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IG Finds Fraud In Home Buyer Credit

From an unfazed Associated Press:

Congress scrutinizes problems in home buyer credit

By Jim Abrams, Associated Press Writer

WASHINGTON – Tens of thousands of people may have taken advantage of the first-time home buyer tax credit to defraud the government, an IRS watchdog office said Thursday, in testimony that could jeopardize efforts to extend the popular program.

Treasury Inspector General for Tax Administration J. Russell George told a House panel that more than 19,000 people filed 2008 tax returns or amended returns claiming the credit for homes they had not yet purchased. Those claims amounted to $139 million and it was not clear that the IRS planned to go back to verify that those purchases actually took place, he said.

George said his office had identified another $500 million in claims, by some 74,000 taxpayers, where there were indications of prior home ownership.

George’s office said the IRS did not require taxpayers to provide documentation to substantiate the purchase of a home. They were told by the tax agency that it did not have the ability to accept such documentation electronically.

He told a House Ways and Means oversight subcommittee that they also found 580 taxpayers under the age of 18 who claimed $4 million in first-time home buyer credit. One was 4 years old.

George said that while the IRS has since taken steps to tighten oversight, "some key controls were missing to prevent an individual from erroneously or fraudulently claiming the credit."

Linda Stiff, IRS’ deputy commissioner for services and enforcement, agreed that "any time that there is an opportunity to receive cash back it tends to attract people that might have an intent to defraud the government." The agency "recognizes that there is potential for both fraud and errors" when a new tax credit is enacted. She said the agency "will vigorously pursue those who filed fraudulent claims."

The home buyer credit was a key element of the $787 billion stimulus package enacted last February. Under the measure, low- and middle-income first-time home buyers purchasing a home between Jan. 1 and Nov. 30 of this year could claim a credit of up to $8,000 on their 2008 or 2009 income tax return.

The Internal Revenue Service says it has processed claims from more than 1.5 million individuals or families. The General Accountability Office, in a report to the subcommittee, said that represented about $10 billion in tax revenue…

Gosh, the government gives away money willy-nilly and some people try to take of advantage of that by fraudulent means.

And yet we are told that we will save billions (if not trillions) by having government take over another 6% of our nation’s economy with ‘healthcare reform.’

(Thanks to NickB for the heads up.)

This article was posted by Steve on Thursday, October 22nd, 2009. Comments are currently closed.

14 Responses to “IG Finds Fraud In Home Buyer Credit”

  1. NickB says:

    You’re welcome, Steve!

    How much would you like to wager that the next story like this will be about auto dealerships submitting phony “cash for clunkers” credits? Well, that’s if the government will actually send this money to the dealerships, since we all can see that this socialist administration is hell bent on acquiring every bit of all the major industries in this country.

    • azcargal says:

      I did not like the “cash for clunkers” but at least I have knowledge of the business you are pointing fingers at. Did you ever work at a dealership? Doubt It! The state and the banks audit dealerships on a monthly bases. The paper work that the dealers had to go thru to get their money refunded was a nightmare. Many of the dealers waited months to get the refunds that they fronted for the customer. You take a family owned dealership that fronts $90,000 if they sold 20 cars, thats a ton of cash. The Gov took a month or more because of the paper work that was not even in place when this program started. It was a cluster f***. Don’t blame the dealers, blame the Gov/Obama.
      I am tired of listening to the “know it alls” that puck out sh** with out one brain cell activated. Amazing

  2. Hey. Remember back 2005 when FEMA got scammed out of millions of tax payer dollars via “significant fraud and abuse” of its emergency benefits credit card program??

    Neither does Congress. What’s that definition of insanity, again?? And what does it say about us, as a people, when we let them continually abuse our money??!!

    **On a personal note: My wife & I recently purchased a home this year after living in an apartment for many years, cleaning up calamities acquired before we we’re married to each other.

    We legitimately qualify for this $8000 tax credit …uh, incentive… transfer of wealth.

    I can certainly spend that money better than the gub’mint, but I loathe the notion of redistribution.

    There lies the rub.

    We’re leaning toward either tithing the majority of money to our church, or a huge donation to the RNC, or a significant contribution to local Missouri republicans / libertarians. Surprisingly, ACORN is not on the list.

    Any advice, local denizens of S&L?


    • proreason says:

      If you need the money keep it. Tithe a portion because that’s a generous thing to do.

      You will be cheated out of 100 times that amount during your life by the government. View it as a token reimbursement for the crimes that will be committed on you so that your rulers can live like emperors.

      Not keeping the money would be the equivalent of not drawing Social Security because you oppose it philosophically.

    • Right of the People says:

      Keep the money, give to your church and your favorite charity.

      My wife and I always give directly to organizations like the Boy Scouts instead of the United Way which is borderline crooked and very badly run.

      Buy something nice for the house, Pro is right, this is probably the one time you’ll get anything from the feds.

  3. NickB says:

    I’d like to add on, just look at some the industries and institutions Obama, Pelosi, and Reid are targeting:

    Health Industry
    Automotive Industry
    Insurance Industry
    Banking Industry (control the money)

    If the health industry is 6% of the nation’s economy, I’ll bet all the others listed and not listed, comprise a very alarming figure.

