Fox News Suicide Watch
Today, Oct 23rd Fox storyteller John Stossel, who we shall refer to as uknucklehead, penned an article with the emotionally charged title of ‘Congress Proposes More Fraud? And then goes on to tell me in the very first paragraph that the $8000 First Time Home Buyers tax Credit is “wracked with fraud”. Personally, when I see a question mark at the end of the sentence, it tells me the author doesn’t know diddly, but the truth is uknucklehead doesn’t report that Congress Proposes More Fraud, they merely suggest you reach that conclusion. In fact uknucklehead could have written the very same article with the title ‘FTHBC almost Fraud Free?’ or “it’s Not Really All That Bad” or “We Don’t Know Crap Until the IRS Audits Those Returns But That Doesn’t Stop Us From Reporting Government is Bad Even Though Government Uncovered Whatever Fraud We Will Report”.
Uknucklehead tells us:Yesterday, the Treasury’s Inspector General told congress that 580 kids, some as young as four, had qualified as homeowners. There were 19,300 claims for houses that hadn't actually been purchased. 74,000 claims where the applicant appeared to have owned a home within the last three years, hardly making them “first time” homebuyers.
Skipping the Kiddie Krime for now, uknucklehead could have reported that 74,000 claims where the applicant appeared to have a home
, one red flag that makes them suspicious, not guilty, of fraud was claiming a mortgage interest deduction. Perhaps, in a Country of 310 million, with a 50% divorce rate, there really are 74,000 people who are claiming a mortgage interest deduction on a house that is their ex’s primary residence, not their own. I bet there are a lot of people in this country who get to claim a mortgage interest tax deduction on a house that has not been their primary residence for the last three years. I bet you even know a dozen or so. It is one of the quirks of US law that I hope you never learn, but half of you will. Should the Treasury Inspector General advise the IRS to check those returns? Sure, but I am guessing there is not a very high percentage of genuine fraud there. As the Inspector General testified and uknucklehead failed to include While these entries indicate home ownership, the homes involved may or may not have been the taxpayers’ principal residences, so the deductions do not automatically disqualify the taxpayers from receiving the First-Time Homebuyer Credit. However, we believe they warrant scrutiny by the IRS.
The Inspector General also found that of those 70,000 returns, 12,000 also claimed the Residential Energy Tax Credit in the last three years. Those claims are either guilty now or guilty then. So we have 12,000 cases of tax fraud uncovered by the diligent work of the IRS and the Inspector Generals Office, who suckered those dirtbags in with the bait of a bigger payday and then dropped the hammer on them. See note #16 for the credit to the IRS agents.
Then there was Kiddie Krime and the 580 kids under the age of 18 that applied for the FTHBC are going to get a stern talking to, because Gov’t caught them, and they are going to get a few more Kiddies too. I’m guessing these a bunch of these kiddies have also been adding to their IRA’s, with Mommy and Daddy’s money, not their own but we’ll see. And these potential perpetual tax dodgers have now been uncovered by taking their greed one tax dodge opportunity too far. Mommy and Daddy will probably have to pay a few fines and maybe find a new tax preparer. The Inspector General advised the IRS to add age to their FTHBC fraud filters and the IRS agreed to. The IRS’ existing filters only got 160 of those kids.
Finally there were 19,300 houses which hadn’t actually been purchased. According to the Inspector General’s testimony they all had purchase dates in the future. What percentage of these were criminally fraudulent, or just people who mistakenly thought they had to collect the credit in the same calendar year they were purchasing the home has yet to be determined by an IRS audit. Uknucklehead fails to tell us that the IRS fraud filters also identified 45,000 people who took less than the full credit they were entitled too. It probably a safe conjecture that if 45,000 people took too little by error than 45,000 also took too much by error. Most of these seem to be confusing Bush’s original $7500 credit with President Obama’s $8000 but there is always room for more mistakes.
It seems to me that with the excellent work done by the IRS fraud filters and the Inspector General in helping them refine those filters, that the IRS will probably do a pretty good job of deciding which individuals are guilty of criminal fraud and will enjoy penalties and interest, and those who are guilty of making a mistake and will enjoy merely receiving or returning money until the correct amount gets paid.
Uknucklehead also tells us - this type of fraud always happens in government programs. The GAO says that 25% of Earned Income Tax Credit money went to people who shouldn't actually have qualified.
And The GAO also reports that 10 percent of unemployment benefits and 10 percent of Medicaid payments are fraudulent.
I am sure those statements are equally accurate representations of the reports they refer to. With reporting this bad, eventually Fox's listeners and readers will leave, just as I did.
I would like to take this opportunity to thank the IRS and Inspector General for rooting out what appears to be the 1-2% of fraud going on with this program and saving taxpayer’s dollars. I would also like to thank them for the efficient use of filters to do so, further saving taxpayer’s dollars by reducing the manpower needed.
I would also like to advise my fellow Fools to not stretch tax law too far or uknucklehead will be reporting on the IRS catching you next.