Fraud found in the homebuyers' tax credit program

Fraud found in the homebuyers' tax credit program
Fraud found in the homebuyers' tax credit program

A government investigation found that almost 1,300 prison inmates were among those to avail themselves of the popular tax break that gave $8,000 to first-time home-buyers and $6,500 to repeat offenders, I mean, buyers. The inmates' take on this tax-payer funded stimulus benefit: more than $9 million.

The audit of the program by the Treasury Inspector General for Tax Administration found 14,132 erroneous tax filings for credits that total at least $26.7 million.

Before your blood pressure rises too high, this is really just a small sliver of the more than $12.6 billion in credits paid to date through the program -- although it is troubling that the program remains so vulnerable to fraud.

Last week, a measure was approved to extend the tax credit program's closing deadline by three months for the 180,000 households who had signed home purchasing contracts by April 30. Originally, they had just two months to close and many people were fearful that delays in getting their overwhelmed lenders to move would cost them eligibility in the program. The extension, while a boon for those already in the system, opens the door to fraud, its critics say, because it gives people a chance to post-date purchase contracts and still close on time.