Part of President Barack Obama's 2009 economic recovery package – aka Stimulus Package – was a tax credit of up to $8,000 to first-time homebuyers. Unable to leave bad enough alone, Congress later both expanded and extended the program.
The Treasury inspector general for tax administration now reports that the IRS has paid out more than a half-billion dollars in homebuyer tax credits to people who didn't qualify.
IRS Paid $513M in Undeserved Homebuyer Tax Credits by Stephen Ohlemacher Associated Press, Apr 15, 2011
The program was in place for just over 14 months and the IRS managed to pay out $513 million in questionable claims. The IRS has said that the Treasury estimates are overstated. So when investigations are complete, do we think the number will go up or down?
· $326 million went to more than 47,500 taxpayers who were not first-time homebuyers.
· More than 13,400 taxpayers claimed the credit even though they had not yet purchased a home – $97.8 million in credits.
· More than 1,000 taxpayers said they purchased homes while they were incarcerated in prison, claiming $7.7 million.
· More than 2,500 taxpayers claimed credits for buying homes for which at least one other taxpayer also claimed the credit for buying – $11.4 million.
· More than 2,700 taxpayers claimed credits for homes that were purchased before the tax credit went in effect – $17.6 million.
These are obvious cases to be flagged for audit by any institution let alone one with the resources of the IRS. But the IRS response is that the agency worked hard to enforce a complicated tax credit that provided nearly $29 billion to more than 4 million taxpayers. The agency audited 448,000 returns and blocked 426,000 questionable claims, they said. In all, the agency's enforcement efforts saved more than $1.3 billion and identified more than 200 criminal schemes, they said.
This is the “nobody’s perfect” defense – no remorse, no shame, no accountability.
The IRS also said that the extensions and expansion of the credit created a complicated and confusing system that made it hard for many taxpayers to determine which credit they qualified for, if any.
I don’t doubt it for a second – lawyers should be barred from writing anything.
However, what has complexity got to do with missing the obvious nonsense caught by the Treasury? They’re not even good at excuse making – the “it’s not my fault” defense.
All this waste already and the lawsuits have not yet begun to be filed.
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