IRS Does Not Make People Claiming The Homebuyer Tax Credit Prove Home Purchase!

[Soul Crusher]

The IRS Does Not Make People Claiming The Homebuyer Tax Credit Prove They Bought A House
John Carney|Oct. 22, 2009, 3:15 PM | 629 |18
PrintTags: Regulation, Economy, Mortgages, Fraud, SEC, Scams, Scandals, Housing Crisis, Crime, White-collar crime, Housing
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The tax credit for home buyers is even worse than we thought.

As it turns out, the IRS doesn't require the people who claim the credit on their tax forms to offer any proof they bought a home.

Scott Jagow at ScratchPad reports:

The IRS doesn’t require documentation to prove the person getting the credit actually bought a home.

Let me repeat that. The IRS isn’t requiring people to prove they bought a house, let alone a “first” home.

We've already pointed out that the tax credit is available to people who do not pay any taxes. If your income is so low that you do not have any tax liability, the government will still cut you a check for up to $8,000. For people with low-incomes, it is just a straight subsidy. Welfare for homebuyers.

We've also indicated how the tax credit undermines the downpayment requirements for FHA loans. Currently, to get a loan backed by the FHA, a buyer must make a down payment of at least 3.5% of the home price. But since they can then get a check for up to $8,000 from the government, often they can pick up the house without any real investment at all.

The IRS doesn’t have the authority to reject a claim for the tax credit without doing a full audit first.

Of course, this situation is almost certainly leading to massive fraud.

"Just yesterday, a tax preparer in Florida was sentenced to 30 months in prison for illegally claiming the home buyer tax credit. Apparently, he told some of his clients they could qualify if they were 'merely thinking about buying a house,'" Jagow writes.

Actually, the likely fraud goes much further than this. By enabling people to buy houses with no money down, the IRS is leaving the door wide open for mortgage fraud. Downpayments are a key barrrier to mortgage fraud because fraudsters don't want to--and often cannot--make upfront payments. But once the downpayment is zeroed out, committing fraud becomes cheap...and rampant.
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And some of you idiots want the Fedzilla to take over health care? ? ?

WTF is wrong with you people? 

[Straw Man]

Any CPA or Enrolled Agent with a brain in their head would want to see a copy of the Hud-1 and obviously you'd need this document if the IRS challenged the claim or audited you.

[Soul Crusher]

Any CPA or Enrolled Agent with a brain in their head would want to see a copy of the Hud-1 and obviously you'd need this document if the IRS challenged the claim or audited you.

1.  The IRS does not have the manpower to audit all the people claiming the credit

2.  Acorn and other shady outfits will have no problem processing the tax returns.

3.  Many shady accountants will no doubt file these returns and split the proceeds with the "borrower" and engineer the return to pass through. 

No doubt this is going to be another collosal waste of taxpayer $$$$.   

[Straw Man]

1.  The IRS does not have the manpower to audit all the people claiming the credit

2.  Acorn and other shady outfits will have no problem processing the tax returns.

3.  Many shady accountants will no doubt file these returns and split the proceeds with the "borrower" and engineer the return to pass through. 

No doubt this is going to be another collosal waste of taxpayer $$$$.   

how is this any different than any other year.

If you sell a house or write off points in the year you purchased the loan it's basically the same process and this tax credit i.e. you put it on your return and no one checks unless you're audited.

[Soul Crusher]

how is this any different than any other year.

If you sell a house or write off points in the year you purchased the loan it's basically the same process and this tax credit i.e. you put it on your return and no one checks unless you're audited.

I think the govt writes the taxpayer a check of 8k in this deal if I am not mistaken. 
 

[Straw Man]

I think the govt writes the taxpayer a check of 8k in this deal if I am not mistaken. 

doubtful

it's a tax credit not a rebate

[SAMSON123]

3 the only thing I can say to you is to NOT get into the mindset that the IRS can not come after one or ALL americans if it so wants to. They don't need MANPOWER all it takes is a few keystrokes to seize your bank accounts, put leins on your property, label you a terrorist AND HAVE YOU JAILED. Despite the illegality of the IRS, the government has given them sweeping powers like the Federal Reserve where they are rarely challenged (even by lawyers) unless they did something terribly wrong, where they can do anything they want to you financially: seize accounts, garnish or take your ENTIRE PAYCHECK, seize and social security, UE, financial aid, investments, stocks, bonds etc etc etc.

If the IRS is supposedly NOT asking for proof of you owning a home for a tax credit...you better not try and take advantage of it, becasue should they check up on you the IRS can not only take back the credit, but put you through the wringer with confiscations, leins, seizures etc...IT IS NOT WORTH IT!!!

[Soul Crusher]

3 the only thing I can say to you is to NOT get into the mindset that the IRS can not come after one or ALL americans if it so wants to. They don't need MANPOWER all it takes is a few keystrokes to seize your bank accounts, put leins on your property, label you a terrorist AND HAVE YOU JAILED. Despite the illegality of the IRS, the government has given them sweeping powers like the Federal Reserve where they are rarely challenged (even by lawyers) unless they did something terribly wrong, where they can do anything they want to you financially: seize accounts, garnish or take your ENTIRE PAYCHECK, seize and social security, UE, financial aid, investments, stocks, bonds etc etc etc.

If the IRS is supposedly NOT asking for proof of you owning a home for a tax credit...you better not try and take advantage of it, becasue should they check up on you the IRS can not only take back the credit, but put you through the wringer with confiscations, leins, seizures etc...IT IS NOT WORTH IT!!!

Good point.  This is why I dont efile and still send paper returns. 

This is another little detail in the health bill.  The IRS is now getting involved in your health care via penalties, fines, etc.

[Hereford]

doubtful

it's a tax credit not a rebate

Ya