Nearly one third of all suspicious first-time homebuyer credit claims submitted by noncitizens around the country come from Texas where 1,000 applications for the tax credit have been filed by people employing a special taxpayer identification number that is used primarily by illegal immigrants, according to a Treasury Department investigation.
Illegal immigrants are not eligible for the credit, but the value of all non-citizens claims for the credit total $20.8 million, a U.S. Treasury Department inspector general said. Texas’ total was almost double that of similar suspicious filings from California, a state estimated to have nearly twice as many illegal residents.
Russell George, Treasury inspector general said in an interview with The Dallas Morning News that the involvement of third-party preparers in some questionable homebuyer claims filed nationwide suggested there may have been “conspiracies and attempts to cheat the government by more than one person.”
George warned of the potential for fraud in the homebuyer credit program soon after it was enacted by Congress in July 2008. The credit was increased and extended in February 2009 as part of the $787 billion stimulus legislation.
In October, an investigation headed by George found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit
The investigation identified more than 19,300 electronically filed 2008 tax returns on which taxpayers claimed the credit for a home which had not yet been purchased, but allegedly would be in the future. The amount of the credits inappropriately claimed via e-filing totaled more than $139 million. To date, however, the Justice Department has filed only one criminal case and one civil injunction against tax preparers for submitting false claims for the homebuyer credit. One preparer was from Jacksonville, Fla. The second was from Mission, Texas.
An individual taxpayer identification number (ITIN) is used by people who are not eligible for a Social Security number. The ITIN program was created to collect taxes from foreign investors, but the IRS has acknowledged that more than half of ITINs are filed by illegal immigrants. Holders have filed more than 1 million tax returns each year, a requirement to obtain a refund.
George said he could not disclose for privacy reasons where in Texas the suspicious homebuyer claims by noncitizens originated. But he said his office has not completed its investigation. He said another interim report is expected to be released by late February and will contain more revelations.
“The numbers get a lot worse,” he said.