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Hello, thought i would ask here due to the excess of financial experts here. I got a form from the IRS regarding my First Time Homebuyers Credit. Says due to the following dispotitions: home converted to business, home destroyed, home sold within 3 years, home is not main residence, that i have to complete form 5405 when doing my 2010 taxes and payback the $8000 tax credit.

I bought my condo back in 2009. It is my primary residence, i have not rented it out etc, it is the only home i own. I called and they have been nothing but unhelpful and not even sure for what i should do. Any suggestions? I dont think i should payback the tax credit when i havnt sold it, rented or done anything im not supposed to. Any advice would be great!

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Hi i actually got this letter in the mail with the same situation, i bought my house in late 2009 and they sent me this ... (more)

shortilaila (Jan. 25, 2011 @ 11:43p) |

2 people I know who took the 2009'$8000 credit received just a general letter "reminding" them they would need to repay ... (more)

SUCKISSTAPLES (Jan. 25, 2011 @ 11:52p) |

On Line 15 of Form 5405, you would put down no gain and therefore not have to pay anything back. http://www.irs.gov/pub/... (more)

calwatch (Jan. 25, 2011 @ 11:59p) |

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Zan86 said:   I bought my condo back in 2009. It is my primary residence, i have not rented it out etc, it is the only home i own. I called and they have been nothing but unhelpful and not even sure for what i should do. Any suggestions? I dont think i should payback the tax credit when i havnt sold it, rented or done anything im not supposed to. Any advice would be great!Did you respond to their notice, stating this? Phone calls arent going to help. Data errors do happen, and they obviously think something happened that didnt. You just need to fix the glitch.

I am beginning to think that IRS is fishing everyone. Just last month, IRS sends me a bill saying that I owe an employment tax of approximately $5000 from year 2004 (6 freaking years ago). I do my payroll through ADP, then reviewed by my accountant quarterly so I know it's accurate. My accountant went back to my business checking account from 2004 and verified that it was indeed paid. IRS won't budge or talk to me/him by saying PAY NOW or face penalty/collection. Advised to pay then appeal. I am out of $5000 and god knows how long it would take them to refund that amount back to me.

My accountant and I sent them a certified letter including my bank statement SHOWING the disputed amount paid. They still wouldn't budge...bunch of morons.

Write a response immediately stating that none of the items in their letter apply to you and you believe the letter must have been sent in error. Send your response to them via certified mail, return receipt requested (to prove that they got it). Include your phone number in the letter and invite them to call you to discuss.

If you get any further letters respond to them in exactly the same manner. EVENTUALLY you will either stop getting letters or will get to talk to someone who knows what they are doing. You could also try going into a local IRS Office to talk to someone there, but that is going to take a substantial amount of time and effort on your part and you may not get anyone that knows more than what the first level phone folks know, which is practically nothing. At this point I would just respond in writing.

I had an issue with the IRS that took my CPA sending 3 letters back to them before they acknowledged their mistake. They are very good at generating form letters that sound threatening but very slow at actually reviewing the facts of your case to see if the form letter is applicable.

Pun said:   I am beginning to think that IRS is fishing everyone. Just last month, IRS sends me a bill saying that I owe an employment tax of approximately $5000 from year 2004 (6 freaking years ago). I do my payroll through ADP, then reviewed by my accountant quarterly so I know it's accurate. My accountant went back to my business checking account from 2004 and verified that it was indeed paid. IRS won't budge or talk to me/him by saying PAY NOW or face penalty/collection. Advised to pay then appeal. I am out of $5000 and god knows how long it would take them to refund that amount back to me.

My accountant and I sent them a certified letter including my bank statement SHOWING the disputed amount paid. They still wouldn't budge...bunch of morons.


Wow, your CPA is a wuss. If I had proof of payment I sure as heck wouldn't have paid them again just to appeal it.

Ok so over an hour later and being on hold, i finally got an answer. I guess some institutions have my old (parents) address on file and sent tax information to the IRS that had my old address listed. So the computer flagged me. She said not to do anything and that they may contact me requesting further information. I got the name/ID number of the person i talked to on the phone and wrote down the time/date etc..

So i guess i dont have to do anything else, just a hassle and got me worried. IRS has the worst phone system ive ever seen.

Zan86 said:   Ok so over an hour later and being on hold, i finally got an answer. I guess some institutions have my old (parents) address on file and sent tax information to the IRS that had my old address listed. So the computer flagged me. She said not to do anything and that they may contact me requesting further information. I got the name/ID number of the person i talked to on the phone and wrote down the time/date etc..