    Didn’t we see this in history but a mere 75 years ago in Nazi Germany?

    • proreason says:

      You forgot Student Loans and the Mortgage Loan industry.

      And they are in the early stages of siezing the News media (in addition to FCC control).

      And don’t forget that the government also has captive control of the industries that supply the military.

      And don’t forget that the government also has implicit control of the Education Industry.

      And don’t forget that the government also has implicit control of much of the Transportation Industry (other than automobiles) via the FAA and other regulatory agencies.

      So a large portion of the small slice of the economy that isn’t directly under the thumb of the Obamy Fascists is still controlled by them.

  4. GetBackJack says:

    In the middle 80s – Reagan’s time – and the coming hostile takeover and murder of the Savings and Loan industry I was a senior partner in a modest boutique investment bank. We had several opportunities presented to us by industry leading bank officials to get involved in the coming new wave of bank financed consumer credit lending. From private label credit cards (GE Credit masquerading as a leading chain store, etc); get into Bogue-Financing (bogues are bogus-motherfarkers, an auto industry financing term); get in on the ground floor of the coming tsunami of mortgage brokerage (instead of S&L lending) and any number of other federally manipulated, Wall Street battle-planned alterations to the market operations of America’s financial landscape.

    I was out-voted almost every time by my fellow partners. They drove the institution headlong into most of these deals so that we ended up owning a mortgage wholesaler (a new invention), an auto-financing unit that specialized in creating asset-backed securities out of car dealers’ bogue-paper they wrote themselves; arranged a dozen private label credit card structures for name-brand chains you’d recognize; and in general went for the disastrous wave of Biblical proportion new way of consumer lending. Watched the FBI fund virtually 100% of Equifax’ new unit in Alpharetta Georgia so the FBI could circumvent the law not to amass files on average citizens without due process; this way they could BUY files from Equifax’ new unit and be in the clear …

    … all of which is to intimate that being there in the Change, I got out. I predicted, then, corruption, fraud, graft and law breaking on a scale heretofore unknown in our nation. And I was right. The tales I can tell of just the criminality of the ruin of the S&Ls, their demise and gobbling up by banks already scripted before the S&Ls even knew their ruin was laid on would curl your hair. The following crimes of what went on around the Resolution Trust should have put 1,000 politicians and bureaucrats in prison but instead made a lot of people very very rich.

    What we’re witnessing is unlike anything I can understand. I understand the criminal mind, but to purposefully murder the golden goose is beyond my ken. And obviously beyond most people’s understanding because regardless of explanations offered it just gets more and more complicated, more criminal and more wrong …. like trying to haul water with a fork.

    • proreason says:

      They don’t care about the golden goose.

      They care about power.

      Czaris Russia was dirt poor, but the Romanoffs lived in splendor.

      So will Obamy.

      We can only hope that he and his crooked puppet-masters will end up in the same graves as the Romanoffs.

    • Rusty Shackleford says:

      Years ago when I first saw “It’s A Wonderful Life” with Jimmy Stewart, I, like everyone else, had it in for Mr Potter, the grumpy curmudgeon who stole the money from Bailey (Jimmy Stewart). As the years progressed, I found that Mr Potter actually had it right, that in order to buy a home, you have to have collateral, a job, a means of paying the home loan back.

      Bailey’ basic premise was founded on the same bent as those who pressured the government to loosen up on the regs in order to allow lesser solvent folks the opportunity to buy a house in Bedford Falls. Well, we all know how the story ends but in the REAL world, that hat that got passed around came up bupkiss and that’s what the mortgage industry in our nation had to deal with.

      I saw all the growth, I was in Phoenix at the time with a new house closing every 10 minutes or something like that. I could not imagine where all the money came from. Now I know. It wasn’t there. At least not in any great or consistent quantity.

      So it caved in. As well it should. That is how it works. And everyone who was complicit in it, deserved to eat some of the humble pie. Unfortunately, such was not the case as a corrupt Bailey came along and told Potter he’s a mean racist and everyone believed him. Mary bought some 400 dollar sneakers and Zu-Zu got better but still can’t play the piano.

      All kidding aside, you can only run wide open for a certain period of time. Every single money man in the business KNEW that the end had to come. So the trick was how to maximize their yield before that happened and how to dump the bad debt onto some unsuspecting fools.

      But it’s kind of like trying to hide a fire under your hat, ain’t it? You’re the only one who can’t see it.


  5. canary says:

    Obama got the message out for several monthes before the 2008 filing date, that it’s okay to cheat on your taxes and that ‘everyone’ gets to buy a house & not pay for it.

    • canary says:

      ooohhh. I get it. ACORN helped everyone with their taxes, and aided child traffickers for sex slavery.

  6. David says:

    4 million doesn’t even make sense. The max you can claim is $8000! Some of this seems so easy to check I wonder what IRS does with all the national treasure it sucks up. Sure is hard to tell if someone owned a home in the last three years, not like the government keeps track of property taxes or anything.

  7. proreason says:

    What if the entire country started filing for all of these credits? I wonder what little Timmy does.

    Why, it would almost be a taxpayer revolt, wouldn’t it?

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