Network News

X My Profile
View More Activity
Posted at 6:00 AM ET, 12/ 2/2010

Inmates get fraudulent tax refunds behind bars, report says

By Ed O'Keefe

Eye Opener

Jail cells might keep inmates from escaping, but don't appear to stop some from filing fraudulent tax returns.

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 IRS paid $112 million of the claims, a small fraction of the $326 billion in refunds so far this year.

But the number of fraudulent payments made to inmates has climbed 37 percent since 2004, said the report, which also 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 (TIGTA), set for release Thursday. 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 J. Russell George said in an interview. "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 now requires George's office to file regular updates on prison-based tax fraud. The number of bad claims has climbed because the IRS has stepped up detection and enforcement, as well as because a higher number of prisoners are making fraudulent claims, TIGTA and IRS officials said Thursday.

The IRS "is making very good progress" in identifying cases of fraud, George said. Overall, in the general population, the agency stopped almost 250,000 fraudulent returns totaling $1.48 billion through March, double the number from the 2009 filing season.

"The IRS takes refund fraud seriously and has programs in place to aggressively combat it," agency spokesman Terry Lemons said in a statement. Tracking prison fraud "is not a simple process, particularly considering the fact that some inmates and their families are legally entitled to tax refunds and that the prisoner population is constantly changing," he said.

The agency is working with state and federal officials to ensure timely updates and last summer met with federal prison officials to improve detection and prevention of prisoner fraud, he said.

Leave your thoughts in the comments section below

Cabinet and Staff News: President Obama offers to delay his vacation to get a tax cut deal. Henry A. Kissinger, George P. Shultz, James A. Baker III, Lawrence S. Eagleburger and Colin L. Powell opine in The Post on New START. Sen. Herb Kohl (D-Wis.) is blocking Obama's nominee to head the DEA. Former Vice President Dick Cheney wades into the RNC chairman's race.

FDA:
Procedural problem threatens food safety bill: The section in question would impose fees on importers, and on farmers and food processors whose food is recalled because of contamination. If it is determined that those fees amount to taxes, it would essentially nullify the vote by the Senate.

FTC:
FTC recommends 'Do Not Track' program in Internet privacy report: Several ideas are aimed at helping make it easier for consumers to understand what information is being collected and used about them

GOVERNMENT WORK/LIFE/OPERATIONS:
Presidential panel offers 2nd proposal on federal pay freeze: Federal employees would take a hit, along with many other parts of the government, under a plan released Wednesday.

INTERIOR DEPARTMENT:
Obama administration reimposes offshore oil drilling ban: It will prohibit offshore oil drilling in the eastern Gulf of Mexico or off the Atlantic and Pacific coasts as part of the next five-year drilling plan, reversing two key policy changes announced in late March.

JUSTICE DEPARTMENT:
Justice drops probe of Ensign: The Nevada Republican admitted in June 2009 that he had an affair with the wife of a former aide, Doug Hampton. Federal investigators were looking into whether Mr. Ensign broke any laws in financially helping the Hampton family.

NASA:
Senators say NASA isn't implementing programs: Bipartisan members of the Senate Commerce Committee expressed growing concerns Wednesday that U.S. manned space-exploration efforts were mired in political and budget uncertainties.

SEC:
SEC goes after fraud by local hedge funds: The agency's San Francisco is seeking to crack down on illegal conduct by hedge funds and corporate bribery, activity that got pushed aside as regulators grappled with Ponzi schemes and subprime mortgage-related probes during the recent financial crisis.

Follow The Federal Eye on Twitter | Submit your news tips here

By Ed O'Keefe  | December 2, 2010; 6:00 AM ET
Categories:  Eye Opener, Oversight  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Postal Service, union contract talks go past deadline
Next: GSA to use Google cloud-based system for e-mail

Comments

And the IRS is going to oversee the "Heath Care Bill" passed by Congress. Oh Boy!!

Hope they will do a better jib on that then Taxes ...... but some how I doubt it.

Posted by: bkarpus | December 2, 2010 8:44 AM | Report abuse

Afterward, Majority Leader Steny H. Hoyer (D-Md.) voiced frustration to reporters. "This has happened to us four or five times with the Senate," Hoyer said. "The Senate knows this rule and should follow this rule. They should be cognizant of the rule. Nobody ought to be surprised by this rule. It's in the Constitution. And they've all been lectured, and we have as well, about reading the Constitution."

Posted by: kstobbe1 | December 2, 2010 8:57 AM | Report abuse

Really- it's impossible to flag an address that is like "Prisoner #xxxxxxx, Leavenworth, Kansas"?
Aren't their SS#'s on the system somewhere showing that they are in jail?
Who is responsible? What is the fix and when is it in place? And how do we prevent this from happening again?
These are the only questions that need to be answered, unless someone or office was already tasked with the job and did not do it- then pink slips need to be prepared. Can't fire government workers?
Let's try. Put it in the newspaper- let the public know who is not doing their job.
Let's not let anymore incompetents survive only to retire with a pension and benefits.