So i guess i dont have to do anything else, just a hassle and got me worried. IRS has the worst phone system ive ever seen.


Did you record the call? If not I'd still send a letter confirming the conversation (include all the details, including phone person's name and ID) via certified mail as I said earlier. Just to be safe.

crhptic said:   Pun said:   I am beginning to think that IRS is fishing everyone. Just last month, IRS sends me a bill saying that I owe an employment tax of approximately $5000 from year 2004 (6 freaking years ago). I do my payroll through ADP, then reviewed by my accountant quarterly so I know it's accurate. My accountant went back to my business checking account from 2004 and verified that it was indeed paid. IRS won't budge or talk to me/him by saying PAY NOW or face penalty/collection. Advised to pay then appeal. I am out of $5000 and god knows how long it would take them to refund that amount back to me.

My accountant and I sent them a certified letter including my bank statement SHOWING the disputed amount paid. They still wouldn't budge...bunch of morons.


Wow, your CPA is a wuss. If I had proof of payment I sure as heck wouldn't have paid them again just to appeal it.


We tried 3-4 times with different agents. They are just like any typical federal workers who are too lazy to review any documents. They dont even make sense on the phone. One of the agent was over 60 years old who had hard time reading even with his reading glasses (kept asking me to be patient since he had hard time reading).

I agree. If the IRS wants to contact me they can do so in writing, and I will respond in writing. I am not wasting my time on hold with them. Read Publication 1 for more details on your rights.

crhptic said:   Zan86 said:   Ok so over an hour later and being on hold, i finally got an answer. I guess some institutions have my old (parents) address on file and sent tax information to the IRS that had my old address listed. So the computer flagged me. She said not to do anything and that they may contact me requesting further information. I got the name/ID number of the person i talked to on the phone and wrote down the time/date etc..

So i guess i dont have to do anything else, just a hassle and got me worried. IRS has the worst phone system ive ever seen.


Did you record the call? If not I'd still send a letter confirming the conversation (include all the details, including phone person's name and ID) via certified mail as I said earlier. Just to be safe.


Will Do, thanks for the tip!! Should i just send it to the generic address on on their website? Il just state our phone conversation, who i talked too, what was said etc..Should i just sent it certified mail?

crhptic said:   Did you record the call? If not I'd still send a letter confirming the conversation (include all the details, including phone person's name and ID) via certified mail as I said earlier. Just to be safe.

There is a long record of the IRS not standing behind its phone representative's advice. Recording or no recording.

edit: If the IRS notifies you in writing, respond in writing based on the facts as you know them.

Citing the phone call is useless and will be disregarded.

The letter you received may have contained a return address. Include a copy of the letter in your response. Keep a copy of their letter and your letter for your files. Include in your letter any case number or other identifying numbers contained in their letter.

BEEFjerKAY said:   crhptic said:   Did you record the call? If not I'd still send a letter confirming the conversation (include all the details, including phone person's name and ID) via certified mail as I said earlier. Just to be safe.

There is a long record of the IRS not standing behind its phone representative's advice. Recording or no recording.


True. But if you have proof that the IRS gave you incorrect advice you MAY be able to use this fact to get out of interest and penalties. (i.e. it won't get you off the hook for the original problem, if you were actually in the wrong)


BEEFjerKAY said:   
The letter you received may have contained a return address. Include a copy of the letter in your response. Keep a copy of their letter and your letter for your files. Include in your letter any case number or other identifying numbers contained in their letter.


What he said. Send to the return address in the letter they sent you. Send it certified, return receipt requested (green card at the post office) so you have proof they got it. And keep copies of EVERYTHING for at least 7 years.

Pun said:   crhptic said:   Pun said:   I am beginning to think that IRS is fishing everyone. Just last month, IRS sends me a bill saying that I owe an employment tax of approximately $5000 from year 2004 (6 freaking years ago). I do my payroll through ADP, then reviewed by my accountant quarterly so I know it's accurate. My accountant went back to my business checking account from 2004 and verified that it was indeed paid. IRS won't budge or talk to me/him by saying PAY NOW or face penalty/collection. Advised to pay then appeal. I am out of $5000 and god knows how long it would take them to refund that amount back to me.

My accountant and I sent them a certified letter including my bank statement SHOWING the disputed amount paid. They still wouldn't budge...bunch of morons.


Wow, your CPA is a wuss. If I had proof of payment I sure as heck wouldn't have paid them again just to appeal it.


