Crackdown on Tax Refund Fraud Catches Prisoners Filing $4.4 Billion in Fraudulent Returns

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TIME recently reported that the Internal Revenue Service (IRS) has ratcheted up its efforts to identify prisoners conducting tax refund fraud. (What a novel approach – checking to see if prisoners are still perpetrating crime.). The article points out that ”the issue of prisoners getting undeserved tax refunds has been an embarrassment to the IRS…” (Think about how taxpayers feel.)

The article cites a recently released report by the Treasury Inspector General for Tax Administration (TGTA), and notes that the ”…crackdown on tax fraud this year prevented the issuance of $4.4 billion in bogus refunds, an increase of 171% over the previous year.’? What about last year? A 2010 TGTA report ”found that 50,000 inmates had claimed more than $130 million in tax refunds” and most had not been reviewed by the IRS. Now things are changing (what a good idea!)? by April of 2011, the IRS had ”selected 199,854 tax returns filed by prisoners for screening” – a 256 percent increase over the number of prisoners identified for screening in April 2010. (So…how many prisoners were released last year and/or are working with their friends outside of prison to file false returns that the IRS isn’t detecting? Opportunities for improvement abound…)

Source: Today’s ”Fraud of the Day” is based on an article entitled, “IRS Catches More Tax Cheaters – But They’re Already in Prison,” by Jonathan Berr, published by the TIME, Nov. 17, 2011.

The IRS has caught a lot more people cheating on their taxes. A crackdown on tax fraud this year prevented the issuance of $4.4 billion in bogus refunds, an increase of 171% over the previous year, as the agency ratcheted up its scrutiny of filings by prisoners, according to a report released earlier this month by the Treasury Inspector General for Tax Administration (TGTA).

The issue of prisoners getting undeserved tax refunds has been an embarrassment to the IRS, particularly during these tough economic times. A 2010 report from the same office found that nearly 50,000 inmates had claimed more than $130 million in tax refunds. Most of these returns were not reviewed by the IRS for possible fraud. That changed.

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