Here’s a scheme for you: The government has set up this new tax credit worth thousands of dollars. What if we find some impoverished individuals, have them fill out tax returns claiming this credit, and we pocket all that cash? We’ll just phony up some other parts of the return to make it look real. They’ll never catch us!
As an aside, this sort of thing happens with all refundable tax credits. It’s one of the reasons why they attract fraudsters like moths are drawn to bright lights.
Yes, this really happened…except for the part about never being caught. Jason Altman, his brother Jarrod, and Emanuel Harrison owned Tax on the Run, a tax preparation business in Dallas, Texas. They got the bright idea about the First Time Homebuyer’s Credit and did recruit individuals to file tax returns for the credit. They invented Schedule C’s (sole proprietorships) for those individuals so it looked like they made money (enough to afford a house) and then added in the homebuyer’s credit. Amazingly enough, all of those returns had refunds. They also had these clients obtain refund anticipation loans. Once the loan was approved, they drove the taxpayer to a check cashing business where their refund check was cashed. The members of the conspiracy took most of the money. None of the clients qualified for the homebuyer’s credit.
Jason Altman and Emanuel Harrison had already received 7 years at ClubFed. Jarrod Altman was luckier: He received eight months of home confinement as part of three years of probation on Friday. The trio used intermediaries to recruit impoverished taxpayers; the intermediaries are also heading to ClubFed. Everyone involved must also make restitution to the IRS.
Hopefully, our Congresscritters won’t invent new refundable credits. Wait, isn’t there something new this year with medical care?