I know this isn’t multifamily related per se, but it’s soasinine that I had to comment on it.

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Apparently, a breakdown or loophole in tax fraud controls seemto have created a bit of opportunity for criminals to cash in onthe federal homebuyer tax credit. And I’m not just talking aboutthose engaged in white-collar criminal activity like cheating onone’s taxes. I’m taking about criminals whose current residencesare already paid for with tax dollars—our nation’s prisonsystem.

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In a June 17 audit report issued by the Treasury inspectorgeneral for tax administration, it was found that an estimatedminimum 1,295 prison inmates, 241 of whom were serving lifesentences, applied for—and received—$9.1 million in homebuyer taxcredits. A cool $1.7 million of those funds went to those inmatesserving life terms.

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You can read the entire report by clicking here. But here are some interestingtakeaways:

•The audit team identified 4,608 prisoners listed on the IRS 2009who tried to claim the homebuyer tax credit, even though they werein jail when the home was supposedly purchased.•From a “judgmental sample” of those filings the auditors consideredto be the “most egregious.” These included “715 prisoners whosefiling statuses were something other than joint and who wereserving life sentences during the period their home would had tohave been purchased. We found 241 of these prisoners receivedHomebuyer Credits totaling more than $1.7 million.”•A previous report has found that most of these fraudulent refundswere to prisoners in Florida; 61% of those were given to inmateswho were in for life.

So what, a return address from Inmate #2468753, StatePenitentiary of Florida wasn’t enough to raise the eyebrows of somefile processors? Okay, you committed a crime and whoops, you can’tvote, but hey, sure, here’s a check for $8,000!

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More from the report:

•The IRS has taken steps to strengthen controls and help preventinappropriate Credits from being issued, including putting infilters to identify questionable claims before they’re processed.But more controls are needed, and fraudulent and questionableclaims processed prior to the implementation of these controls willneed follow-up action.•In addition to the $9.1 million in fraudulent complaints, “multipleclaims for the same home were allowed. And claims totaling anestimated $17.6 million were allowed for homes purchased prior tothe dates allowed by the law.”•“Many questionable claims for the Credit made on amended taxreturns were not appropriately sent to the IRS’ Examinationfunction for scrutiny…Further, TIGTA found additional IRS employeesthat had made questionable claims for the credit.”

It’s debatable, depending who you speak with, that the taxcredit—$8,000 for first-time buyers and $6,500 to current ownersbuying new, permanent homes—gave a boost to the home sales market.Regardless of whether it worked, I’m sure its architects didn’thave this in mind. It could be argued that it helped to raise thefederal deficit, especially given all the fraud that’s surfaced(and has yet to).

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Yeah…so, I’m going to put this under the “WTF,Government?!” file.

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