
Originally Posted by
Melonie
as has been stated over and over again in past threads, as soon as you purchase a house (or car or anything else with a title / deed), the state agency that registers that title / deed will automatically report to the IRS the sale price, along with the name, address and SS# of the buyer, along with the amount loaned by a financial institution which filed a lein on the title / deed. It then takes the IRS computers about 2 seconds to calculate the buyer's down payment, the buyer's monthly payment amount, to look up the average cost of living in the buyer's zip code area to determine how much the buyer must spend on things other than mortgage payments, then to search for past tax returns filed under the buyer's SS# and compare the amount of reported after-tax income the buyer had / has available to save up the down payment plus make monthly payments plus pay for other costs of living.
If the IRS computers find that the income vs spending numbers simply don't match, a 'stage one' red flag goes up - which will initiate wider IRS inquiries into the buyer's credit rating, and from the credit report further inquiries will be made re the buyer's bank accounts, credit card accounts, other outstanding loans (i.e. car) etc. If the wider inquiry confirms that there seems to be a lot more money being spent than has been claimed as taxable income, a 'stage two' red flag goes up and you can count on some 'personal contact' with an IRS agent.
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