Fraud in First-Time Homebuyer Program

Oct. 22, 2009— -- Some Americans are using children as young as age four to defraud the government out of an $8,000 tax credit for first-time home buyers.

In additional to using kids to qualify for the credit, some people who already own homes are taking the first-time buyer credit, others are claiming the money just because they're thinking about buying a home, and some fraudulent claims are even being submitted by IRS employees.

Congress today heard allegations of fraud in the new program meant to increase home sales and help put lower-income Americans into their first houses.

The home buyer credit was a key element of the $787 billion stimulus package enacted last February. Under the measure, low- and middle-income first-time home buyers purchasing a home between Jan. 1 and Nov. 30 of this year could claim a credit of up to $8,000 on their 2008 or 2009 income tax return. So far 1.4 million people have claimed the credit at a cost of $10 billion.

But the program was put into place so quickly that there were not enough safeguards to prevent fraud. Congress is now looking into the extent of the fraud and how to fix it.

Rep. John Lewis, D-Ga., chairman of the House Ways and Means Subcommittee on Oversight said, "We will hear today that taxpayers claiming the credit include those who already owned a home, who had not yet bought a home, and who are children -- some as young as four years old."