April 23, 2010 - Special Edition


Backdating Purchase Agreements for Home Buyer Tax Credits = Criminal Fraud
by Shelley R. McCoy and John Q. Herrin

As a reminder, the Home Buyer Tax Credits are set to expire April 30, 2010. This means that Buyers who wish to benefit from the tax credit must have an accepted binding purchase agreement as of that date.

With the tax credit deadline looming, however, home Buyers or REALTORS® may be tempted to backdate post-April 30th purchase agreements. REALTORS® must resist this temptation or face severe criminal consequences.

Specifically, Title 26, Section 7206 of the United States Code, warns that any person who aids or assists in a fraudulent or false document in connection with any matter under the Internal Revenue laws is guilty of a felony and subject to:

(1) Imprisonment for not more than 3 years in a Federal prison;
 

(2) A fine of $250,000 for individuals or $500,000 for corporations; or
 

(3) Both


In fact, just last week, a Los Angeles REALTOR® pleaded guilty to federal tax charges after she helped five new home Buyers fraudulently obtain the $8,000 credit. She also assisted five others in scamming the IRS under the Earned Income Tax Credit. As a result, the REALTOR® faces up to 50 years in prison and a $2.5 million fine.

Like the fraudulent LA REALTOR®, any Indiana REALTOR® who backdates a post-April 30th purchase agreement will be guilty of criminal tax fraud and subject to a lengthy prison term and pricey fine.

So, think before you backdate a purchase agreement: Is committing criminal fraud for an $8,000 or $6,500 tax credit worth risking your career, a prison sentence, and fine? Do not let a misguided desire to help your client ruin your life. Your agency duties do not require it, and the Code of Ethics and the law forbid it!   (**Taken from www.MIBOR.com )