Posted by: poppysue85 | December 2, 2010 9:04 AM | Report abuse

Why worry? Eric Holder and the IRS are all on top of it. Heck, they may someday send Charlie Rangel to prison. He could show the inmates the correct way to commit fraud.

Posted by: richard36 | December 2, 2010 9:19 AM | Report abuse

bkarpus ... juste another brick in the wall evidencing that the government is unable to STOP fraud in any governmental program.

And the insane Pelosi-Reid-Obama Healthcare financing scheme is basically dependent on eliminating Medicare fraud to help finance the increased access to healthcare.

It can't be done! What's peceived as "free money" and "gonna get my share" philosophy overrides logic and sanity.

Posted by: Hazmat77 | December 2, 2010 9:26 AM | Report abuse

take the monies from Timmy and Douglas H. Shulman is the 47th Commissioner of Internal Revenue. As Commissioner, he presides over the nation's tax system, which collects approximately $2.4 trillion in tax revenue that funds most government operations and public services.

Posted by: kstobbe1 | December 2, 2010 9:29 AM | Report abuse

$112 million is no small fraction. As a tax service professional, I can tell you the IRS is full of incompetent personnel.

Posted by: norurb | December 2, 2010 9:29 AM | Report abuse

"The Nevada Republican admitted in June 2009 that he had an affair with the wife of a former aide,..."

It's obvious there is a Don't Ask, Don't tell policy in congress. Not about homos though. No wonder the rest of the world calls us infidels and The Great Satan.

Posted by: glenmayne | December 2, 2010 10:19 AM | Report abuse

Prisoners are generally cut off from federal assistance, so if the Social Security administration can do this, then so can the IRS.
I don't see any reason why a list of the prisons in the United States couldn't be plugged into the IRS computers, and any checks sent to these addresses flagged for review by IRS employees. Wouldn't that solve the problem and not throw a monkey wrench into the speedy refund system we all want to encourage?
Also this raises other issues in my mind. You generally have to have generated revenues to get a tax refund. Or does the IRS just take someone's word that they earned money and deserve a refund, even if the IRS does not have any federal withholding statements or stock fund statements?
Yes, I can conceive of some circumstance where a wealthy felon might have to file a tax return. But most of those behind bars are not Bernie Madoff types but bankrupt druggies, etc.

Posted by: edwardallen54 | December 2, 2010 11:19 AM | Report abuse

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 IRS paid $112 million of the claims, a small fraction of the $326 billion in refunds so far this year
___________________________________________
WHAT!!!. The article says this is "a small fraction of the $326 billion in refunds so far this year". Is the Post trying to say this is not such a big deal??? This is such an idiotic statement. Why not say of the fradulent claims totaling $130 million the IRS paid $126 million of these fraudulent claims for a percent return of 96.9%. Is the WaPO a newspaper or what???? Thanks for keeping us so informed. No big deal really since it is such a small part of the total refunds paid. But, $126 million dollars can do a lot of good. I guess WaPO thinks it is such a small part of the total that it just doesn't matter. And the WaPO is at the epicenter of politics. Ha, Ha Ha

Posted by: jack711 | December 2, 2010 11:55 AM | Report abuse

Is there ANYONE at the IRS with an IQ above room temperature? These incompetent clowns are being paid exhorbitant salaries plus cadillac Perks and they continue to process obvious fraud documents that boggle our minds. Is there ANYTHING this government can do right? I don't think so. Get rid of the UNIONS and get rid of the IRS and cut Federal employess by 25%, to start. Cut salaries by 25% and FREEZE for 3 years until we have a Conservative POTUS established in the White House. We have had more than ENOUGH of this incompetent, corrupt bunch of Bozo's! Out in 2012!! Counting the days.

Posted by: priley8104 | December 2, 2010 12:39 PM | Report abuse

The Nevada Republican admitted in June 2009 that he had an affair with the wife of a former aide,..."

It's obvious there is a Don't Ask, Don't tell policy in congress. Not about homos though. No wonder the rest of the world calls us infidels and The Great Satan.
----------

What the hell does this spew have to do with prisoners ripping off the gov't with fraudulent tax returns?

Posted by: steelers01 | December 2, 2010 1:12 PM | Report abuse

Makes one wonder if inmates manage to get this much money back, how about the rest of the population. How many non-inmates are getting fraudulent returns back?

Posted by: jim_maryland | December 2, 2010 1:55 PM | Report abuse

It's a no-brainer that ALL claims for tax refund from prisoners should be screened.

Why aren't they all being screened. That's absurd.

Posted by: tncdel | December 2, 2010 3:49 PM | Report abuse

What a Crock. The same old political games with federal employees as the scapegoats this time.

Posted by: david_sequeira_fdic | December 2, 2010 5:40 PM | Report abuse

well doesn't the prison system inspect the mail a prisoner gets? then why don't they inspect where the prisoner's mail is going too and if it is to the irs have the prison send those returns addressed to the irs for special handling. just a thought.

Posted by: lindagee7 | December 4, 2010 2:26 PM | Report abuse

Post a Comment

We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.




characters remaining

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company