might think that the IRS would pay special attention to the tax returns
being submitted by prisoners. After all, these people have already
revealed that they have a penchant for breaking the law. But a
recently-released report from the Treasury Inspector General for Tax Administration shows that refund fraud by prisoners is a real problem that isn’t being properly addressed.
report states that the number of fraudulent tax returns filed by
prisoners and identified by the IRS has increased from more than 18,000
returns in 2004 to over 91,000 returns in 2010. And the refunds
claimed on these returns increased from $68 million to $757 million.
Another interesting report (see More Tax Return Preparers Are Filing Electronically, but Better Controls Are Needed)
demonstrated that many prisoners are registered as return preparers
with the IRS. Although the IRS is making attempts to regulate dishonest
preparers, the courts are making it difficult. Not long ago, Washington D.C. Federal District Court Judge James E. Boasberg blocked the IRS from implementing new requirements.
If the courts and the IRS can put a stop to the fraudulent returns, the government will save itself some serious cash.