We tried 3-4 times with different agents. They are just like any typical federal workers who are too lazy to review any documents. They dont even make sense on the phone. One of the agent was over 60 years old who had hard time reading even with his reading glasses (kept asking me to be patient since he had hard time reading).


At that point I probably would have just waited for another letter, then sent the same certified letter (with copies of all previous correspondence) back to them certified mail. Repeat until either they go away or they wrongfully seize assets at which point you sue them in US Tax Court. No way would I have paid them $5K just to go away.

crhptic said:   BEEFjerKAY said:   crhptic said:   Did you record the call? If not I'd still send a letter confirming the conversation (include all the details, including phone person's name and ID) via certified mail as I said earlier. Just to be safe.

There is a long record of the IRS not standing behind its phone representative's advice. Recording or no recording.


True. But if you have proof that the IRS gave you incorrect advice you MAY be able to use this fact to get out of interest and penalties. (i.e. it won't get you off the hook for the original problem, if you were actually in the wrong)


BEEFjerKAY said:   
The letter you received may have contained a return address. Include a copy of the letter in your response. Keep a copy of their letter and your letter for your files. Include in your letter any case number or other identifying numbers contained in their letter.


What he said. Send to the return address in the letter they sent you. Send it certified, return receipt requested (green card at the post office) so you have proof they got it. And keep copies of EVERYTHING for at least 7 years.


Will do! thanks for the advice, put my mind at rest!

crhptic said:   Pun said:   crhptic said:   Pun said:   I am beginning to think that IRS is fishing everyone. Just last month, IRS sends me a bill saying that I owe an employment tax of approximately $5000 from year 2004 (6 freaking years ago). I do my payroll through ADP, then reviewed by my accountant quarterly so I know it's accurate. My accountant went back to my business checking account from 2004 and verified that it was indeed paid. IRS won't budge or talk to me/him by saying PAY NOW or face penalty/collection. Advised to pay then appeal. I am out of $5000 and god knows how long it would take them to refund that amount back to me.

My accountant and I sent them a certified letter including my bank statement SHOWING the disputed amount paid. They still wouldn't budge...bunch of morons.


Wow, your CPA is a wuss. If I had proof of payment I sure as heck wouldn't have paid them again just to appeal it.


We tried 3-4 times with different agents. They are just like any typical federal workers who are too lazy to review any documents. They dont even make sense on the phone. One of the agent was over 60 years old who had hard time reading even with his reading glasses (kept asking me to be patient since he had hard time reading).


At that point I probably would have just waited for another letter, then sent the same certified letter (with copies of all previous correspondence) back to them certified mail. Repeat until either they go away or they wrongfully seize assets at which point you sue them in US Tax Court. No way would I have paid them $5K just to go away.


It was our 2nd certified letter, and they kept mounting penalties and interest. Calls went unresolved. Accountant advised to pay and appeal as it would be more headache for me to fight $5000.

My brother got the same notice too. We sent in a certified letter. Both of us bought in 2008 so the tax credit has to be repaid except in increments of $500/year. Should have bought in 2009 for the free ride...

Pun said:   crhptic said:   Pun said:   crhptic said:   Pun said:   I am beginning to think that IRS is fishing everyone. Just last month, IRS sends me a bill saying that I owe an employment tax of approximately $5000 from year 2004 (6 freaking years ago). I do my payroll through ADP, then reviewed by my accountant quarterly so I know it's accurate. My accountant went back to my business checking account from 2004 and verified that it was indeed paid. IRS won't budge or talk to me/him by saying PAY NOW or face penalty/collection. Advised to pay then appeal. I am out of $5000 and god knows how long it would take them to refund that amount back to me.

My accountant and I sent them a certified letter including my bank statement SHOWING the disputed amount paid. They still wouldn't budge...bunch of morons.


Wow, your CPA is a wuss. If I had proof of payment I sure as heck wouldn't have paid them again just to appeal it.


We tried 3-4 times with different agents. They are just like any typical federal workers who are too lazy to review any documents. They dont even make sense on the phone. One of the agent was over 60 years old who had hard time reading even with his reading glasses (kept asking me to be patient since he had hard time reading).


At that point I probably would have just waited for another letter, then sent the same certified letter (with copies of all previous correspondence) back to them certified mail. Repeat until either they go away or they wrongfully seize assets at which point you sue them in US Tax Court. No way would I have paid them $5K just to go away.


It was our 2nd certified letter, and they kept mounting penalties and interest. Calls went unresolved. Accountant advised to pay and appeal as it would be more headache for me to fight $5000.


