2(f)********************************\n***************************************2(f)****************************\n***************************2(f)********************. We brought this oversight to the\nIRS\xe2\x80\x99s attention, and they took immediate corrective action to address the issue.\nTo determine whether all questionable claims on amended returns meeting the IRS\xe2\x80\x99s criteria\nwere identified and reviewed, we selected a statistically valid sample of 379 Forms 1040X\n(206 processed before the IRS\xe2\x80\x99s criteria were implemented, and 173 processed after the criteria\nwere implemented).\nOf the 206 amended returns processed prior to the implementation of the criteria, we found that\nnone of the 64 cases that would have met Examination criteria, based on prior home ownership,\nhad been examined. The average claim totaled $7,225. Based on our sample, we estimate that\nan additional 4,385 amended claims received by the IRS prior to the implementation of the\ncriteria had indications of prior home ownership but were never examined. To address our issue,\nthe IRS informed us that it screened the claims made on amended returns prior to\nimplementation of the criteria and referred 7,911 cases to the Examination function for its\nconsideration. The Examination function agreed to include 2,872 returns in its post-refund\nexaminations. As of December 31, 2010, the IRS had conducted examinations on 904 taxpayers\nwhere the Homebuyer Credit was not allowed as claimed. The amount of Homebuyer Credits\nclaimed on these amended returns for these 904 taxpayers totaled $6,408,930. Based on the\nIRS\xe2\x80\x99s examination results for amended Homebuyer Credit returns, we estimate the IRS can\nrecover an additional $2,837,534 in erroneous claims from 406 examinations where a final\ndetermination was not made as of December 31, 2010.\nOf the 173 amended returns processed after the implementation of the criteria, we found 50 with\nindications of prior home ownership within the last 3 years (which should have met the criteria\nfor further scrutiny). However, 25 (50 percent) of these 50 were not identified as questionable\nand/or not referred to the Examination function. The average claim for the Homebuyer Credit on\nthese 25 returns was $7,126. Based on our sample, we estimate that a total of 1,713 amended\nreturns processed between June 10, 2009, and October 31, 2009, met examination criteria but\nwere not appropriately referred to the Examination function for review.\nThe IRS believed the returns that were processed incorrectly in our sample were simply the\nresult of the learning curve associated with a new process. We performed follow-up tests to\ndetermine whether this issue had improved as employees became more familiar with the process.\nWe selected an additional statistically valid sample of 346 Forms 1040X processed after\nimplementation of the criteria and processed after our original sample of 1040Xs. Although the\nIRS employees\xe2\x80\x99 identification of returns meeting examination criteria had improved, we still\nfound errors. Of the 346 amended returns, 175 had indications of prior home ownership within\nthe last 3 years (which should have met the criteria for further scrutiny). We found that\n10 (6 percent) of these 175 were not identified as questionable and/or were not referred to the\nExamination function. Although the IRS believed there would be a learning curve associated\n Page 10\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\nwith the processing of these claims, it did not develop a quality review process specific to\nHomebuyer Credits. Without proper controls to ensure questionable claims are scrutinized,\nerroneous Credits will continue to be issued.\nRecommendation\nRecommendation 3: The Director, Submission Processing, Wage and Investment Division,\nshould ensure that employees are provided proper training for screening claims made on all\namended returns, particularly those involving new tax laws. Also, increased quality reviews of\nthe amended claims involving new processes should be performed to determine if employees\nunderstand the new processes.\n Management\xe2\x80\x99s Response: IRS management stated that they are already taking steps\n to ensure that employees are properly trained and that new processes are followed. For\n Tax Year 2010, training resources allocated to newly hired employees increased from\n 2 to 5 weeks. Refresher training for permanent and returning employees was increased\n from 1 to 2 weeks. Training is also conducted throughout the year, whenever changes to\n procedures are issued, and includes procedures for screening claims.