Subsidy or Scam? Many Abuse Housing Tax Credit
(Reuters) — Thousands of individuals claiming the first-time homebuyer’s $8,000 tax credit may have been attempting to scam the system, including purported four-year-olds and illegal immigrants, according to a watchdog report released on Thursday (by IG, inspector general Russell George).
It further faults the IRS for failing to take its advice that a third party be required to document an individual claiming the credit actually purchased a home.
The IRS refuted some of the findings of the IG, and argued for example that some findings are premature because some taxpayers may eventually purchase a home.
Under the law, the credit should be claimed after purchase.