Friday, September 10, 2010

Things that Make you Go "What the ..."

CNN reports that the first-time home buyer tax credit program, designed to stimulate the economy, has a few problems (HT: Elaine Phillips):
According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.

The confusion comes because home buyers were eligible for two different credits, depending on when their homes were purchased.

Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home's purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.
It isn't surprising that a government program would cause mass confusion. Nor is it surprising that the IRS is struggling to sort this mess out. But what really makes one shake his head is this little tidbit:
The inspector general reported that 1,326 single people listed as dead by the Social Security Administration claimed more than $10 million in credits. The IRS threw out 528 of those 1,326 claims, saving $4 million.
Are we supposed to celebrate the fact that the IRS "saved" 40% of the money obtained fraudulently? What about the other 60%? The article implies that those claims weren't thrown out, even though they have been identified.

I must admit that I was briefly tempted to claim the tax credit for the two rental properties I bought in 2009. Given the IRS's record, I might have gotten away with it.

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