Credit where none was due

Source: Reuters

When there's an opportunity to scam the U.S. government for a half-a-billion dollars, should it come as a surprise that there are always people willing to leap at it? Reuters has this pathetic puppy of a story: "U.S. tax authorities failed to detect half a billion dollars in likely tax fraud by individuals applying for first-time homebuyer credits, a government auditor said on Friday. Taxpayers got potentially erroneous refunds worth some $513 million from the credits, the Treasury Inspector General for Tax Administration said in a report." How will we get our free $8,000 this year, we ask?

U.S. tax authorities failed to detect half a billion dollars in likely tax fraud by individuals applying for first-time homebuyer credits, a government auditor said on Friday.

Taxpayers got potentially erroneous refunds worth some $513 million from the credits, the Treasury Inspector General for Tax Administration said in a report.

The politically popular program gave qualified buyers in 2008 through 2010 a tax credit of up to $8,000.

Lawmakers passed four versions of the credits, in part to jump-start the stalling economy during the 2007-2009 financial meltdown.

Nearly 3.9 million taxpayers have received $27 billion dollars from the credit through the end of 2010, according to the Internal Revenue Service.

The inspector general wants the IRS to demand more documentation from those applying for such credits in the future and legislation to give the IRS more authority to require the proper paperwork, among other fixes.

The IRS, in its response, noted that refundable credits in particular are subject to cheating, and said the credit was the biggest refundable credit program at the time.

"This complexity undoubtedly contributed to numerous errors and erroneous claims," the IRS said in an official response.

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