Washington Report

Homebuyers Tax Credit May Be Too Popular

In response to abuses and fraud uncovered by the IRS and Treasury Department into the First-Time Homebuyer Credit program, the House Ways and Means oversight subcommittee introduced a bipartisan bill Thursday to improve the screening of applicants and administration of the program.

According to the agencies, 580 taxpayers under the age of 18 claimed approximately $4 million in credits; some of them were as young as four.

“Some key controls were missing to prevent an individual from erroneously or fraudulently claiming the credit and receiving an erroneous refund of up to $8,000,” said J. Russell George, inspector general for tax administration at Treasury. He said that as of Oct. 9, the IRS has processed more than 1.2 million tax returns claiming almost $8.5 billion in First-Time Homebuyer Credits. It’s also examining more than 100,000 potentially fraudulent claims.

The Homebuyer Tax Credit Improvement Act would require applicants to be at least 18 years old and to provide documentation to prove they purchased a home; give the IRS with authority to review prior returns and determine if a taxpayer is eligible for the credit; and improve tax administration by increasing the number of electronic returns filed by return preparers.

“This tax credit is an important resource for families seeking to purchase a home and a vital part of our economic recovery efforts. We must ensure that we are administering the credit accurately and strike a balance between issuing timely refunds of the credit and protecting federal resources,” said Rep. John Lewis (D.-Georgia), chair of the House Ways and Means oversight subcommittee.

Although the credit is set to expire in November, Democratic and Republican lawmakers in both the House and the Senate are calling for the program to be extended.

Click here to enter the Black Enterprise Homeownership Contest.

Someone to Watch Over You

 

After many days of debate and negotiation, the House Financial Services Committee approved legislation 39-29 on Thursday to create a Consumer Financial Protection Agency, a key and controversial element of President Barack Obama’s plan to overhaul the financial industry.

“This bill has now passed a major hurdle and this step sends an important signal to the American people that we will not stand by and allow big financial firms and their lobbyists to mobilize against change,” said Obama.

American Bankers Association official Floyd Stoner expressed continued opposition to the bill, citing “the very broad, ill-defined authority that is granted to this new agency that could be used to justify essentially any regulatory action,” and other issues.

The legislation would empower the agency to write rules to protect consumers from predatory mortgage lending, credit card and other practices that contributed to the financial meltdown. It would enforce a law passed earlier this year  to protect consumers from sudden increases in credit card interest

rates. Banks with less than $10 billion in assets will not have to open up their books to CFPA examiners. The bill eliminated a proposal by the Obama administration to require banks to offer standardized, “plain vanilla” products.

“I think the most important thing is that it would create an agency that has somebody going to work everyday thinking that [his or her] primary responsibility is looking out for the interests of consumers, ” said Rep. Mel Watt (D-North Carolina), who sits on the committee.Hearing Examines Healthcare Reform and Small Business

The numbers are frightening. Healthcare costs for small businesses have been growing four times faster than the rate of inflation since 2001, said Sen. Mary Landrieu (D.-Louisiana) at a small business committee hearing to examine how the healthcare reform proposals currently being considered on Capitol Hill will help these enterprises. The cost of individual policies has increased by 74% in the last eight years and in 2018, small businesses are estimated to lose $178,000 because of the high cost of healthcare.

Where’s the relief?

Despite ongoing debate in the House over a public option, both Small Business Administration chief Karen Mills and Treasury Secretary counselor Gene Sperlingsupported an insurance exchange so businesses can pool risk and spread costs.

Sperling also praised a provision to expand entry into the exchange beyond the very smallest businesses, though the actual size is yet to be determined. “I also like the fact that once you’re in, you don’t go out,” Sperling said, adding that this will allow businesses to remain in the exchange as they grow and create jobs.

Responding to critics who question whether tax credits will increase coverage, Sperling said that increasing coverage is just one goal and small businesses that have offered coverage despite challenges should be rewarded. He also believes tax incentives might encourage some small businesses to start offering coverage.

Amanda Austin, representing the National Federation of Independent Business, said that an exchange based on provisions in the Small Business Health Options Program Act of 2009 “will allow for individual choice of plans and help provide a human resources function, something that small employers currently lack.” She also said that tax credits should be a short-term investment while Congress addresses overall affordability problems that plague the nation’s healthcare system.

To view the hearing, click here.

White House Tries to Remove Barriers to Home Energy Retrofits

Vice President Joe Biden unveiled a plan this week that would allow homeowners to install renewable energy systems and retrofit buildings and pay off the expense over time on their property tax bills. New homebuyers and homeowners who are refinancing would be able to include the cost of an energy upgrade in their mortgage. Retrofitting homes could cut home energy bills by $21 billion annually, according to the report, saving the average household more than $700 each year.

The recommendations were among several proposals included in a Recovery Through Retrofit report that would lower U.S. energy consumption and create jobs. Biden and other administration officials who attended the report’s release at an event in the Old Executive Building on Monday said that it builds on the foundation laid in the Recovery Act to expand job and business opportunities for the middle class.

“We’re not just creating jobs for their own sake, we’re trying to create jobs here as a cornerstone for the 21st century economy,” said Biden. And they’re jobs that “are literally of the future, jobs that will not be able to be easily exported, jobs that you can actually raise your family on.”

The report, which is part of the Middle Class Task Force chaired by Biden, does not commit any new funds for home energy upgrades, but does try to make it easier and more appealing for people to make and finance energy upgrades. Other recommendations include creating national workforce certifications and training standards for energy efficiency and retrofit workers and providing access to consistent, consumer friendly retrofit information.

The Department of Energy also announced that it is accepting applications for a $390 million “Retrofit Ramp-Up” program for states, local governments and Indian tribes to create partnerships to retrofit entire neighborhoods at a time.

Click here to watch a video of the event.