Paul L. Caron

Wednesday, June 23, 2010

TIGTA Uncovers Widespread Fraud in First-Time Homebuyer Tax Credit Program, Including by Prisoners Serving Life Sentences

TIGTA The Treasury Inspector General for Tax Administration today released Additional Steps Are Needed to Prevent and Recover Erroneous Claims for the First-Time Homebuyer Credit (2010-41-069):

In its new report, TIGTA estimates that 14,132 individuals received erroneous credits totaling at least $26.7 million. These erroneous credits included:

  • 2,555 taxpayers receiving credits totaling $17.6 million for homes purchased prior to the dates allowed by law.
  • 1,295 prisoners receiving credits totaling $9.1 million who were incarcerated at the time they reported that they purchased their home. These prisoners did not file joint returns, so their claims could not have been the result of purchases made with or by their spouses. Further, TIGTA found that 241 prisoners were serving life sentences at the time they claimed that they bought new primary residences.
  • 10,282 taxpayers receiving credits for homes that were also used by other taxpayers to claim the credit. (In one case, TIGTA found that 67 taxpayers were using the same home to claim the credit.) TIGTA auditors have not fully quantified the total of these erroneous credits, but all indications are that the total will be in the tens of millions of dollars.

Some of the improper payments involve IRS employees, TIGTA found. At least 34 IRS employees claimed the Credit despite indications that they owned a home within the past three years. This is in addition to the 53 IRS employees that TIGTA identified in August 2009.

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Tracked on Jun 24, 2010 6:42:32 AM


Giving big breaks to the housing and mortgage industry takes away from the multi-family housing industry. Granted, the housing and mortgage industry has a much more influential lobby but this has hurt a lot of management companies, and in turn the residents.
Just putting that out there so folks aren't shocked when the government wants to take over rental housing too. Think it can't happen? They couldn't take over healthcare, remember?

Posted by: Gran Tobal | Jun 24, 2010 2:22:55 PM

Does anyone know if they investigated whether those claiming the $8,000 credit really only qualified for the $7,500 "loan"? I see where homes purchased prior to the eligible date for either credit were investigated, but not those within the eligible period for the $7,500 but not $8,000.

Posted by: B | Jun 24, 2010 9:48:35 AM

I still think the home buyer credit stimulus has done more good than bad for the economy and home buyers/sellers. After all, even if you assume the same amount of fraud was committed in 2009 when the home buyer credit program was expanded, it still only makes up about 2% of the total program outlays.

Posted by: Andy | Jun 23, 2010 6:37:39 PM

Another example illustrating why Congress should not unleash such havoc via the tax system, as opposed to direct appropriations.

Posted by: Jake | Jun 23, 2010 5:44:28 PM


Posted by: S | Jun 23, 2010 10:57:27 AM