IRS warns taxpayers about new tax credit for buying home
11:47 AM Wed, Jul 29, 2009 | Permalink
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The Internal Revenue Service today warned taxpayers to claim a new tax break for first-time home buyers only if they qualify. The warning came after the agency prosecuted a tax preparer in Florida for falsely claiming the credit on a taxpayer's return. To date, the IRS has executed seven search warrants and currently has 24 open criminal investigations involving potential instances of fraud involving the credit, said Peggy Riley, the IRS's New England regional spokeswoman.
"We're taking a look at these credits, so taxpayers must make sure they actually qualify for the credit before they take it on their tax return," Riley said. "We're also warning taxpayers to beware of tax preparers who promise you a big refund without even taking a look at your situation." The IRS said it has a number of sophisticated computer-screening tools to quickly identify returns that may contain fraudulent claims for the tax break. "We will vigorously pursue anyone who falsely tries to claim this or any other tax credit or deduction," Eileen Mayer, chief of the IRS's criminal investigation branch, said in a statement. "The penalties for tax fraud are steep.Taxpayers should be wary of anyone who promises to get them a big refund." The "first-time homebuyer credit" took effect for 2008 and was modified for 2009. In general, it provides a tax credit of up to $8,000 to help a taxpayer buy a home. The credit has a number of restrictions. For example, it applies only if the taxpayer has not owned a primary residence in the past three years. 
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