What Do You Mean the Federal First-Time Home-Buyer Tax Credit Attracts Fraud?

As mentioned earlier (here ), the financial crisis was fueled by the government’s obsession with home ownership. Yet, last year the Bush administration decided that it was wise to continue to encourage people to buy houses that they couldn’t afford. That’s why it came up with a refundable tax credit, worth up to $8,000 for the purchase of a first home.  Refundable tax credit means that the claimants will get cash back even if they paid no taxes.  The low level of documentation required to get your credit makes it also a low hanging fruit for potential scammers. Is anyone surprised?

“The Treasury’s inspector general for tax administration, J. Russell George, recently told Congress that at least 19,000 filers hadn’t purchased a home when they claimed the credit. For another 74,000 filers, claiming a total of $500 million in credits, evidence suggests that they weren’t first-time buyers.

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