Anyone considering inappropriately claiming the first-time home buyer credit on their tax return had better reconsider: The IRS announced its first successful prosecution of the matter.
The first-time home buyer credit, originally passed in 2008 and modified in 2009, provides up to $8,000 for first-time home buyers, according to the IRS.
The purchaser must qualify as a first-time home buyer, defined as 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.
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On Thursday July 23, 2009, Jacksonville, Fla. tax preparer James Otto Price III pleaded guilty to falsely claiming the first-time home buyer credit on a client's federal tax return, the IRS said. Price faces the possibility of up to three years in jail, a fine of as much as $250,000, or both.
To date the IRS has executed seven search warrants and currently has 24 open criminal investigations in pursuit of potential instances of fraud involving the credit. The agency has a number of sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time home buyer credit.
"We will vigorously pursue anyone who falsely tries to claim this or any other tax credit or deduction," said Eileen Mayer, chief of the IRS' criminal investigation unit. "The penalties for tax fraud are steep. Taxpayers should be wary of anyone who promises to get them a big refund."
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