As many potential first-time homeowners rushed to lenders in order to qualify for the Homebuyer Tax Credit, which expired in April, some behind bars were successful in filing for and receiving the credit. The United States Treasury Department released a report today declaring $9.1 million in tax credits were fraudulently claimed and received by more than 1,200 prison inmates. Some 241 inmates who filed for homebuyer tax credit are on death row.
The tax credits were meant for first-time, legitimate homebuyers. The purpose of the $8000 credit was to stimulate the housing market after the recession. But many who filed were prisoners that had filed a claim or multiple fraudulent claims. Some of the claims were not filed in the correct time period and were not paid out. Overall, the amount of credits sent out incorrectly to individuals totaled more than $28 million. The report stated that a total of 4,608 state and federal prison inmates filed credits and more than 1,200 actually received the tax credit.
According to the report, 174 of the filed claims were completed by paid tax preparers. The state of Florida had a high percentage of fraudulent prison claims with 61% of life sentence prisons receiving the tax credit. Florida Department of Corrections spokesman stated that people in prison can still buy a home and many have families outside of prison. Also, the Florida Department of Corrections provides the IRS with inmate information quarterly. When a prisoner receives a check through institution mail, the prison will contact the IRS to ensure the check is legitimate.
“Additional controls are necessary to address erroneous claims for the credit,” the Treasury’s report stated. “Further, fraudulent and questionable claims processed prior to implementation of controls will need follow-up action by the IRS.”
In addition to the fraudulent prison claims, the report also found the IRS paid out $17.6 million to individuals who purchased their home before the tax incentive program even began. Some 2,555 individuals received the credit despite the supposed strict deadlines. The IRS has stated they have been working on improving their efforts to cut down on fraudulent activities. They plan to review filed claims and ‘recapture’ the fraudulent claims already paid out
Prison Inmates Claimed Homebuyer Tax Credit, $28 Million in Fraud was created by and is property of American Consumer News.
