What Do You Think?

[janetyu]

I wonder just how the IRS plans to get the money back?
Waste several more million than was taken on legal procedures with the threat of sending the people to jail?


copied from:
http://news.yahoo.com/s/ac/7877746_irs_prisoners_stole_391_million_of_tax_dollars_in2009


IRS: Prisoners Stole $39.1 Million of Tax Dollars in 2009

Shayna Leah Shayna Leah – Thu Feb 17, 1:51 pm ET

During 2009, prisoners managed to collect a whopping $39.1 million in undeserved refunds from the IRS. $19 million went to prisoners in just three states: Florida, Georgia, and California. USA Today reported that as outrageously high as those amounts are, the true amount tax dollars that have been stolen could be even higher. The audit that the IRS has just concluded found a large number of fraudsters, but without examining every prisoner's tax return for fraud, it is impossible to know.

While prisoners' jobs while incarcerated do not pay enough to require the prison to withhold taxes, many prisoners and their families receive income through legal sources, such as investments, inheritances, or other sources that lead to legitimate tax refunds.

J.Russell George, the Treasury Department inspector general for tax administration, said, "If the IRS does not take action, the problem will only worsen and more taxpayer dollars will be lost." He explained that despite the IRS's continuing work to tighten the net on these criminals, including legislation passed in 2008, prisoners continue to work to find ways to receive refunds that they are not legally entitled to.

Another audit was conducted earlier this year. Its results, announced February 3, included 29 inmates who received $50,000 worth of federal tax credits for electric and other alternative motor vehicles listed falsely on their tax returns. The IRS has found that many tax scams are run by prisoners who are able to find Social Security numbers and other identifying data on others, such as other prisons, which are then used to create and file false tax returns. The false tax returns are then used to claim thousands of dollars of undeserved refunds.

Some of the popular tricks used by prisoners to claim false tax refunds include trolling the internet for businesses that have filed for bankruptcy. Prisoners then list those companies on their Forms 1040 as employers, since it is more difficult for the IRS to confirm the veracity of the claim.

Prisoners committing tax fraud may also collude with their friends and relatives outside of the prison. Although the IRS seems to have no filter to keep them from sending large checks to prisons, these prisoners will take the extra step of having these friends and relatives receive the IRS refund checks, cashing them, and then depositing them into their prison accounts.

The audit by the inspector general found that the IRS does not check all of the tax returns filed by prisoners. The IRS had identified 44,944 fraudulent or false tax returns filed in 2009 by prisoners, however the inspector general identified and addition 54,410 tax returns that the IRS had failed to identify as having been filed by prison inmates during 2009. Without the proper identification as a prisoners' tax return a return is not subject to the specialized fraud checks used to examine all prisoners' tax returns.

California, Florida and Georgia, likely lead the pack of tax fraudster prisoners because they have the second, third, and fifth largest prison populations in the country respectively according tot he Pew Center on the States. The Pew Center is a tax exempt organization which is focused on finding state policy solutions.