\nConsiderable Interest Amounts Were Paid on Amended Claims\nThe Recovery Act and the WHBAA allow taxpayers to treat homes they purchased in Calendar\nYear 2009 or 2010 as if they were purchased in the prior year (for purposes of claiming\nHomebuyer Credits) to allow for immediate use of the refunds associated with the Credits.\nTaxpayers electing to accelerate the Homebuyer Credits could amend their Tax Year 2008\nreturns to claim the Credits for purchases made in Calendar Year 2009 or amend their Tax\nYear 2009 returns for Calendar Year 2010 purchases if the Credits were not claimed on original\nTax Year 2009 returns. Neither law specifically addressed how interest on these amended claims\nshould be administered.\nThe Internal Revenue Code provides that interest shall be allowed and paid upon any\noverpayment in respect of any internal revenue tax. The IRS determined that interest on\noverpayments is mandatory unless specifically prohibited by law. Because no authority other\nthan the general interest rules as provided in the Internal Revenue Code was found, the IRS\ndetermined taxpayers filing an amended claim for the Homebuyer Credit were entitled to interest\nas provided for by law. When paying interest on an overpayment, any credit available for refund\nis considered to originate as of the due date of the return for the tax year, generally April 15.\nInterest is allowed on any overpayment from the later of the credit received (originated) date or\nthe return received date.\nA taxpayer that timely filed his or her Tax Year 2008 return (on or before April 15, 2009) and\npurchased a home in September 2009 can amend their Tax Year 2008 return and will be paid\ninterest on the amount of the Homebuyer Credit beginning April 15, 2009. Because the IRS\n\n Page 11\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\nconsiders April 15 as the date the Homebuyer Credit originated, they would pay interest\nbeginning 5 months before the actual purchase date or liability to the taxpayer even occurred.\nWe determined that the IRS paid more than $76 million in interest on adjustments made for more\nthan 580,000 amended claims related to the Homebuyer Credit through April 22, 2010. The\ninterest paid was in addition to the amounts claimed for the actual Homebuyer Credit.\nWe reviewed statistically valid samples of 486 amended returns claiming the Homebuyer Credit\nprocessed through April 22, 2010. We determined the IRS paid an additional $22,332 in interest\nto taxpayers in our samples for the time period before the actual purchase date or true liability to\nthe taxpayer occurred.\nIt was clear that Congress\xe2\x80\x99 intent in allowing taxpayers to amend their prior years\xe2\x80\x99 returns to\nimmediately claim Homebuyer Credits was to get the credit amounts to the taxpayers as soon as\npossible. However, the law was silent regarding the payment of interest on these claims. We\nagree with the IRS\xe2\x80\x99s interpretation that interest on overpayments is mandatory unless specifically\nprohibited in the law. However, payment of interest on a liability before it occurred seems\ncounterintuitive. Therefore, we believe the IRS should have sought clarification from Congress\nwith respect to its intent to pay interest on these claims.\nBased on our samples, we estimate that on amended returns processed through April 22, 2010,\napproximately $37 million in interest was paid on Homebuyer Credits before taxpayers had even\npurchased their homes.\nRecommendation\nRecommendation 4: If future legislation allows taxpayers to amend prior year returns to take\nadvantage of a tax provision effective for the current year and does not address the payment of\ninterest, the Commissioner, Wage and Investment Division, should work with the Department of\nthe Treasury\xe2\x80\x99s Office of Tax Policy to seek clarification in the law to allow for administration of\nthe provision in a manner that would avoid paying unnecessary interest.\n Management\xe2\x80\x99s Response: IRS management agreed with this recommendation. If\n legislative history is unclear as to when Congress intends overpayment to exist for\n purposes of allowing interest on amended returns claiming a benefit, the IRS will consult\n with the Department of the Treasury\xe2\x80\x99s Office of Tax Policy as to whether it should\n pursue a legislative clarification regarding the applicability of interest.\nSome Delays Occurred in Processing Claims on Amended Returns\nWe analyzed Homebuyer Credit claims made on amended returns for indications of significant\nprocessing delays. If amended returns are not processed within 45 days, interest must be paid to\nthe taxpayer on the amount of the claim until processing is completed on the return. If the return\n\n\n Page 12\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\ndoes not contain complete information necessary to process the claim, the time necessary to\ncorrespond and receive this information from the taxpayer is not included in the 45 days.