Can Someone Tell Me Why The IRS Has Been Making Home Loans?
Apparently, four years ago the IRS was authorized to make home loans. Now, in a dazzling display of government competence, they’ve made so many loans their system has been overwhelmed and tax refunds are being delayed.
It’s perhaps the very definition of Red Tape. Four years ago, Congress decided that the IRS should get into the banking business, authorizing it to give out no-interest loans to first-time homebuyers. That put the agency in the position of both collecting loan payments and issuing tax refunds to the roughly 1 million taxpayers who took advantage of the program.
This year, the odd arrangement overwhelmed IRS systems, and an unspecified number of taxpayers have been forced to wait four months or more for their tax refunds. In fact, many are still waiting.
“This is frustrating for taxpayers, and it’s frustrating for us,” said IRS spokesman Terry Lemons. “We deeply apologize.”
What’s the biggest problem the IRS is facing? The people who took the loans are paying them back too quickly. “One particularly vexing and unexpected problem: Many taxpayers are paying more than the minimum $500 annual payment in an effort to pay off the loan early,” reads the article. You can’t make this stuff up.
So how exactly did the IRS come to be making home loans? Turns out it was a desperate attempt by Congress to shore up the collapsing housing market:
All the taxpayers involved in the glitch took advantage of a one-time, misnamed First Time Homebuyer tax “credit” offered during the 2008 tax year, a program that turned out to be a meager effort by Congress to prop up the then-imploding housing market. Homebuyers who took advantage didn’t actually receive a credit — they were granted what was essentially an interest-free loan of up to $7,500, to be paid back in $500 increments starting in 2010.
So in the midst of a housing market collapsed that was brought on by government subsidies and mandates for low interest loans to subprime borrowers, Congress thought one solution would be more government loans.
But don’t worry. These idiots totally think they can make your health care more efficient.