Tom Wurdack

This does not help getting an extension for the First Time Home-buyer tax credit.

By MARTIN VAUGHAN and JOHN D. MCKINNON
Tens of thousands of people submitted suspicious — and possibly fraudulent — claims for a federal tax credit meant for first-time home buyers, tax officials told Congress Thursday.

The Treasury tax-oversight office said at least 19,000 filers who hadn’t bought homes claimed $139 million in tax credits and were reimbursed, raising new worries about the housing stimulus as lawmakers consider extending the credit.

Treasury oversight officials said they have found an additional 74,000 tax-credit claims, valued at $500 million, where evidence of previous homeownership could make their claims invalid.

More than 500 people under the age of 18, including a 4-year-old child, also had their names on applications for the credit, which has no minimum-age requirement, federal officials said at a hearing on abuses of the program. Most of the claims involving children were made by parents who purchased a home but were ineligible for the credit because their incomes were too high, said J. Russell George, the Treasury inspector general for tax administration. The tax-oversight office doesn’t answer to the Treasury secretary.

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With the $8,000 homebuyer tax credit due to expire in little more than a month, the Congress is looking into the possibility of extending it for another six months and perhaps even expanding the program’s reach.

On Tuesday the Senate Banking Committee held a hearing on the State of the Nation’s Housing Market. Committee Chairman Chris Dodd (D-CT) called for an extension of the homebuyer tax credit saying, “As part of the economic recovery package, we created an $8,000 first time home buyers’ tax credit, replacing an unsuccessful and overly complex loan program with one that is already having an impact. The homebuyer tax credit has already been used by nearly 2 million first time homebuyers. In addition to helping middle class families achieve the dream of homeownership, the tax credit has helped to stabilize housing prices and the market at large.”

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Ahead of several data reports, speeches from Federal Reserve officials, and a deluge of earnings, a third straight day of sell-offs is looking probable as global markets are bleeding red across the board.

Shares in China and Japan fell 0.62% and 0.64%, respectively, on Thursday, after news that China’s economy posted a slightly-lower-than-expected 8.9% annual growth rate in Q3. Stocks in Europe are worse with London’s FTSE 100 down 1.11% recently and France’s CAC-40 down 1.50%.

Meanwhile, oil futures are trading lower but remain above the psychologically-important $80 mark. Also, the dollar is picking up against an array of currencies this morning; the euro touched above the $1.50 level yesterday but is now lower at $1.4972.

A mass of Q3 earnings reports will hit the headlines today. Key earnings include AT&T, Dow Chemical, 3M, Merck, and McDonald’s.

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