Prisoners Rake In Millions from IRS in Bogus Refund Claims

Hundreds of thousands of prisoners are filing phony tax refund claims and the IRS is not doing enough to quash the problem, according to a watchdog report.

The Treasury Inspector General for Tax Administration (TIGTA) said in its report Tuesday that refund fraud associated with prisoner Social Security numbers is a “significant problem” for the tax agency that is only getting worse over time.

According to the report, more than 137,000 phony tax returns were filed in 2012 using a prisoner’s Social Security number to the tune of $1 billion. While many of the fake refunds were flagged and prevented by the agency, the IRS issued $70 million in bogus refunds.

This was a significant increase from 2007, when more than 37,000 fake tax returns were filed for amounts equaling $166 million.

“Tax refund fraud associated with prisoners remains a significant problem for tax administration,” the report said.

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