By Bernie Becker - 07/25/11 03:14 PM EDT
In all, taxpayers received roughly $27.9 billion for houses bought between 2008 and 2010 through the various first-time credits, according to congressional estimates.
Russell George, the tax administration inspector general, did say in a statement that the IRS has taken positive steps in some areas to boost oversight of the credit, while the audit stated the agency “faced difficult and significant challenges” in administering the tax provision.
Generally speaking, the first-time credit for 2008 buyers was essentially an interest-free loan that could be paid back over 15 years. After it was revised, the credit did not require repayment for houses bought in 2009 and much of 2010.
The audit also found 70 taxpayers who received the credit in both 2008 and 2009, and that the IRS had spent roughly $37 million on the credits before taxpayers had actually purchased a house.
The inspector general recommended that, among other things, the agency should examine more closely amended claims that alter the purchase year of a home.
The IRS generally agreed with the audit’s recommendations and, in its written response, thanked the inspector general for complimenting the steps it had taken to manage the credit.
Earlier this year, The Washington Times reported that more than 100 IRS employees wrongly claimed the homebuyer credit; the revenue service said it could fire those who fraudulently received the credit.