By Ed O’Keefe
The Washington Post
WASHINGTON — 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 Internal Revenue Service paid $112 million of the claims, a small fraction of the $326 billion in refunds this year.
The number of fraudulent payments to inmates has climbed 37 percent since 2004, said the report, which 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 , set for release today. 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 Russell George said . “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.”
In 2005, TIGTA found that 18,000 prisoners had filed fraudulent returns in 2004. The report prompted a 2008 law that requires George to file regular updates on prison-based tax fraud.
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