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.
Among those claiming bogus credits, at least some of them were definitely first-timers. The credit has already been claimed by 500 people under the age of 18, including a four-year-old. This pre-K housing whiz likely bought because mom and dad make too much to qualify for the full credit, which starts to phase out at $150,000 of income for couples, $75,000 for singles.”
The whole Wall Street Journal article here.
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