Fraud Plagues Homebuyer Tax Credit

According to a Treasury inspector general, rampant fraud has become a large problem for the Obama administration’s first-time homebuyer tax credit program, leading to losses of up to $504 million. In some cases, people were able to manipulate the program to such an extent that children as young as four years old were receiving federal tax credits.

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The program offers a federal income tax credit of up to $8,000, which means that such a program could provide criminals with a tidy sum of money if there are not enough controls set in place to prevent it. So far, more than 1.2 million borrowers have claimed about $8.5 billion of the $13.6 billion set aside for the program.

According to the Internal Revenue Services, as many as 73,799 claims totaling almost $504 million have been identified as potentially coming from non-first-time homebuyers. The IRS also found that 582 taxpayers under 18 years old were able to claim $4 million in credits, even though they are ineligible to buy homes.