NEW YORK (CNNMoney.com) — More than 1,200 prison inmates, including 241 serving life sentences, defrauded the government of $9.1 million in tax credits reserved for first-time homebuyers, according to a Treasury Department report released Wednesday.
Treasury’s inspector general also found that thousands of people filed multiple claims or made claims outside the allotted time period. In all, more than $28 million was improperly doled out. The Internal Revenue Service program at issue is meant to stimulate the housing market by giving tax credits of as much as $8,000 to qualifying first-time home buyers.
“Additional controls are necessary to address erroneous claims for the credit,” the report stated. “Further, fraudulent and questionable claims processed prior to implementation of controls will need follow-up action by the IRS.”
According to the report, 4,608 state and federal inmates filed for these tax credits, and that fraudulent refunds were doled out to 1,295 of them. The inspector general’s report said the most “egregious” fraudsters were 715 prison lifers, including 174 who filed with the help of paid preparers. From this group, 241 lifers were awarded $1.7 million. The problem was particularly bad in Florida: 61% of the lifers who got credits were incarcerated in the Sunshine State.
The homebuyer tax credit program was very specific about the time period in which homebuyers were allowed to participate, though this rule seems to be the most widely violated. The credit was for home purchases that happened after April 8, 2008, with a cut-off date that was eventually extended to May 1, 2010.
The report found that the IRS awarded $17.6 million to 2,555 filers who had bought their homes before the credit program kicked in.
The inspector general also identified 206 filers who claimed the credit for multiple addresses; these fraudulent filers were awarded a total of $1.4 million.
The report also found that improper filers included 34 employees of the IRS. This is in addition to 53 IRS employees that the inspector general identified last year as improper filers.
Govt outwitted by fraudsters…sound like mortgage lenders.
An office worker with a stated income of $300k. Great! mortgage approved for a $1MM house
Until the govmint gets completely out of housing (incl. tax deductions, credits, Fannie, Freddie, ad naseum), we taxpayers will continue to get a hosing. If there ever was an example of a market completely FUBAR’d by govmint interference, RE is it.
If someone is in prison for life and has access to file and mail off tax forms, that privilege should immediately be taken away from them. No TV, no taxes, nothing. Just because they’re life in prison doesn’t mean they can’t be severely punished, quite the contrary. The punishment can easily be far worse than their existing life in prison sentence.
Just goes to show what a mess the rpogam is and was.Waste of money as usual.
So, by that logic, tweeter and Dr. Detroit, because people have also defrauded the Defense Department in its spending, we should get rid of it too. You know, so we’re consistent here.
P. T. Barum for the 21st century – There’s a scam artist born every minute.
RB Resident is spot on. Anything the government spends money on is going to have fraud and waste as part of the budget. It really doesn’t speak to the merits of the program. There are much better reasons to despise all the money the government spends on housing – a lot more money is wasted on legitimate claims than fraud.
BTW, Fannie Mae is considering banning home loans to people for 7 years who strategically walk away from their homes:
http://www.msnbc.msn.com/id/37879718/ns/business-real_estate/
I always thought they were too lenient, but 7 years might deter some people seeing as how some homeowners have the cash and income to stay but just don’t want to.
7 years is still too lenient imo.they should be banned for 20 years and that might help.
Yeah, right. Think Fannie will still be around in seven years?
If you think Fannie won’t be around in seven years, you’re not being cynical enough.
I used to be cynical. Now I am just amazed.
Will the government create a new department to prevent this from happening again? That always seems to be the response to any problem that arises. The government just can’t help itself when it is “trying to do the right thing”. Or maybe one of those blue ribbon commissions who will spend endless amounts of time looking into the problem, creating untold amounts of wasted reports and proposing solutions which were obvious if they had only thought about the program from the beginning.
“I used to be disgusted; now I try to be amused.”
–Elvis Costello