\nWe reviewed a statistically valid sample11 of 102 amended claims for the Homebuyer Credit to\ndetermine if the claims were processed timely. For purposes of this test, we considered 45 days\nto be timely and more than 75 days to be significantly delayed.\nOf the 102 returns, we determined that 44 (43 percent) were processed timely. Those processed\ntimely had an average processing time of 39 days. We found 19 (19 percent) with significant\nprocessing delays. However, seven of these cases were delayed primarily because the IRS had to\ncorrespond with the taxpayers for missing information. The remaining 12 cases were delayed in\nIRS functions, and 10 of these 12 cases were delayed, at least in part, because the Examination\nfunction waited for Examination employees to make a determination to audit the claims or accept\nthe claims as filed and return them to the Accounts Management function for processing.\nWe found that 9 of the **1** cases were not audited and were referred back for processing.\n*******************************************1**********************************\n***************1************************.12 Overall, these **1**cases remained in the\nExamination function an average of 81 days before a determination was made to audit or not\naudit the Homebuyer Credit claims. One-half of these cases remained in Examination for more\nthan 90 days.\nThe Examination function\xe2\x80\x99s procedures call for cases referred from the Accounts Management\nfunction to be selected for audit or returned to the Accounts Management function within\n14 days. Untimely processing of cases results in unnecessary interest payments and increased\nburden on taxpayers whose refunds are delayed.\nRecommendation\nRecommendation 5: The Commissioner, Wage and Investment Division, should ensure that\ntimeliness standards are adhered to for the screening and classification of cases referred to the\nExamination function from the Accounts Management function.\n Management\xe2\x80\x99s Response: IRS management agreed with the recommendation and\n has guidelines in place in its Examination function for cases referred from the Accounts\n Management function. They will continue to ensure procedures are followed and will\n take appropriate action when the workload impacts their ability to adhere to the\n guidelines.\n\n\n\n\n11\n This sample was valid for all amended returns processed between November 2009 and April 2010.\n12\n ***************1*************************.\n Page 13\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n Appendix I\n\n Detailed Objective, Scope, and Methodology\n\nThe overall objective of this review was to determine whether the IRS had controls in place to\nensure that Homebuyer Credits claimed on Amended U.S. Individual Income Tax Returns\n(Forms 1040X) were appropriately processed. To accomplish our objective, we:\nI. Identified and evaluated processing procedures and controls for amended returns within\n the IRS return processing functions and determined whether those procedures and\n controls would identify, correct, or refer questionable claims for the Homebuyer Credit to\n the Examination function.\n A. Reviewed documented IRS procedures within the Submission Processing and\n Accounts Management functions developed to identify and process claims for the\n Homebuyer Credit on amended returns as well as identify and stop erroneous or\n questionable claims.\n B. Determined the specific program and filters that the IRS used to identify case work\n (including referral to the Examination function) for questionable claims for the\n Homebuyer Credit filed on amended returns.\n C. Discussed with IRS personnel the controls, programs, and procedures in place to\n identify and prevent questionable claims for the Homebuyer Credit on amended\n returns. We determined the criteria used for either working the amended claims or\n referring the work to the Examination function.\n D. Determined whether there were any quality control reviews performed for\n identifying, working, or referring questionable claims for the Homebuyer Credit on\n amended returns, and assessed whether those reviews were adequate.\n E. Determined the documentation required for taxpayers to support their claims for the\n Homebuyer Credit.\nII. Identified and evaluated the Examination function procedures and controls to ensure\n inappropriate claims for the Homebuyer Credit on amended returns are examined and\n corrected.\n A. Reviewed documented procedures and controls designed to identify and work\n erroneous claims for the Homebuyer Credit on amended returns.