As unbelievable as it may sound, the Internal Revenue Service is expanding a program to uncover tax cheats by analysing mortgage payment information it gets from banks.
You might think that our current economic situation would rule out making it more costly to be current on your mortgage. But then you would be wrong. The Wall Street Journal is reporting that the IRS is planning to use data it collects on mortgage payments to track down people who report less income than they pay in mortgage interest.
Of course, this way of evaluating tax cheats could result in a lot of false postitives. Here’s the WSJ:
Highly paid former employees of investment banks who lost their jobs in the financial crisis but who, thanks to their savings, are still making their mortgage payments, could also draw scrutiny under the IRS plan, said Tom Ochsenschlager, vice-president for taxation at the American Institute of Certified Public Accountants.
The Treasury inspector general said in a Monday report that tens of thousands of homeowners who paid more than $20,000 in mortgage interest in 2005 either didn’t file a tax return or reported income that appears insufficient to cover their mortgage interest and basic living expenses.