tax fraud Archives - KEYTLaw's Blog

IRS Dithers while Prisoners File Phony Tax Returns, Collect Millions in Refunds

Washington Examiner: “The number of prisoners who file false tax returns with the Internal Revenue Service has more than doubled in the last five years, according to a new Treasury Department report, and the amount of money the IRS has mistakenly refunded to those prisoners has nearly tripled. Meanwhile, the report, from the Department’s Inspector General for Tax Administration, accuses the IRS of failing to enforce a law passed by Congress in 2008 to crack down on false returns coming from the nation’s prisons.”

Treasury Study Finds Massive Fraud with First Time Home Buyer Credit

The Treasury Inspector General for Tax Administration released a report on June 17, 2010, titled Additional Steps Are Needed to Prevent and Recover Erroneous Claims for the First-Time Homebuyer Credit. A study by the Inspector General found widespread fraud involving the government hand out that gives people a tax credit of $8,000 for buying a home. Here are some of the findings from the audit of the IRS, the agency that will be in charge of enforcing the trillion dollar plus Obamacare:

We identified 4,608 prisoners listed on the IRS 2009 Prisoner File8 who attempted to claim the Homebuyer Credit on their Tax Year 2008 returns, despite the fact that they were in prison at the time their qualifying home was reportedly purchased (951 of these claims were filed by paid preparers).

From the file of 4,608 prisoners claiming the Homebuyer Credit, we researched a judgmental sample of those that we considered to be the most egregious. These included 715 prisoners whose filing statuses were something other than joint (i.e., they were not filing with a spouse) and who were serving life sentences during the period their home would had to have been purchased (174 of these claims were filed by paid preparers).9 We found 241 of these prisoners received Homebuyer Credits totaling more than $1.7 million.

For . . . (84 percent) of these 86 claims, we found no indication of any IRS post-refund compliance activities to recover the refunds.

we estimate that at least 1,295 prisoners received refunds totaling more than $9.1 million for fraudulent Homebuyer Credits claimed on their 2008 tax returns.

Multiple Claims Exceeding the Maximum Homebuyer Credit Were Paid for the Purchase of the Same Home

The amount of these 18,832 claims
[for the same home more than once] totaled more than $134 million.

Homebuyer Credits Were Allowed for Purchases Made Prior to the Dates Allowed by Law

We identified 2,751 claims filed on Tax Year 2008 electronic tax returns totaling almost $18.8 million that were based on homes reportedly purchased prior to April 9, 2008

we estimate that for Tax Year 2008, approximately 2,555 taxpayers filing electronic returns inappropriately received Homebuyer Credits totaling $17.6 million based on homes purchased prior to dates allowed by the law.

Internal Revenue Service Employees Made Questionable Claims for the Homebuyer Credit

12 IRS Non-Filer Enforcement Stories

The Tax Lawyer’s Blog: “Each year the IRS publishes examples of its non-filer enforcement actions. Below are the examples for fiscal year 2010. They are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.”

New Home Buyer Tax Credit Massive Tax Fraud

Wall St. Journal: “The Treasury’s inspector general for tax administration, J. Russell George, recently told Congress that at least 19,000 filers hadn’t purchased a home when they claimed the credit. For another 74,000 filers, claiming a total of $500 million in credits, evidence suggests that they weren’t first-time buyers. Among those claiming bogus credits, at least some of them were definitely first-timers. The credit has already been claimed by 500 people under the age of 18, including a four-year-old.”

See also Taxgirl’s post called “Hey Kid, Wanna Buy a House?“