TV Commercial Does Not Determine Tax Law

Post Date: 1/5/12
Last Updated: 1/5/12


Cross References
• Grosso, Eastern District of Pennsylvania, November 30, 2011

The taxpayers saw a television commercial that said to receive the $6,500 first-time homebuyer tax credit an individual must live in their present home from five to eight years before buying the second home. The taxpayers claimed the credit on a townhouse that they purchased for their son. The IRS denied the credit because the townhouse was not used as the principal residence of the taxpayers.

In order for an individual who already owns a home to qualify for the first-time homebuyer tax credit, the home purchased must be used as the primary residence of the taxpayer [IRC §36(c)(6)]. The taxpayers claimed they were entitled to the tax credit because a TV commercial they saw did not clarify that the new home being purchased had to be used as a primary residence in order to qualify for the tax credit.

The District Court ruled against the taxpayers. The Court said the taxpayers may not have been aware of the fact that the new home had to be used as their primary residence, but it is still a requirement clearly explained in the Code. Neither the TV commercial’s lack of clarification, nor the taxpayer’s misunderstanding of the Code excuses the requirements of the law.
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