IRS Warns: Don’t Take $8,000 First Time Home Buyer Tax Credit If You’re Not Eligible
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It had to happen: With $8,000 in free cash available to first-time home buyers (and those who haven’t owned a home in the past three years), somebody had to take advantage of the situation.The Internal Revenue Service announced this morning its first successful prosecution related to fraud involving the first-time homebuyer credit and warned taxpayers to beware of this type of scheme.
According to the IRS statement, last Thursday, a Jacksonville, Fla.-tax preparer, James Otto Price III, pled guilty to falsely claiming the first-time homebuyer credit on a client’s federal tax return. Price faces the possibility of up to three years in jail, a fine of as much as $250,000, or both.
The IRS has to date executed seven search warrants and currently has 24 open criminal investigations in pursuit of potential instances of fraud involving the credit. How are they catching taxpayers who misuse the $8,000 first time home buyer tax credit? Apparently, the agency has a number of sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time homebuyer credit.
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