“… any time that there is an opportunity to receive cash back, it tends to attract people that might have an intent to defraud the government.”

So says Linda Stiff, IRS deputy commissioner for services and enforcement, who is investigating more than 100,000 questionable applications from “first-time” homebuyers who want $8,000 tax credits for their recent property purchases.

Illegal immigrants, underage buyers (one as young as four years old), previous homeowners and other shady individuals among the 1.5 million looking to take advantage of the program have raised yellow flags at the government tax agency.

However, the IRS is quick to point out the many of those flagged for further inspection could be found to be “legitimate” when all is said and done.

Currently, the $8,0000 tax credit, which is a key piece of the landmark $787 billion stimulus package enacted earlier this year, is set to expire on Nov. 30, 2009 (it began, retroactively, on Jan. 1, 2009). It’s possible that the popular program could be extended into 2010 because thus far it has been a “vital part” of the national economic recovery effort in the United States.

However, if it is riddled with “fraud” and other problems it may make decision makers think twice about renewing it.

For more on the $8,000 tax credit be sure to check out our topic archive right here.