\n B. Determined whether adequate information is provided by the taxpayer and/or by other\n IRS functions making amended Homebuyer Credit claim referrals to allow\n\n Page 14\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n Examination function personnel to determine sufficient and appropriate resolution of\n the amended claims.\n C. Determined whether there were any quality control reviews performed for\n identifying, working, or resolving questionable claims for the Homebuyer Credit on\n amended returns, and assessed whether those reviews were adequate.\nIII. Identified taxpayers filing amended returns claiming the Homebuyer Credit, and\n evaluated whether controls identified, stopped, and corrected erroneous claims.\n A. Worked with TIGTA Information Services programmers to develop a computer\n program to identify taxpayers claiming the Homebuyer Credit on their Tax Year 2008\n return and on amended returns filed for their Tax Year 2008, 2009, or 2010 return.\n The records were obtained from the IRS Master File.1 We validated the data received\n by comparing 30 records to IRS Master File data.\n B. Worked with TIGTA Information Services programmers to develop a computer\n program to match taxpayers filing an amended return identified in Step III.A. with\n data from returns on the Individual Return Transaction File2 indicating prior home\n ownership. We validated the data received by comparing 30 records to IRS Master\n File data. From a population of 25,970 claims, we selected and reviewed a\n statistically valid sample3 of 379 claims for indications that the return was identified\n for meeting examination criteria and was forwarded to the Examination function for\n further scrutiny. From a subsequent population of 3,395 claims, we selected and\n reviewed a statistically valid sample4 of 346 claims for indications that the return was\n identified for meeting examination criteria and was forwarded to the Examination\n function for further scrutiny.\n C. We used data from the files received from TIGTA Information Services employees to\n identify 1,225 taxpayers who claimed the Homebuyer Credit indicating a Calendar\n Year 2008 purchase on their original Tax Year 2008 return filed electronically and\n who then filed an amended return claiming the Homebuyer Credit indicating a\n\n\n\n\n1\n The IRS database that stores various types of taxpayer account information. This database included individual,\nbusiness, and employee plans and exempt organizations data.\n2\n The IRS computer file containing individual tax return data.\n3\n The statistical sample size was selected by using a 95 percent confidence level, a \xc2\xb15 percent precision, and a\n50 percent expected error rate.\n4\n The IRS believed the returns that were processed incorrectly in our original sample were simply the result of the\nlearning curve associated with a new process. We performed follow-up tests to determine whether this issue had\nimproved as employees became more familiar with the process. The statistical sample size was selected by using a\n95 percent confidence level, a \xc2\xb15 percent precision, and a 50 percent expected error rate.\n Page 15\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n Calendar Year 2009 or 2010 purchase. We selected and reviewed a judgmental\n sample5 of 43 of these claims to determine why the year of purchase was changed.\n D. We used data from the files received from TIGTA Information Services employees to\n identify 607 taxpayers who claimed the Homebuyer Credit on an amended return\n indicating a Calendar Year 2008 purchase with a subsequent amended return claiming\n the Homebuyer Credit indicating a Calendar Year 2009 or 2010 purchase. We\n selected and reviewed a judgmental sample6 of 45 of these claims to determine why\n the year of purchase was changed.\n E. Conducted research through third-party sources to verify if the Homebuyer Credits\n identified may have been legitimately claimed by the taxpayers.\nIV. Identified and evaluated IRS controls over interest paid to taxpayers who claim the\n Homebuyer Credit on amended returns.\n A. Researched the Internal Revenue Code, applicable laws, and IRS procedures related\n to paying interest on amended returns with Homebuyer Credit claims.\n B. Worked with TIGTA Information Services programmers to develop a computer\n program to identify taxpayers claiming the Homebuyer Credit on amended returns\n and related interest and refund transactions. We validated the data received by\n comparing 30 records to IRS Master File data.\n C. Selected and reviewed a statistically valid sample7 of 384 of the population of\n 409,386 amended claims processed through October 31, 2009, to determine the\n amount of interest paid, how long it took the IRS to process the return, whether there\n were indications of significant processing delays, and whether the claims were\n questionable.