In all, more than $600 million in tax credit claims are suspicious, tax officials testified last week before Congress. The credit, on home sales to first-time buyers that close through Nov. 30, is an important piece of the $787 billion stimulus package enacted in February and is part of the Obama administration's effort to lift housing sales.
The housing industry has been pushing to extend the credit or even expand it to include more homebuyers to keep momentum going in the nascent recovery of home sales and prices. But the White House, looking at the estimated $1 billion monthly cost, has been less eager.
"Based on the administration of the credit today, I am very concerned about the IRS' ability to effectively administer the credits that are claimed before the Dec. 1 deadline, let alone any credits that may be claimed within future extended deadlines," Treasury Inspector General J. Russell George testified before the House Ways and Means Oversight subcommittee.
The tax credit goes to buyers who had not owned a primary residence in the past three years and earned less than $75,000 as an individual or less than $150,000 as a married couple.
But through late August, more than 19,000 taxpayers had listed the credit for properties that hadn't been purchased, filing claims worth nearly $140 million, George said. Nearly 74,000, claiming nearly $504 million, appeared to have already owned a home, he said.
An additional 582 supposed first-time homebuyers turned out to be younger than 18 years old, claiming nearly $4 million. Although officials said some circumstances would allow minors to purchase a home, most of the suspicious cases seemed to involve parents pulling the strings because their own incomes were too high.
George said more than 3,200 taxpayers claimed nearly $21 million through tax returns filed with individual taxpayer identification numbers, often used by nonresident aliens, who are excluded from the program.
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