Been there, done that, got the t-shirt. We had to go 3 rounds of letters before my CPA finally talked to someone who knew what the heck they were doing. They claimed I owed $12,000 (and yes, the penalties and interest go up every letter because they are based on time elapsed). In fact I owed $27 which I paid once the IRS figured things out.

I have not seen this letter you are referring to. Any chance you could scan it, black out any personal information, and post it here?

They did not assess any tax or demand that you send them any money, correct? It sounds like they are just warning you that you might have to repay the tax credit.

Take this with a grain of salt because I have not seen the letter: But it sounds to me like there is nothing more you can do at this time. The IRS has not made an assessment against you or sent you a demand letter. File your taxes honestly. After you file your return, the IRS may or may not make a determination that you owe them more money. If they do, that is the point at which you would contest their finding. You can't really contest a future assessment which the IRS has not yet made.

When I filed to get my credit, I received the rest of my refund (sans the credit). I contacted the IRS, and they said that it was a common error with the machine that scanned the returns not detecting that a certain box was checked. I called and they pointed me to an appeal processes. Well, I filed everything to fix the error and a few months later... no credit still. So I called them up, and they were able to actually make the adjustments for me over the phone. About 6 weeks later, I had the check.

So in short, it sounds like their mistake... don't ignore it hoping it will go away, and don't give in...

http://www.irs.gov/individuals/article/0,,id=234046,00.html

Arguably you could wait for the CP 2000 (notice of deficiency) and challenge then. The letter says that a phone call should clear it up, but writing a letter could also do that. It might stop the CP 2000 from being issued, since there are strict time limits for responses when the CP 2000 hits.

Hi, I dont know if this helps but we got 3 of these letters already. they are bombarding us. We do however qualify for filing the form to repay the credit. If you take a good look at it, they just want you to fill it in, there are options in the form that end up with a" thanks, attach this form with all docs, you will not need to repay the credit" kind of verbiage.
as in our case, where we sold at a slightly more than 8K loss.
you definitely do no need to pay back the credit if you still live in the house (unless you bought it from a relative).
but the IRS do seem to send that letter left and right...

thelord said:   Hi, I dont know if this helps but we got 3 of these letters already. they are bombarding us. We do however qualify for filing the form to repay the credit. If you take a good look at it, they just want you to fill it in, there are options in the form that end up with a" thanks, attach this form with all docs, you will not need to repay the credit" kind of verbiage.
as in our case, where we sold at a slightly more than 8K loss.
you definitely do no need to pay back the credit if you still live in the house (unless you bought it from a relative).
but the IRS do seem to send that letter left and right...


Thats good to know. I'm not too worried. I have evidence of it being my primary residence like utility bills, registering my car there, witness from our maintenance man etc.... Hopefully stuff like that is sufficient, plus when i go do my taxes in the next month it will be listed as my primary address.

Hi i actually got this letter in the mail with the same situation, i bought my house in late 2009 and they sent me this letter saying i have to pay back this home buyers credit over the next 15 years(even thou i know only 08 had to pay this back) and so i called the irs and they explained to me that since i had amended my 2008 taxes to get my credit that their computer spit out this letter in error, and said it would not effect me when i efile. So the other day i do my taxes and it rejects my efile and tells me i have to claim my first time buyers credit payment that is due this year so yet again i call they irs and they explain it will take 3 weeks for the computer systems to be updated. So at this point i have to sit and wait...

Hi i actually got this letter in the mail with the same situation, i bought my house in late 2009 and they sent me this letter saying i have to pay back this home buyers credit over the next 15 years(even thou i know only 08 had to pay this back) and so i called the irs and they explained to me that since i had amended my 2008 taxes to get my credit that their computer spit out this letter in error, and said it would not effect me when i efile. So the other day i do my taxes and it rejects my efile and tells me i have to claim my first time buyers credit payment that is due this year so yet again i call they irs and they explain it will take 3 weeks for the computer systems to be updated. So at this point i have to sit and wait...

2 people I know who took the 2009'$8000 credit received just a general letter "reminding" them they would need to repay the credit if the home ceased to be their primary residence.

The letter did not state anything was owed as to them specifically

Conveniently the IRS neglected to mention the credit did not need to be repaid if the home was sold at a loss greater than $8000, which is the actual situation as the homes were sold in 2010 for more than $8000 loss.

Haven't done taxes yet but I assume there will be some form
To include with the 2010 taxes noting that the home was sold for a loss exceeding $8000...does anyone whi has done their 2010 taxes know yet?

On Line 15 of Form 5405, you would put down no gain and therefore not have to pay anything back. http://www.irs.gov/pub/irs-pdf/f5405.pdf



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