Subject: Tax Fraud
Comment: I am in the mortgage industry, and have seen an increase in the volume of Stated Income loans, where for a relatively small rate or point increase, borrowers obtain the "convenience" of not having to provide documentation supporting their disclosed income. While I'm sure there are some applications (possibly 1% to 5%?) that accurately state verifiable income and simply don't want to provide documentation, you would have to be naive to believe that the vast majority of borrowers either: a) do not make the income they declare, or b) make the income that is declared, but do not report it.
While I have issues with the first possibility (and Title 18 of the US Code, Sec 1 may also have issues), it is the latter scenario that is relevant to this forum.
As a person that pays his taxes and still sees huge federal and state budget deficits that will hinder our economic well being, I have a major adverse reaction to tax fraud, whether its a corporation using phony overseas tax shelters, or an individual underreporting his/her income.
I realize there are probably privacy issues involved, and I'm not really an advocate for government intruding on private lives. But the mortgage industry is already heavily regulated. Is it possible to require mortgage lenders to report the names of individuals who use Stated Income programs to the government/IRS? Perhaps even report the income that's been stated? If not ALL mortgage lenders, then how about those lenders receiving tangible benefits from the government? Such as Banks (and their subsidiaries/affiliates) that borrower money from the Federal Reserve at very low rates (rates that the government and MY tax dollars provide)?
I have to feel that audits on borrowers using Stated Income programs would be helpful in finding significant tax dollars. Or, by installing the fear of IRS investigation, at least have a dramatic effect on this type of lending and sharply curtail it. That in itself may save the government from having to step in should (when?) the bubble burst and many financial institutions face insolvency from billions of defaulted loans.