\n D. Selected and reviewed an additional statistically valid sample8 of 102 of an additional\n population of 329,982 amended claims processed from November 1, 2009, through\n April 22, 2010, to determine the amount of interest paid, how long it took the IRS to\n process the return, whether there were indications of significant processing delays,\n and whether the claims were questionable.\n\n\n\n5\n We used a judgmental sample because we did not intend to project the results of this sample to the entire\npopulation.\n6\n We used a judgmental sample because we did not intend to project the results of this sample to the entire\npopulation.\n7\n The statistical sample size was selected by using a 95 percent confidence level, a \xc2\xb15 percent precision, and a\n50 percent expected error rate.\n8\n The statistical sample size was selected by using a 95 percent confidence level, a \xc2\xb110 percent precision, and a\n50 percent expected error rate.\n Page 16\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n E. Determined from our samples whether the amount of interest paid was congruent with\n the law and in a manner that was fair and equitable to taxpayers.\nInternal controls methodology\nInternal controls relate to management\xe2\x80\x99s plans, methods, and procedures used to meet their\nmission, goals, and objectives. Internal controls include the processes and procedures for\nplanning, organizing, directing, and controlling program operations. They include the systems\nfor measuring, reporting, and monitoring program performance. We determined the following\ninternal controls were relevant to our audit objective: the IRS\xe2\x80\x99s policies, procedures, and\npractices related to the processing of amended returns and the identification of erroneous claims\nfor the Homebuyer Credit filed on amended returns.\n\n\n\n\n Page 17\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n Appendix II\n\n Major Contributors to This Report\n\nMichael E. McKenney, Assistant Inspector General for Audit (Returns Processing and Account\nServices)\nKyle R. Andersen, Director\nLarry Madsen, Audit Manager\nKyle D. Bambrough, Lead Auditor\nDoug C. Barneck, Auditor\nDavid M. Bueter, Auditor\nLevi J. Dickson, Auditor\nVictor A. Taylor, Auditor\nMichele S. Cove, Information Technology Specialist\nArlene Feskanich, Information Technology Specialist\n\n\n\n\n Page 18\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n Appendix III\n\n Report Distribution List\n\nCommissioner C\nOffice of the Commissioner \xe2\x80\x93 Attn: Chief of Staff C\nDeputy Commissioner for Services and Enforcement SE\nDeputy Commissioner, Wage and Investment Division SE:W\nDirector, Customer Account Services, Wage and Investment Division SE:W:CAS\nDirector, Accounts Management, Wage and Investment Division SE:W:CAS:AM\nDirector, Submission Processing, Wage and Investment Division SE:W:CAS:SP\nChief, Program Evaluation and Improvement, Wage and Investment Division SE:W:S:PRA:PEI\nChief Counsel CC\nNational Taxpayer Advocate TA\nDirector, Office of Legislative Affairs CL:LA\nDirector, Office of Program Evaluation and Risk Analysis RAS:O\nOffice of Internal Control OS:CFO:CPIC:IC\nAudit Liaison: Chief, Program Evaluation and Improvement, Wage and Investment Division\nSE:W:S:PRA:PEI\n\n\n\n\n Page 19\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n Appendix IV\n\n Outcome Measures\n\nThis appendix presents detailed information on the measurable impact that our recommended\ncorrective actions will have on tax administration. These benefits will be incorporated into our\nSemiannual Report to Congress.\nType and Value of Outcome Measure:\n\xe2\x80\xa2 Funds Put to Better Use \xe2\x80\x93 Actual; $6,408,930 of amended First-Time Homebuyer Credits\n claimed by 904 taxpayers was disallowed in post-refund examinations (see page 9).\nMethodology Used to Measure the Reported Benefit:\nThe IRS developed specific criteria to identify questionable claims for Homebuyer Credits on\namended returns and implemented controls to apply these criteria during processing of the\namended returns. The controls were designed, in part, to identify taxpayers who had indications\nof home ownership within the last 3 years and route these returns to the Examination function for\nfurther scrutiny. Our audit tests identified amended returns that were processed prior to the\nimplementation of the criteria, but were not appropriately referred to the Examination function\nfor review.\nTo address our issue, the IRS screened claims made on amended returns prior to implementation\nof its criteria and agreed to include 2,872 returns in its post-refund examinations. As of\nDecember 31, 2010, the IRS had conducted examinations on 904 taxpayers and disallowed the\nHomebuyer Credit. The amount of Homebuyer Credits claimed on the amended returns for these\n904 taxpayers totaled $6,408,930.