The scheme described in the post is real, is named by the US tax authority, and has produced numerous federal convictions and prison sentences.

The IRS addresses this exact belief as a listed frivolous argument. Another variation of the "redemption theory" asserts that persons can draw on the secret or "straw man" Treasury account by sending a Form 1099-OID to a creditor and the creditor can present the form to the Treasury Department and receive full payment of the debt, and the IRS states that the Treasury Department does not maintain depository accounts against which an individual can draw a check, draft, or any other financial instrument, adding: "The notion of secret accounts assigned to each citizen is pure fantasy."

The IRS also notes that in addition to potential civil and criminal tax penalties for misusing Form 1099-OID, persons who fraudulently use false or fictitious instruments may be guilty of federal criminal offenses, such as under sections 287 and 514(a) of title 18.

Documented imprisonments substantially exceed ten. A single DOJ release covers six defendants: on January 28, 2013, Penny Jones of Rigby, Idaho, was sentenced to 144 months in prison after pleading guilty to conspiracy to defraud the United States and 41 counts of filing false claims for tax refunds, in a scheme operated with Beiter, Clum, Peters and others to defraud the IRS out of tax refunds . Jones had earlier pleaded guilty in Fort Lauderdale to forty-one counts of causing the filing of false claims for income tax refunds and one count of conspiracy to file false claims , and a federal court separately barred her from preparing returns after finding she prepared more than 400 federal tax returns claiming fraudulent refunds exceeding $168 million, including false Forms 1099-OID, in a scheme rooted in the long-discredited "redemption" theory which, according to its proponents, allows taxpayers to use IRS forms to access secret Treasury accounts .

Other separate federal cases include: Karl Herrington of Parma, Michigan, convicted of two counts of corruptly endeavoring to obstruct the administration of the internal revenue laws, four counts of filing false tax forms, and one firearms count, in connection with Forms 1099-OID falsely reporting original issue discount paid to law enforcement personnel and judges ; Charles Scott Brown, 54, of Camas, Washington, sentenced to 18 months in prison for four counts of filing fraudulent tax returns after fraudulently claiming more than $1.2 million in refunds in the OID-1099 scheme ; Judy Grace Sellers, found guilty by a federal jury of conspiracy to submit false tax returns and defraud the US Treasury, aiding in the preparation of false returns, filing a false lien, and failure to appear, in a $3.4 million scheme ; and an accountant sentenced to 97 months in federal prison and ordered to pay $705,276 in restitution after assisting at least eight people in seeking fraudulent refunds of more than $3 million in a scheme that relied on a bogus use of 1099-OID forms .

On the car and house element, the record shows two distinct things. Promoters pitch the scheme as a way to settle consumer debts: the redemption scheme promises its victims the ability to pay down their debts, including mortgages, credit cards and student loans, using government funds , and the IRS has cautioned taxpayers to avoid getting caught up in schemes disguised as a debt payment option for credit cards or mortgage debt . Separately, some convicted participants spent fraudulent refund proceeds on such items: one defendant's refund check of $411,773 went toward a $60,000 Mercedes-Benz, a 23-foot ski boat, a Toyota Sequoia SUV, two wave runners and two snowmobiles, in addition to paying off his home mortgage and credit cards , and another used refund money for travel, shopping sprees and luxury hotel stays . That defendant used IRS Form 1099-OID to report $583,151 in "other income" he had never received, claimed it had all been withheld for taxes, and was subsequently indicted .

The scheme has also been listed in official scam warnings: an IRS "Dirty Dozen" release records that in some cases individuals made refund claims based on the bogus theory that the federal government maintains secret accounts for US citizens and that taxpayers can gain access to those accounts by issuing 1099-OID forms to the IRS .