It seems that the Home-Buyer Tax Credit, the $8000 credit meant for first-time home buyers, attracted more than just cute young couples on the hunt for their first home together. According to an ABC News report, the credit proved extremely popular at your friendly neighborhood prison yard as well.
A report issued by the Treasury Department estimates that nearly 1300 prison inmates, despite being currently incarcerated, filed claims before the program ended in April – raking up over $9 million dollars among them in fraudulent claims in the process. So you might wanna proceed with caution when Crusher and Low Blow show up at your door for a cup of sugar.
How do screw-ups like this happen?
In a statement, the IRS said, "In swiftly making the First Time Homebuyer Credit immediately available to more than 2.6 million homebuyers, a very small number of payments were made to prisoners incorrectly, which the IRS is now taking all steps to recapture and to prevent going forward. The IRS will follow up on every instance of an improper prisoner payment and take swift and appropriate enforcement actions."
So how could this have happened in the first place? Those investigating the claims say part of the problem lies in the fact that the IRS didn’t initially require taxpayers to prove they actually bought a home before sending the credit out. That’s right, all these inmates did was apply for the credit. They certainly didn’t buy a home (that anyone knows of at least), and they didn’t even need to prove it. Nice one, fellas.
Do not pass Go, do not collect $200
Still, IRS officials are claiming that only a small amount of inmates were able to “best the system” and actually get the credit. Nearly 400,000 “questionable homebuyer claims” were denied and over 150 criminal cases were opened. The IRS says that these efforts have saved taxpayers more than $1 billion dollars, and is now asking Congress for data on federal, state and local prisoners so it can effectively block future claims.
Despite this, the program was a major success for many first time home buyers who actually bought a home. Without the credit, it’s estimated that nearly half of those who bought a home last March wouldn’t have been able to do so without it. That said, home owners may want to keep an eye on some of their new neighbors. Those bright orange jumpsuits aren’t their mover uniforms…
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