Wall Street is getting reamed, as it should. But the greed on Main Street has yet to be acknowledged:
Some of these suspicious claims come from people who are writing off interest payments on another house. That's a pretty strong sign that they already own a home.
Russell George, the inspector general who watches over the IRS, is bewildered by the way the agency set up the program.
"This is one of the largest refundable credits in the history of the Internal Revenue Service," George says. "As they are well aware, there are people who do not want to pay taxes. If you give them any opportunity to avoid paying it, certain people will."
In a recent audit, George's office highlighted nearly $500 million in homebuyer tax credits claimed by people who don't appear to qualify. SCPR
People have found loopholes in the
homebuyer tax credit program and are working the system. The program could be extended, though some,
such as Sen. Claire McCaskill, are against it. Greed will always prevail in our culture-- on Main Street and Wall Street-- because things and money = success:
George says, "If the IRS were to require documentation of the purchase of a home, that would serve as a major disincentive to people who would otherwise fraudulently claim the credit."
But the IRS has resisted that move.
"It wouldn't necessarily give us the ability to automatically disallow the claim," says Frank Keith, a spokesman for the IRS.
He says the IRS doesn't have the authority to reject a claim for the tax credit without doing a full audit first. Keith says his agency has flagged more than 100,000 tax returns for a second look.
"I think we'll find some where the taxpayer perhaps has made an honest mistake," Keith says. "And I think we'll find those cases in which the taxpayer has intentionally filed a claim for a credit knowing full well that they weren't eligible."
On Wednesday, a tax preparer in Florida was sentenced to 30 months behind bars for filing false tax returns. He claimed the homebuyer credit for 15 of his clients, and told some of them they could qualify even if they were merely thinking about buying a house. SCPR
