Don't try to cheat the home buyer tax credit...the IRS is watching!

The Internal Revenue Service is investigating more than 100,000 claims for the First-Time Homebuyer Tax Credit that may be unjustified or even fraudulent.

The IRS has identified 167 of what it calls “criminal schemes” involving the credit. The IRS refused Monday to elaborate about the problem.

Bonnie Speedy, AARP tax-aide director, blamed the post-closing filing procedures for the problem, saying people who weren’t entitled to the credit could too easily claim it. "

People are filing for the credit who don't have a right to file for it," she says. Some observers say these claims could jeopardize an extension of the tax credit.

Source: The Wall Street Journal, John D. McKinnon (10/20/2009)