HOMEBUYER TAX CREDIT – GOOD IDEA TURNED BAD?

In what seemed like such a good idea at the time, tax lawyers say has turned-out to be a beleaguered homebuyers’ tax credit program riddled with fraud, delays and confusion. According to IRS attorneys, the homebuyers’ tax credit, adopted as part of the Obama economic stimulus program has been fraught with problems from day one. Now we’re learning the problems in the program ran much deeper than anyone could have expected.
Investigators searching out fraudulent claims in the program are now reporting that one hundred and twenty eight (128) IRS employees were responsible for making false $8,000 first-time homebuyer tax credit claims during 2008 and 2009. Perhaps even more disconcerting, the Treasury Department’s Inspector General is saying these fraudulent claims represent only a small percentage of the overall fraud in the program.

IRS tax lawyers following the investigations, indicate cases like that of Michael E. Doyle, a former IRS supervisor in Andover, Massachusetts, are typical. Doyle had claimed he’d purchased a home in 2008, in order to take advantage of the tax credit, when in truth he’d bought the home in 2007.

In yet another example of fraud, these same tax lawyers point to the case of Catherine Griffin, who worked as a part-time employee for the Agency in Georgia. Ms. Griffin was accused of altering electronic data in the IRS’s computers to assist four friends and family members to successfully assert fraudulent homebuyer tax credit claims. Recently, Ms. Griffin pled guilty to one count of accessing a computer without authorization. According to tax attorneys following the case, she is currently awaiting sentencing.

Most tax lawyers recognize the IRS was given the new tax credit program with insufficient time to put adequate processes in place to discourage and easily identify fraudulent claims. There can be little doubt that the 128 IRS employees who submitted fraudulent tax credit claims knew about the holes in the program and tried to cash-in on the programs’ shortcomings. What’s more, some tax attorneys suggest the IRS employees probably figured their claims would be overlooked, in part, due to the Agency’s high workload processing millions of these claims, and given their positions within the Agency.

If you made a homebuyer’s tax credit claim and still haven’t received a refund, chances are you’ll be waiting a while longer as the government tries to sort through thousands of questionable claims. If you have questions about your eligibility to make such a claim, or are wondering why you are still waiting for your refund, then you are encouraged to speak with a tax lawyer or other tax professional to get the answers you need. Further, if your homebuyer’s tax credit claim was denied, you may consider speaking with a tax lawyer about any back taxes you may owe and how best to deal with the denial.

 

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