© 2009 . All rights reserved.

Back to the Blog The New Home-Buyers' Big Tax Credit Fraud

Play

Coffee and Markets

Download Podcast | iTunes | Podcast Feed

Francis Cianfrocca joins Ben Domenech for the Tuesday, October 20th edition of Coffee & Markets, a series of brief morning podcasts on politics and the marketplace, now appearing as well on WashingtonTimes.com.

Today’s podcast focuses on the fallout over the level of fraud in the $8,000 tax credit for new home-buyers on Capitol Hill, and whether it will prevent Congress from extending the credit program for another year.

Items discussed include:

WSJ on IRS Investigation of New Home-Buyer Tax Credit

WASHINGTON — The Internal Revenue Service is examining more than 100,000 suspicious claims for the first-time home-buyer tax break, another sign of potential trouble for the soon-to-expire program.

The measure, adopted in February as part of the economic-stimulus bill, gives first-time buyers an $8,000 tax credit in an effort to boost sales and stimulate the moribund housing market. The program is set to end Nov. 30, but housing-industry leaders are lobbying Congress to extend it.

More than a million claims for the credit have been received so far, and housing-industry experts estimated that the credit has helped generate about 350,000 home sales that wouldn’t otherwise have occurred. But some lawmakers and tax experts now say there is evidence that a significant number of the claims might prove to be unjustified, or even fraudulent.

“I am concerned about recent reports that there have been fraudulent schemes involving the credit,” Rep. John Lewis (D., Ga.), chairman of a House Ways and Means oversight subcommittee, said in a statement. The subcommittee is planning a hearing on the problems on Thursday.

The IRS said it was investigating 167 “criminal schemes” involving the credit, according to the subcommittee. IRS officials on Monday declined to describe the suspected schemes or provide additional details.

At a recent hearing of a White House tax advisory panel, Bonnie Speedy, national director of AARP Tax-Aide, a volunteer service for low-income people, suggested that abuse of the home-purchase credit appeared to be widespread, in part because of relatively loose standards for claiming the credit.

The credit “has some fraud issues because it’s not being done at the time of the sale,” said Ms. Speedy. “People are filing for the home credit who don’t have a right to file for it.” Taxpayers don’t have to file their claims as part of a real-estate transaction and instead can file or amend their income-tax returns to claim the credit.

A spokesman for the National Association of Realtors, Lucien Salvant, said, “Any time there is a lot of money around, there is going to be people attracted to it with evil intent.”