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Friday, October 23, 2009

Treasury Finds IRS Employees Abused Homebuyer Tax Credit

By Ray Hennessey

FOXBusiness

The Treasury Department has uncovered more than 50 instances where employees of the Internal Revenue Service illegally or inappropriately claimed credits for first-time homebuyers.

In an interview with FOX Business Network’s Neil Cavuto, J. Russell George, the inspector general for tax administration at Treasury, said there are 53 cases involving IRS employees and that number could rise.

“In all honesty this is an interim report,” George said. “I expect that the number would be much larger than that number.”

WATCH J. Russell George's Interview with Neil Cavuto

Russell testified before Congress this week that there are nearly74,000 individuals who claimed the tax credit did not appear to qualify for it, at a cost of half a billion to taxpayers. The most egregious examples, George said, includes a 4-year-old who claimed the credit – one of 582 taxpayers under the age of 18 to claim about $4 million using the credit.

“Contract law generally prevents anyone under the age of 18 from engaging in that kind of legal binding,” George said. “Yet you have many, many -- at least 600 taxpayers -- who benefit from this.”

Treasury has 107,000 civil cases related to the homebuyer credit, and plans special audits for thousands of additional returns, George said.

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