IRS issues new guidelines on obtaining home buyer tax credits

Despite blizzards that shut federal offices for days, the Internal Revenue Service issued new guidance Feb. 12 on the two tax credit programs that are powering the country's real estate markets -- the $6,500 credit for repeat buyers and the $8,000 first-time buyer credit.

The new IRS policy clarified documentation that taxpayers need to submit to successfully obtain either credit. When Congress revised the credit programs in November, it ordered the IRS to tighten its rules and monitoring to curtail widespread frauds that had emerged earlier in 2009.

These included fictitious home purchases in which people claimed and received $8,000 checks from the government on transactions that had never occurred. .

To avoid such abuses in the revised credit program -- which is scheduled to be available for qualified purchases closed through June 30 -- Congress directed the IRS to spell out documentation standards in detail and to install monitoring systems to spot fraud upfront. Among the keys to the monitoring system is that all documentation accompanying credit claims comply with the IRS' detailed rules.

Here's what the agency wants:

* A fully executed IRS Form 5405 (available at www.irs.gov) on which taxpayers provide information supporting their claim of eligibility, including income and home purchase date.

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