The First-Time Homebuyer Tax Credit aimed at boosting home sales allows low- and middle-income earners to claim a credit of up to $8,000 for a first-time home purchase. The $13.8 billion plan was part of the stimulus package passed in February and so far the Internal Revenue Service has processed 1.5 million claims. Lawmakers are considering a plan to extend the program, set to expire at the end of the month, through March. An audit found widespread mistakes and outright fraud including:
– The First-Time Homebuyer Credit IRS form did not verify eligibility and no documentation was required to substantiate home purchase;
– $139 million in credits were awarded to people for more than 19,000 homes that were still on the market;
– Checks given to 582 taxpayers under 18 who claimed $4 million in first-time homebuyer credits. The youngest buyers were 4 years old;
– Through July 25, the audit identified 3,238 people claiming $21 million in First-Time Homebuyer Credits on returns filed with special tax identification numbers used mostly by resident aliens, who are not eligible for the benefit;
– Nearly 74,000 First-Time Homebuyer Credits totaling almost $504 million were claimed by taxpayers who had indications of prior home ownership within three years;
– The IRS has not decided whether to examine 70,005 questionable claims worth $479 million that were handed checks prior to the initiation of special pre-refund examination filters.
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