The Internal Revenue Service paid a slew of bogus claims for the homebuyer’s credit, according to Treasury inspectors. They uncovered payments for the credit to filers who reported buying a house before the credit took effect and to taxpayers who listed post office boxes as their new addresses (how the hell does that happen).
Others claimed the credit when buying a residence from a relative, which is not allowed. Inspectors also found
that some IRS employees had made phony claims. They are now under investigation (but pensions and jobs will probably be safe).
The IRS’ problems with the homebuyer’s credit are the tip of the iceberg. The agency erroneously paid almost $17 billion of earned income credits in 2010, the Government Accountability Office says. That’s about 25% of all claims
for the credit. Fraud and dishonest return preparers contributed to this problem.
Improper claims for other credits are slipping through the cracks as well: the electric car credit is being claimed for gasoline-powered vehicles.
Some filers are claiming too large a tax credit for residential energy-efficient improvements. That credit is capped at $1,500 total for 2009 and 2010.
Many taxpayers who took the adoption credit are failing to attach all the required documentation.
The Service is working to try to recoup refunds based on these improper claims. Audits, audits everywhere…