Fraudulent Homebuyer Credits Total $513 Million
The IRS Treasury Inspector General has come to the conclusion that greater controls are needed over all refundable tax credits, in light of three internal audits that discovered the current IRS system “allowed potentially erroneous refunds of more than $513 million to be received by taxpayers who most likely did not qualify” for the credit.
The IRS has since taken steps to determine and track, the qualification of the first-time homebuyer credit with improved accuracy, since they are now requesting HUD closing papers and disallowing the electronic filing of returns that attempt to take the credit. Taxpayers in 2010 were required to file a paper return for added scrutiny.
Because the first-time homebuyer credit is a refundable credit of $8,000, there will be 64,000 taxpayers who now owe that money back, along with penalties and interest.
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