WASHINGTON — The Internal Revenue Service has paid out more than a half-billion dollars in homebuyer tax credits to people who probably didn’t qualify, a government investigator said Friday.
Most of the money — about $326 million — went to more than 47,000 taxpayers who didn’t qualify as first-time homebuyers because there was evidence they had already owned homes, said the report by J. Russell George, the Treasury inspector general for tax administration. Other credits went to prison inmates, taxpayers who bought homes before the credit was enacted and people who did not actually buy homes.
“The IRS has taken positive steps to strengthen controls and help prevent the issuance of inappropriate homebuyer credits,” George said. “However, many of the actions occurred after hundreds of thousands of homebuyer credits had already been issued, including fraudulent and erroneous credits totaling millions of dollars.”
The popular credit provided up to $8,000 to first-time homebuyers and up to $6,500 to qualified current owners who bought another home during parts of 2009 and 2010.
IRS spokeswoman Michelle Eldridge said the agency worked hard to enforce a complicated tax credit that provided nearly $29 billion to more than 4 million taxpayers. The agency audited nearly 448,000 returns and blocked or denied nearly 426,000 questionable claims, she said.
In all, the agency’s enforcement efforts saved more than $1.3 billion and identified more than 200 criminal schemes, she said.
The agency questioned some of the inspector general’s findings but said it would follow up on the report.
The tax credit for first-time homebuyers was part of President Barack Obama’s economic recovery package enacted in 2009. In November 2009, Congress extended the credit and expanded it to longtime owners who bought new homes.
Breaking down the payouts
Among the government investigator’s findings:
• More than 47,500 taxpayers claimed the first-time homebuyer credit even though there was evidence on previous tax returns that they had already owned a home. The report estimated these people claimed $326 million in credits.
• More than 13,400 taxpayers claimed the credit even though they had not yet purchased a home. The report estimated these people claimed $97.8 million in credits.
• More than 1,000 taxpayers said they purchased homes while they were incarcerated in prison, claiming $7.7 million.
• More than 2,500 taxpayers claimed credits for buying homes for which at least one other taxpayer also claimed the credit for buying. These taxpayers received $11.4 million.
The Associated Press
