National Trending

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It takes effort to stay trendy. You can’t walk around in the coolest clothes, drive the hippest car and sing lyrics to the most popular songs without good research. That being said, you may have one question, ”Does the same effort apply to staying current with fraud trends?’? It takes time and effort to commit fraud, and even more of the same to get away with it. According to an article highlighted in CorrectionsOne.com, Ohio inmates collectively exerted a multitude of effort in an upward trending tax refund fraud scam.

A spike in identity theft amongst Ohio inmates resulted in an upward trend of bogus tax returns, causing the taxpayers to suffer. According to data obtained by the Treasury Inspector General for Tax Administration, the number of false tax returns made by U.S. prisoners increased five-fold between 2004 and 2010. In 2010, prisoners received $35.2 million in bogus returns alone. So why does it seem so easy for inmates to cash in while they are in the slammer?

Until recently, the government agencies did not have access to accurate state and federal prisoner data for screening to prevent tax fraud. Luckily for the government agencies, a recent change in federal laws has granted better access to pertinent prisoner information needed to prevent fraud.<i? An assistant U.S. attorney for the Northern District of Ohio commented? ”Hopefully it is becoming an easier crime to catch…There are just so many (returns), and there is the pressure to get them out, and some of these (bogus returns) can get through.”

The IRS revealed Ohio prisons submitted 2,189 false tax returns in 2010, a 50 percent increase from 2009. (That’s a huge increase in just one year.) An employee of the IRS regional office in Columbus explained? ”When accurate prison data is available, the IRS is very successful at detecting and stopping incorrect funds.’? The IRS was able to identify and stop more than $722 million in bogus claims sought by inmates in 2010. Both the IRS and the Federal Bureau of Prisons are making efforts to combat prisoner tax refund fraud a priority.

If one thing is trending, it will be the increase in extended prison time for inmates caught submitting false tax returns. You couldn’t beat the system the first time; don’t think you can beat the system the second time around while you’re sitting there in jail.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Inmates Get Millions for Bogus Tax Returns,” written by Cornelius Frolik of the Dayton Daily News and published by CorrectionsOne.com on July 15, 2013.

DAYTON, Ohio — Inmates increasingly are submitting bogus tax returns in the hopes of receiving a hefty refund from Uncle Sam, and the phony schemes continue to cost taxpayers millions each year.

The number of false returns filed by U.S. prisoners increased fivefold between 2004 and 2010, according to data obtained from the Treasury Inspector General for Tax Administration. The IRS identifies most of the fraudulent returns, but enough got through that inmates received $39.1 million in bogus tax refunds in 2009 and $35.2 million in 2010, the most recent year data is available.

 

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.