Inmates in U.S. prisons are using a tax scam to bilk millions from the IRS, according to CNNMoney.
The theft involves prisoners filing fraudulent tax refunds from behind bars, using stolen or fake identities and other tactics.
“There is no limit to what the criminal mind is capable of,” said Thomas Cooke, professor of accounting and business law at Georgetown University.
Editor's Note: The IRS’ Worst Nightmare — How to Pay Zero Taxes
“Identity theft is all too common today and filing a return with fraudulent data is all too easy.”
The number of fake returns from prison has increased in recent years, CNNMoney reported. In fact, in 2010, inmates claimed $758 million in fraudulent returns, and were successful to the tune of about $35 million.
Inmates often get help from the outside, apparently by offering a cut of whatever refund is received, CNNMoney reported.
Former inmate Larry Levine told CNNMoney that in some instances, U.S. prisoners find annual reports in the library from corporations that list federal tax ID numbers, and then claim they worked for them on 1040 forms.
Other prisoners claim wages from companies that have filed for bankruptcy because those wages can be harder for the IRS to track.
The IRS said collecting accurate data about prisoners has been hard, but that new laws should help.
The Washington Times said a new Treasury Department report found the IRS and prison officials are cooperating in increased enforcement of tax fraud committed behind bars.
The Times reported additional details on the scams. It said some inmates pore over obituaries, looking for people’s identities to steal. Others use their access to computers to file tax returns online. They can have refunds electronically deposited into the bank accounts of friends on the outside.
“Most taxpayers find e-filing to be quick and easy. Unfortunately, some bad guys have also found it a quick and easy way to commit fraud,” said Karen Kraushaar, a spokesperson for the Treasury Department’s inspector general’s office.
Editor's Note: The IRS’ Worst Nightmare — How to Pay Zero Taxes
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