Inmates get fraudulent tax refunds behind bars, report says

From Ed O'Keefe of The Washington Post on Dec. 2:

Jail cells might keep inmates from escaping, but don't appear to stop some from filing fraudulent tax returns.

More than 48,800 of the nation's prisoners claimed $130 million in fraudulent tax refunds by March of this year, and the numbers are probably much higher, according to a new watchdog report. The IRS paid $112 million of the claims, a small fraction of the $326 billion in refunds so far this year.

But the number of fraudulent payments made to inmates has climbed 37 percent since 2004, said the report, which also acknowledged that the rise is partly a result of increased detection and enforcement by the IRS.

The IRS doesn't screen most prisoners' tax returns, according to the report by the Treasury Inspector General for Tax Administration (TIGTA), set for release Thursday. A review of tax records found that 88 percent of the 287,918 returns filed by prisoners by late March were not screened for potential fraud. Of those, about 48,800 returns lacked wage information reported to the IRS by employers, the report said.

"There is a major problem with returns being filed fraudulently by people who are incarcerated," TIGTA Inspector General J. Russell George said in an interview. "What makes this even more problematic is that we identified this as a problem more than five years ago. The problem not only persists, it's gotten even worse."

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