While doing hard time is anything but a walk in the proverbial park, anyone who's watched HBO's 'Oz' knows a resourceful inmate can still enjoy many of the perks of pre-incarcerated life while behind bars. From recreational drugs, to chipped cell phones, to fried chicken, there are plenty of ways to partake in life's finer things as you count away the days.
But who knew inmates were receiving tax refund checks, and large ones at that, while still in the pen? Here's the story:
Prisoners in Florida, Georgia and California lead the nation's inmate population in scamming payments from an unlikely benefactor: the IRS. Prisoners in the three states received nearly $19 million in IRS refunds during 2009 after filing false or fraudulent tax returns, according to an IRS report to Congress that was included in a federal audit released in January.
The haul was part of $39.1 million in undeserved federal tax refunds the IRS issued to jail and prison inmates nationwide for phantom jobs on phony returns, the data shows. That's nearly triple the $13.4 million annual in tax refunds the IRS reported it issued to prison scammers just five years earlier.
The IRS said it could not immediately determine how much, if any, of the fraudulent refunds in 2009 has been recovered, because the recapture process "can take several years."
Although inmates' prison jobs don't pay enough to trigger tax withholding, some prisoners and their families may legally receive income from investments, inheritances or other sources that can qualify them for legitimate tax refunds. Washington enacted legislation in 2008 intended to crack down on fraudulent tax refunds claimed by inmates, but the intended enforcement has been bogged down by legal questions.
Evidence in federal court cases indicates they're typically run by inmates who gain access to the Social Security numbers and identifying information of others - sometimes including fellow prisoners - and then use the data to file false tax returns that generate thousands of dollars in refunds.
In some cases, the inmates search the Internet for listings of businesses that have filed for bankruptcy. Listing a defunct firm as employer on a false tax return can make it difficult for the IRS to verify the claim.
The scams often involve inmates' relatives or friends who are not behind bars. They receive and cash IRS refund checks, then deposit funds in prison accounts.
I could obviously throw in a corny "crime pays" pun here, but that would be waaaaay too easy.
I'm sure lots of anti-government and anti-tax types will see this as evidence that the IRS isn't doing its job. On the contrary, I think the fact that this level of fraud was identified is pretty impressive. This form of inmate fraud has been on the rise in recent years, leading to the Inmate Tax Fraud Prevention Act of 2008 which makes it easier for The Bureau of Prisons and the IRS to share data.
Hopefully this is just the first of many government efforts to curtail such illegal activity. Now if they could just revise their computer-based screening process that unfairly targets people of color to be audited, the IRS would be on a roll.
Posted By: DAVID JOHNSON
Saturday, February 19th 2011 at 12:47AM
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