Foreclosure Crisis and IRS Audits

[tchandy]

This is a post from Dianne Kennedy on mortgage lenders and how they're getting over right now.

Tom

There are 20, 30 maybe 100 companies blatantly breaking tax laws right now, today. The fines, if the IRS would pursue them, would likely be in the tens of millions of dollars. Their failure to comply with tax law is causing havoc for tax professionals and hundreds of thousands of American taxpayers who want to follow the rules, but can’t.
Who are these companies and why isn’t the IRS auditing them?
They are the lenders who have foreclosed on properties or allowed short sales.
Here’s what they are supposed to do if there is a foreclosure:
“File Form 1099-A, Acquisition or Abandonment of Secured Property, for each borrower if you lend money in connection with your trade or business and, in full or partial satisfaction of the debt, you acquire an interest in property that is security for the debt, or you have reason to know that the property has been abandoned.“ (From Instructions for Form 1099-A and 1099-C)
The first mortgage holder, second mortgage holder, in fact all mortgage holders are required to prepare this form for properties taken back in foreclosure.
But most aren’t doing it.
In fact, most of the lenders won’t even talk to the borrowers to give them the information they need to properly complete their tax returns.
That means the people least likely to be able to afford to represent themselves in audit are likely to be audited because they don’t have the information they should have been provided.
I’m a CPA. I’ve been one for a lot of years. In fact, this has been my 29th tax season. I’ve never seen such widespread abuse by financial institutions. For my clients that were hammered by the real estate decline, they are already incurring huge financial losses and now they can’t even get the information they need to prepare their return. We’ve spent countless hours trying to get the legally-required documentation from these companies. And if we get a Form 1099-A at all, it’s often got completely inaccurate information.
Yet, the borrowers are the ones facing audit! NOT the companies who are causing the problem!
That’s just the Form 1099-A problems. There are just as many, if not more, Form 1099-C problems which report cancellation of debt. Borrowers are left uncertain whether debt has truly been forgiven, even when there are binding agreements for deed-in-lieu of transfers or short sales. That’s because they can’t get the Form 1099-C that report cancellation of debt. Or they get the Form 1099-C, showing the cancellation of debt, report the income their tax return and then get collection agencies after them to pay. (Not really cancellation of debt then, is it?)
But where is the IRS in this? There is a penalty for failure to accurately file Form 1099-As and Form 1099-Cs. If the problem is as widespread as indicated by the problems I’ve experienced, then there are hundreds of thousands of missing Form 1099-As.
Yet, the IRS is targeting the borrowers, not the companies!
Please forward this blog post on to your friends. Tweet about it. Report it on Facebook.
Let’s get the IRS to move against these companies and hold them accountable!
Here are the companies that I’ve personally experienced problems with:
Bank of America
Chase
GMAC Mortgage
Wells Fargo

http://www.usataxaid.com/ustaxaid-blog/foreclosure-crisis-and-irs-audits/

 

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[MJ DeMarco]

Dep zua qmieti ifov zuas qutv vu opdmafi Foepi't xictovi tu tji ot dsifovif? O fup'v nopf gumlt duqzoph nz esvodmit et muph et O hiv e mopl dsifov. Vjeplt!!

 

[tchandy]

Dep zua qmieti ifov zuas qutv vu opdmafi Foepi't xictovi tu tji ot dsifovif? O fup'v nopf gumlt duqzoph nz esvodmit et muph et O hiv e mopl dsifov. Vjeplt!!

Pu qsucmin.