Scamming the system for $8,000 tax credits
29.06.2010 00:02
Scamming the system for $8,000 tax credits
By Les Christie, staff writerJune 25, 2010: 10:24 AM ETNEW YORK (CNNMoney.com) -- Some homebuyers are angling to claim the $8,000 tax credit even though they missed the deadline.
To claim the credit, buyers had to sign contracts by April 30 and close the sales by June 30. But real estate agents say some buyers are demanding quick closing dates to meet the June 30 deadline, even though they failed to meet the April 30 deadline.
And because the IRS doesn't require paperwork specifically proving the contract date, they might get away with it.
"We're getting an enormous number of contracts with June 30 closing dates even though the parties just came to terms, like yesterday," according to Glenn Kelman, CEO of real estate broker Redfin. "The clients won't explain why they need a June 30 closing but they still insist on it."
But claiming the credit does require more than sending in your taxes and asking for the money. Buyers have to fill out form 5405, which specifically asks them if they were in contract by April 30. They also have to attach a copy of their settlement statement, which they receive at closing.
"People do have to submit documentation," said an IRS spokesman.
But, the settlement statement does include the contract date -- just the "date of purchase," which is the closing date. So, buyers are backdating their tax forms in hopes of not getting caught.
"It's just illegal," said Tara-Nicholle Nelson, a real estate broker, attorney and an accredited buyer's agent and a spokeswoman for Trulia, the real estate website. "But if everyone in the transaction is colluding, it would be difficult to catch."
An IRS audit, however, might uncover bank records of down payments, dated emails discussing the deals and faxed documents with date and time stamps.
The IRS is keeping mum about how much it knows about this kind of fraud, except to say they have vigorous manual and systemic checks to detect potentially false claims. Anyone who submits fraudulent documentation to support any entries on their tax returns are filing false returns and risk possible civil or criminal penalties.
And even the Treasury Inspector General is keeping quiet, despite releasing a report on Tuesday about other abuses of the homebuyer tax credit - including .
"Even if we did know about it, we probably wouldn't comment," an IG spokesman said.
#cnnfb_connect {background-color:#f5f5f5;width:auto;height:auto;padding:10px;clear:both;} First Published: June 25, 2010: 3:59 AM ETRight Now
There's a million old iPhones being kicked to the curb -- which means it's boom time for companies that buy and resell old gadgets. The chief executive of BP will probably not leave the company with a lucrative severance package. An Arizona restaurant got worldwide attention for its plan to serve lion burgers as a World Cup gimmick -- but where's the meat from? We tracked it down.
| 30 yr fixed mtg | 4.73% |
| 15 yr fixed mtg | 4.11% |
| 30 yr fixed jumbo mtg | 5.50% |
| 5/1 ARM | 3.73% |
| 5/1 jumbo ARM | 4.18% |
Find personalized rates:
Bankrate.com.
You don't need a complex savings plan to have a large nest egg for your retirement. Printing objects in 3-D helps designers and architects create models that can be altered quickly and easily. One small restaurant owner gives advice about how to survive in a slowdown and still deliver great food.
| Markets | Last | Change | % Change |
|---|---|---|---|
| 10,138.59 | -5.22 | -0.05% | |
| 2,220.65 | -2.83 | -0.13% | |
| 1,074.47 | -2.29 | -0.21% | |
| 3.03 | -0.08 | -2.60% | |
| 1.23 | -0.01 | -0.74% |
| Company | Price | Change | % Change |
|---|---|---|---|
| 4.01 | 0.07 | 1.78% | |
| 15.28 | -0.14 | -0.91% | |
| 24.32 | -0.21 | -0.85% | |
| 4.47 | 0.27 | 6.42% | |
| 10.46 | -0.29 | -2.70% |
Sections
Clinical trial ads have proven to be four times more effective on Facebook than on Google. | SolarCity is one of a handful of companies making solar power affordable and easy for the masses. Can they succeed? | The online retailer's stock has fallen after lowering the price on its e-reader and due to concerns about increased competition from Apple. But investors may be overreacting. | Pogoplug founder Daniel Putterman bootstrapped his way to a technology breakthrough. | The Purnells are determined to make sure baby Maya will be taken care of, physically and financially, for life. |
Please create a screen name to access this feature.
Screen name (Select one with 3-12 characters; Numbers and letters only)
Forgot password
Enter your e-mail address below and we will send you an e-mail with a link and code to reset your password.
Password selection
Reset code
New password
Log in & let's get started!
Password
Remember me for two weeksNot a member yet?
Sign up or
Screen name
Select one with 3-12 characters;Numbers and letters only
You will receive an e-mail to validate your account
Password
Make it 6-10 characters, no spacesType what you see in the grey box
If you can't read this,Yes, I would like to receive occasional CNNMoney member updates about new features and special offers.
CNNMoney will use the information you submit in a manner consistent with our . By clicking on "sign up" you agree with and and consent to the collection, storage and use of this information in the U.S. subject to U.S. laws and regulations. ()
For our international users, please be aware that the information you submit when registering for our services is collected in the United States of America. In addition to being subject to our Privacy Policy, the collection, storage, and use of your data will be subject to U.S. laws and regulations, which may be different from the laws and regulations of your home country. By registering for this service, you are consenting to this collection, storage, and use.
We're Sorry!
This service is temporarily unavailable. Please try again soon.
Thanks!
Please check your e-mail and click the link to confirm your membership. Then, you'll be ready to participate in all activities and conversations on our site.
Add comment