Garrett Gazette Opening Message
Washington,
Nov 16, 2009 -
On September 22, 2009, the Unemployment Compensation Extension Act of 2009 came up for a vote in the House of Representatives, and I voted with 331 of my colleagues to pass this bill and extend unemployment benefits to assist those that had been hit hardest by this recession. The bill went to the Senate for approval, where they amended it to include an expansion of the First-Time Homebuyer Tax Credit Program – a program shown to be rife with fraud and misuse of taxpayer money. When the bill came back to the House last week, I could not vote to support the squandering of taxpayer dollars through the Homebuyer Tax Credit Program, a program that I believe is in serious need of reform.
When Congress passed the so-called “stimulus” package in February, it included an expansion of a 2008 tax credit for homebuyers. The program uses your tax dollars to provide a refund of 10 percent of the purchase price of a home, up to $8,000, and the program is administered through the Internal Revenue Service (IRS).
It must first be stated that the government’s role in incentivizing homeownership has been proven to be one of the key factors that led to the current economic crisis, so expanded federal action is debatable at best.
On October 22, 2009, the Department of the Treasury’s inspector general for tax administration testified to Congress, revealing rampant fraud and abuse within the program. The IRS ignored the Inspector General’s initial recommendation for increased documentation for this program, claiming it would be “burdensome for both the taxpayer and the IRS.” As a result, this taxpayer-funded program contained:
• 19,300 electronically filed 2008 tax returns where people claimed the First-Time Homebuyer Credit, yet had not purchased a house, claiming that they intended to do so in the future. Cost to the taxpayer: $139 million.
• 74,000 credit claims by filers who it was later determined weren’t first-time homebuyers. Cost to the taxpayer: $500 million.
• 580 taxpayers younger than 18 years of age who claimed First-Time Homebuyer Credits; the youngest of whom was a four-year old. Cost to the taxpayer: $4 million.
• 3,200 individuals claiming credits thought to be alien residents, which are prohibited from receiving most Federal public benefits. Cost to the taxpayer: $20.8 million.
• 48,500 taxpayers who were legitimately qualified to receive the First-Time Homebuyer Credit that failed to receive the full amount to which they were entitled.
So, in sum, we have a program rampant with fraud, which gives taxpayer dollars to people who don’t legitimately qualify, and fails to appropriately credit the individuals that do qualify. It’s clear that employees of the IRS were aware of the problems with claims process for this program, as the inspector general found 53 cases of IRS employees filing "illegal or inappropriate" claims for the credit. In its current form, this program costs taxpayer about $1 billion a month and is expected to cost $15 billion for the year. Rather than terminate this program, Congress voted on November 5 to expand the program to homeowners looking to buy a replacement principle residence. How many more four-year olds will fraudulently receive taxpayer money under this program before Congress realizes this is a terrible idea?
Voting to expand this program would have been irresponsible of me, and an abdication of my responsibility as a guardian of taxpayer dollars. The Homebuyer Tax Credit Program was a poison pill to otherwise well-intended legislation.
Sincerely,
Scott Garrett
Member of Congress
