Home Buyer Tax Credit Gives Way to Fraud
Danger:Government in Action
If you needed any more proof that the homebuyer tax credit is nothing more than a government boondoggle here it is.
Not only is the program off the charts in terms of cost, but like most government plans it has been overrun by fraud.
From Bloomberg by Dawn Kopecki entitled: Four-Year-Olds Got Homebuyer Tax Credits, U.S. Says
"Children as young as 4 years old received first-time homebuyer tax credits as the U.S. failed to adequately screen filings, a Treasury inspector general told lawmakers today.
"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," Treasury's J. Russell George told the House Ways and Means Committee's oversight panel.
More than 1.2 million borrowers through Oct. 9 have claimed almost $8.5 billion of the $13.6 billion set aside for "first- time" homebuyer tax credits this year, George said. The program is aimed at easing the worst housing slump since the Great Depression.
"Every time Congress creates a new refundable credit, meaning that individuals can get a check from the government whether or not they have actual tax liability, the incentive for fraud is magnified," Louisiana Representative Charles Boustany, the subcommittee's top-ranking Republican, said during the hearing.
The Internal Revenue Service has identified 73,799 claims totaling almost $504 million that may not be from first-time homebuyers. They also found that 582 taxpayers under 18 years old and ineligible to buy a home claimed almost $4 million in credits. More than one 4-year-old received the credit, according to George.
Linda Stiff, the Internal Revenue Service's deputy commissioner for enforcement, said her staff has identified 160 potential criminal cases, and 115 are now under investigation. In total, 8,000 claims have been flagged for potential criminal fraud, she said. "We are and will continue to vigorously pursue those who filed fraudulent claims for the credit," Stiff said.
Auditors found 19,351 taxpayers claimed more than $139 million in credits on homes they had not yet purchased. More than $20.8 million of the credits additionally went to 3,238 homebuyers who filed their taxes with individual tax identification numbers instead of Social Security numbers.
Such numbers are generally used by nonresident aliens and may indicate the borrower is illegally living in the country and not eligible for the credit, George said."
It is madness I tell you.
Government in action is not for the squeamish.
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