$8,000 first-time homebuyer credit targeted by fraudsters

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

This year’s $8,000 federal tax credit for first-time home buyers was apparently so popular that it even attracted ineligible claimants – potentially more than 90,000 of them, including former homeowners and 4-year-old children.

A report from the Treasury inspector general for tax administration found that more than $600 million worth of tax credit claims were questionable. The $8,000 offer, enacted by the Obama administration in February and expanding a similar credit from 2008, was designed to boost housing demand.

Eligibility extended to those who had not owned a primary residence in the last three years and earned less than $75,000 as an individual or less than $150,000 as a married couple. The credit could be claimed after purchasing a home between Jan.1 and Dec. 1.

But on 19,351 electronically filed tax returns, taxpayers listed the credit for properties that hadn’t been purchased. An additional 73,799, claiming nearly $504 million, seemed to have already owned a home.

And 582 supposed first-time home buyers turned out to be younger than 18 years old, claiming nearly $4 million. Meanwhile, 48,580 taxpayers still working with the less-generous 2008 version of the credit may have claimed less than they were entitled to.

The Internal Revenue Service has so far discovered 167 criminal schemes, opened 115 criminal investigations and temporarily frozen more than 110,000 refunds. The IRS has also agreed to recommendations from the inspector general to take corrective action.

Through late August, more than 1.4 million claims have been made to some version of the home buyer’s credit.

-- Tiffany Hsu