The number of fraudulent tax returns filed by prisoners that the IRS has discovered increased from over 18,000 in 2004 to over 91,000 in 2010, comprising $757 million in refunds and the agency must do more to combat the growing scam, the Treasury Inspector General for Tax Administration has said.
After assessing the reliability of the IRS Prisoner File, TIGTA said most inaccuracies identified are due to misinformation on individual prisoners, but the agency does not have the authority to disclose to the prisons information related to prisoner-filed fraudulent tax returns so there is little prison officials can do to stop it.
Of the 2.8 million records on the 2012 Prisoner File, about 240,000 records did not match information maintained by the Social Security Administration.
TIGTA recommended that the IRS compare prison and prisoner files to ensure that all facilities that house prisoners reported them, and said legislation is needed to authorize the IRS to share data with prisons.
IRS management agreed to continue to assess the effectiveness of the validation activities performed on the Prisoner File, although management stated that new programming and procedures would be deployed for 2013.
