I.G. report: I.R.S. having trouble with prisoner tax fraud

According to the audit, roughly $295 million in fraudulent tax refunds had been claimed in the 2009 calendar year, up from $68 million in 2004. The report also found that I.R.S. procedures may be causing it to underestimate prisoner fraud.

The inspector general gave the I.R.S. five recommendations, including to seek legislation that would give it more time to disclose tax return information to prison officials and to develop a method to test the reliability of the information it gets from prisons. The I.R.S. agreed with those two recommendations, partially agreed with another two and did not signal either way on another. 

Senator Chuck Grassley (R-Iowa) said in a Monday statement that the report’s findings showed “that prisoner tax fraud is a low priority for the federal government.”

“The agencies need to take action and correct that impression,” Grassley added. “While they wait, taxpayers are picking up a growing tab for prisoner tax fraud.”