Enabling tax cheats

February 8, 2024

The Obama administration’s spendthrift “stimulus” squandered $ 1.4 billion in Federal Housing Administration mortgage guarantees — plus at least $27 million in first-time-homebuyer tax credits — on borrowers who were delinquent on paying taxes to the IRS.

A new audit from the congressional Government Accountability Office also says FHA lacked safeguards to enforce rules against giving guarantees to tax delinquents who didn’t have IRS repayment agreements, The Washington Times reports.

The 6,327 tax scofflaws who received FHA mortgage guarantees owed the IRA a total of $77.6 million — or $ 12,000-plus each, on average. And with the foreclosure rate for tax delinquents, as a group, three times that of other borrowers, those guarantees exposed FHA to "even greater risks," according to The Times.

The IRS couldn’t even subtract unpaid taxes from the tax refunds of delinquents who had declared bankruptcy and claimed the first-time-homebuyer credit.

"The federal government needlessly put taxpayers on the line to help tax cheats buy homes," said Sen. Tom Coburn, R-Okla., who was among a bipartisan group of lawmakers who requested the audit. It’s up to Congress to keep tax cheats from taking advantage of FHA programs, he says.

What Americans who pay their taxes want to know is how that could have happened in the first place.