The Real Deal New York

IRS issues $37M in questionable refunds to first-time homebuyers

July 25, 2011 02:41PM

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The Internal Revenue Service issued an estimated $37 million in questionable refunds to buyers using the first-time homebuyer tax credit, a federal audit conducted by the Treasury Inspector General for Tax Administration found.

The report, released today, shows that some taxpayers received multiple refunds of the homebuyer credit, and others amended tax returns in order to qualify for a version of the credit that did not require repayment. Not all questionably amended claims were sent on for examination or scrutiny.

The tax credit, introduced in 2008, is a refundable credit available to taxpayers who are purchasing a principal residence. In order to qualify, they cannot have owned a residence for three years prior to the date they bought their new home. There have been various amendments to the credit’s regulations.

“While in response to our previous recommendations the IRS took a number of positive steps to process homebuyer credits claimed on amended returns, this report found additional issues related to the credit,” J Russell George, Treasury inspector general for tax administration, said in a statement. — Katherine Clarke

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