IRS deduction obstruction

WASHINGTON -- Oct. 24, 2006 -- A congressional panel has been busy thinking up new ways for the IRS to ensure that homeowners don’t deduct more mortgage interest than they’re entitled. The Joint Committee on Taxation issued a report proposing that state and local governments should be required to tell the IRS the amount of real estate taxes paid by each taxpayer.

The report also suggests requiring mortgage lenders to report the amount of real estate taxes paid through escrow accounts to the IRS. The proposal would make it easier for the IRS to calculate the correct deduction and would reduce erroneous deductions for non-deductible items like prepaid interest (points) paid in connection with a refinancing, according to the report.

The Joint Committee report didn't calculate how much revenue would be generated if the provisions were enacted into law.

Source: Dow Jones International News (10/19/2006)

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