Criminals con IRS through home buyer tax credit
This time it’s people who can’t get sent to jail for tax fraud because, well, they’re already there. According to this CNN article, over 1,200 prison inmates – including 241 serving life sentences – received $9.1 million in tax credits reserved for first-time home buyers. Furthermore, over $28 million was improperly distributed in home buyer tax credits, according to a Treasury Department report released Wednesday.
For those not familiar with the first-time home buyer tax credit, that was reserved for qualified buyers who purchased homes in April 2008 through April 2010. In November, the first-time tax credit of up to $8,000 so that qualifying repeat buyers could receive credits up to $6,500.
The IRS has dealt home buyer tax credit fraud in the past. In October, the Treasury Department issued a report stating that about 19,350 taxpayers claimed $139 million worth of tax credits for homes they had not purchased last year. An additional 70,000 taxpayers claimed more than $479 million in credits despite evidence they were not first-time home buyers, the October report states.
IRS Spokesman David Stell said the IRS responded to the October report by gearing up for a lot of audits. Congress responded by passing the Worker, Homeowner and Business Assistance Act in November in hopes of curbing abuse by requiring people claiming the credit to submit closing documents with their tax returns.
Indeed, federal law set up a bit of an honor system when it came to claiming the credit. Prior to the aforementioned act, the federal government didn’t require a whole lot in the way of proof from people wanting the credit. Stell, in October, said those people who improperly claimed the credit weren’t off the hook – the IRS was aware of the problem and was working overtime on audits.
The new law, of course, resulted in substantial delays in receiving credits. Stell said anyone claiming the credit could expect to wait 12 to 16 weeks before they got them, thanks to the new legislation, pointing out that law was passed in hopes of making it harder for people to game the system. Prior to the November legislation, tax credits were handed out quickly.
Bear in mind the Wednesday report referenced tax returns filed for 2008 claims – credits that were sent out before the October law was passed. It remains to be seen, of course, whether the new law effectively curbed the abuses reported by the Treasury Department in October and on Wednesday.
Meanwhile, the IRS released a statement claiming the agency is working hard to recover the money that was claimed through fraud. In that statement, the IRS said that over 2.6 million Americans have received tax credits for purchasing homes since April 2008 through April this year.
Additionally, the IRS has denied close to 400,000 questionable claims and has opened more than 150 criminal investigations. The IRS claims its efforts have saved taxpayers more than $1 billion.
It’s worth mentioning that the Wednesday report states that 34 of the people who improperly claimed tax returns are IRS employees. One can’t help but believe they’re in for a miserable time from their employer.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.