U.S. Prisoners Claim $130M in Tax Refunds Without Proof

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Nearly 50,000 US prisoners filing tax returns claimed over $130 million in refunds with no proof of income during the 2010 filing season, a new audit report released Thursday revealed.

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According to the report, 88 percent -- or 253,929 out of 287,918 -- of returns filed by prisoners as of March 24, 2010 were not selected for screening by the Internal Revenue Service (IRS) to test their fraud potential.

"Of those, 48,887 who claimed refunds totaling more than $130 million had no wage information reported to the IRS by employers," the report said, stopping short of saying that those returns were fraudulently claimed.

"While the IRS is identifying larger numbers of fraudulent returns, improvements must be made to its screening processes to ensure that returns filed by prisoners get adequate scrutiny," said J. Russell George, the Treasury Inspector General for Tax Administration (TIGTA), who spearheaded the investigation and recommended a further examination by the IRS.

In light of this discovery, the TIGTA also urged the IRS to seek increased “expanded and expedited” access to wage and withholding information during the filing season.