\nType and Value of Outcome Measure:\n\xe2\x80\xa2 Funds Put to Better Use \xe2\x80\x93 Potential; $2,837,534 of erroneous refunds to 406 taxpayers\n claiming amended First-Time Homebuyer Credits (see page 9).\nMethodology Used to Measure the Reported Benefit:\nThe IRS developed specific criteria to identify questionable claims for Homebuyer Credits on\namended returns and implemented controls to apply these criteria during processing of the\namended returns. The controls were designed, in part, to identify taxpayers who had indications\nof home ownership within the last 3 years and route these returns to the Examination function for\nfurther scrutiny. Our audit tests identified amended returns that were processed prior to the\nimplementation of the criteria but were not appropriately referred to the Examination function\nfor review.\n\n Page 20\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\nTo address our issue, the IRS screened claims made on amended returns prior to implementation\nof its criteria and agreed to include 2,872 returns in its post-refund examinations. As of\nDecember 31, 2010, the IRS had open examinations on 842 of these taxpayers without a final\ndetermination being made.\nWe determined the average amount of Homebuyer Credit claimed on the amended returns for\nthese 842 taxpayers was $6,989. The IRS\xe2\x80\x99s examinations of amended returns have resulted in\n48.21 percent of Homebuyer Credit claims being disallowed through December 31, 2010. Using\nthese examination results, multiplying 0.4821 by the 842 taxpayers with open examinations, we\nestimate the IRS will disallow the Homebuyer Credit on an additional 406 returns. By\nmultiplying the 406 returns with disallowed claims by the $6,989 average claim, we estimate the\nIRS can recover $2,837,534 in erroneous claims from these examinations.\n\n\n\n\n Page 21\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n Appendix V\n\nManagement\xe2\x80\x99s Response to the Draft Report\n\n\n\n\n Page 22\n\x0c Control Weaknesses Over Amended\nReturns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n\n Page 23\n\x0c Control Weaknesses Over Amended\n Returns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n Attachment\n\nRECOMMENDATION 1:\nThe Director, Reporting Compliance, Wage and Investment Division, should identify the amended claims\nthat changed the purchase year of the home and initiate post-refund examinations to ensure refunds for the\ninvalid claims are recovered or the Homebuyer Credit is correctly classified. The TIGTA has provided the\nIRS with details on the cases described above.\n\nCORRECTIVE ACTION:\nWe agree with this recommendation. The IRS has an established method in place, using third-party\npublic property records, to verify the actual purchase date of a home for individuals for claimed the First\nTime Homebuyer Credit (FTHBC). Claims with purchase date inconsistencies will be considered for the\npost refund examination pool.\n\nImplementation Date:\nApril 15, 2012\n\nResponsible Official:\nDirector, Reporting Compliance, Wage and Investment Division\nDirector, Earned Income Tax Credit, Wage and Investment Division\n\nCorrective Action Monitoring Plan\nThe IRS will monitor this corrective action as part of our internal management control system.\n\nRECOMMENDATION 2:\nThe Director, Reporting Compliance, Wage and Investment Division, should identify those taxpayers that\nreceived multiple Homebuyer Credits and initiate post-refund examinations to ensure the refunds are\nvalid and any questionable refunds are recovered. The TIGTA has provided the IRS with details on the\ncases described above.\n\nCORRECTIVE ACTION:\nWe agree with this recommendation. The IRS has taken significant steps to strengthen controls and\nreduce risks of duplicate/erroneous refunds. We have implemented an unpostable check and filters to\nscreen original and amended returns for pre-refund examinations to prevent duplicate/erroneous FTHBC\nrefunds. Of the 73 taxpayers the Treasury Inspector General for Tax Administration identified as\nreceiving a duplicate credit for both the 2008 and 2009 Tax Years, 59 were adjusted/reversed, and\n***1*****. The 12 remaining cases have been referred to the Examination Function for appropriate\naction by the implementation date indicated below.\n\nImplementation Date:\nOctober 15, 2011\n\n\n\n\n Page 24\n\x0c Control Weaknesses Over Amended\nReturns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n\n Page 25\n\x0c Control Weaknesses Over Amended\nReturns Allowed Some Inappropriate Claims for the\n First-Time Homebuyer Credit to Be Allowed\n\n\n\n\n Page 26\n\x0c'