Priorities

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Most people have a list of priorities. It may include priorities for the day or priorities for a life time. Regardless of the timeframe, the items on the list are subject to intense scrutiny. Popular contenders on the lists of priorities include family, work, health, hobbies and fraud. Wait a minute, fraud? According to a NBC Bay Area article, fraud came high on the list of priorities for many inmates and Internal Revenue Service (IRS) workers.

An Investigation has exposed a new priority amongst prison inmates – tax refund fraud. With the ease of submitting false refund claims, the amount of tax refund fraud generated from in prison has increased more than 1,000% in the last decade. (Yes, you read that right.) In a recent interview by the NBC Bay Area team, the Treasury Inspector General for Tax Administration explained the IRS has caught and stopped $1.7 billion in fraudulent tax refunds coming from prison inmates in the past year alone. (These prison inmates are living better than some of us on the outside!) Determined for an inside look, the NBC Bay Area team located a seasoned professional, known in the prison world as the ”Tax Man.” With a carefully calculated method, the ”Tax Man” was able to nab between $3.5 and $4 million from behind bars. What triggered his ”success?”

The ”Tax Man” explained? ”I actually had it so good inside the prison system there was really no need to get out.’? He discovered a method that allowed him to continue to receive tax refunds for himself and others without the question from IRS—until 2001 when the IRS tracked down his fraudulent behavior into a conviction. (Eventually the government will catch you. With new technology the timeframe of ”eventually” will quicken.) Recognizing typical red flags the IRS uses to catch criminals claiming tax refunds, the ”Tax Man” made sure to make claims for $3,000-$6,000; the bigger the claims, the more scrutiny his process would draw. While he may be recognized as a tax refund guru in the prison system, he isn’t the only professional fraudster. The NBC Bay Area team followed the stories of others, revealing a national epidemic needing a permanent solution.

The IRS released a statement saying? ”When the accurate prisoner data is available the IRS is very successful at detecting and stopping incorrect refunds.’? The statement further noted? ”There are still significant challenges in getting complete and consistent data from the multiple jurisdictions involved.” While the government faces the risk of losing billions in tax refund frauds, the IRS and prisons are forging a partnership to help stop the building storm of fraud. (Let’s hope this isn’t the calm before the storm.)

I think we need to set some priorities straight for some inmates. The goal is to get out of jail (if possible), not secure a longer sentence for defrauding the government? It’s like we are hammering a nail with a torque wrench – sure, progress is being made, but the priority surely isn’t efficiency.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Inmate Tax Fraud: $100 Million Crime,” written by Stephen Stock, Julie Putnam and Jeremy Carroll and published by NBC Bay Area Online on April 5, 2013.

Tax refund fraud among the nation’s prison population has grown more than 1,000 percent in the last decade according to the latest data obtained by NBC Bay Area’s Investigative Unit from the Treasury Inspector General for Tax Administration in Washington, D.C.

The Inspector General told NBC Bay Area that in the last tax year the IRS caught and stopped more than $1.7 billion in fraudulent tax refunds filed by prison inmates.

 

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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.