IRS fraud by inmates getting worse, not better

Posted on February 16, 2011

Seal of the Internal Revenue Service

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Five years ago, U.S. prison inmates ripped off the IRS to the tune of $13.4 million dollars.  With that in mind, you’d think the government would be on the lookout for these types of scams and subsequent fraud would be costing the American taxpayer less.   That isn’t the case:

WASHINGTON, Feb. 16 (UPI) — U.S. prison inmates collected $39.1 million in undeserved federal tax refunds in 2009, an Internal Revenue Service report to Congress revealed.

The report said the prisoners filed false or fraudulent tax returns in order to obtain the refunds, USA Today reported Wednesday.

The 2009 figure was nearly triple the $13.4 million prison tax scammers received five years earlier.

Inmates in Florida, Georgia and California accounted for nearly $19 million of the $39.1 million in undeserved tax refunds, the IRS said.

To add insult to injury, this may not even be the high water mark because the IRS doesn’t always screen for fraud on returns filed by convicted criminals, and once fraud has been determined it may take many years to recoup the money.