Homebuyers Tax Credit May Be Too Popular
In response to abuses and fraud uncovered by the IRS and Treasury Department into the First-Time Homebuyer Credit program, the House Ways and Means oversight subcommittee introduced a bipartisan bill Thursday to improve the screening of applicants and administration of the program.
According to the agencies, 580 taxpayers under the age of 18 claimed approximately $4 million in credits; some of them were as young as four.
â€śSome key controls were missing to prevent an individual from erroneously or fraudulently claiming the credit and receiving an erroneous refund of up to $8,000,â€ť said J. Russell George, inspector general for tax administration at Treasury. He said that as of Oct. 9, the IRS has processed more than 1.2 million tax returns claiming almost $8.5 billion in First-Time Homebuyer Credits. Itâ€™s also examining more than 100,000 potentially fraudulent claims.
The Homebuyer Tax Credit Improvement Act would require applicants to be at least 18 years old and to provide documentation to prove they purchased a home; give the IRS with authority to review prior returns and determine if a taxpayer is eligible for the credit; and improve tax administration by increasing the number of electronic returns filed by return preparers.
â€śThis tax credit is an important resource for families seeking to purchase a home and a vital part of our economic recovery efforts. We must ensure that we are administering the credit accurately and strike a balance between issuing timely refunds of the credit and protecting federal resources,â€ť said Rep. John Lewis (D.-Georgia), chair of the House Ways and Means oversight subcommittee.
Although the credit is set to expire in November, Democratic and Republican lawmakers in both the House and the Senate are calling for the program to be extended.