Home » COMMENTARY » Going to Jail for Falsely Claiming First-Time Home-Buyers Credit

Going to Jail for Falsely Claiming First-Time Home-Buyers Credit


By Stacie Clifford Kitts, CPA

Here is my latest addition of the stupid preparer files. Again – mind boggling. This preparer tried to scam something as stupid and easy to track as buying a house. The thing that is most disturbing about this case, is the fact that this guy thought he could get away with it.

Today the Internal Revenue Service announced that it has successfully prosecuted James Otto Price III for falsely claiming the first-time home-buyers credit on a clients federal income tax return. Mr. Price faces up to three years in jail and a $250,000 fine.

The IRS warns potential fraudsters to beware as they have implemented technology that automatically searches for and identifies potential fraudulent claims. The IRS currently has 24 open criminal investigations and has issued seven search warrants related to the fraudulent use of the credit.

“We will vigorously pursue anyone who falsely tries to claim this or any other tax credit or deduction,” said Eileen Mayer, Chief, IRS Criminal Investigation. “The penalties for tax fraud are steep. Taxpayers should be wary of anyone who promises to get them a big refund.”

Taxpayers are reminded that even if they utilize a paid preparer, the taxpayer is still responsible for the accuracy of the return.

The IRS says:

“The First-Time Homebuyer Credit, originally passed in 2008 and modified in 2009, provides up to $8,000 for first-time homebuyers. The purchaser, however, must qualify as a first-time homebuyer, which for purposes of this credit means someone who has not owned a primary residence in the past three years. If the taxpayer is married, this requirement also applies to the taxpayer’s spouse. The home purchase must close before Dec. 1, 2009, to qualify, and the credit may not be claimed on the purchaser’s tax return until after the taxpayer closes and has purchased the home. Different rules apply for homes bought in 2008.”

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