The IRS is closely watching the First-Time Buyer Tax Credit program for fraud. I’m glad they are. I have personally heard of two situations where people have collected $8,000 under the program and they have not yet purchased homes. In one of those instances, I was told that 3 people in one family received the credits—totalling $24,000—and they had not yet purchased a home, were planning to, and were told by their tax person that, “If you don’t buy the house by the deadline you just have to repay it.”
I can’t imagine why anyone would think a stimulus program allows receipt of the stimulus money without actually undertaking the stimulus activity: BUYING THE HOUSE!
Here’s an excerpt from the IRS press release and a link to the IRS site for more information:
“The Internal Revenue Service today announced its first successful prosecution related to fraud involving the first-time homebuyer credit and warned taxpayers to beware of this type of scheme.
On Thursday July 23, 2009, a Jacksonville, Fla.-tax preparer, James Otto Price III, pled guilty to falsely claiming the first-time homebuyer credit on a client’s federal tax return. Price faces the possibility of up to three years in jail, a fine of as much as $250,000, or both.
To date, the IRS has executed seven search warrants and currently has 24 open criminal investigations in pursuit of potential instances of fraud involving the credit. The agency has a number of sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time homebuyer credit.
‘We will vigorously pursue anyone who falsely tries to claim this or any other tax credit or deduction,’ said Eileen Mayer, Chief, IRS Criminal Investigation. ‘The penalties for tax fraud are steep. Taxpayers should be wary of anyone who promises to get them a big refund.'”