Senators Work to Block U.S. Prisoners’ Bogus Tax Refunds
- Posted on January 17, 2011 at 2:10am by
Meredith Jessup
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Over the last five years, prisoners doing time in America’s correctional facilities have received more than $120 million in tax refunds they applied for from their jail cells. According to the Associated Press, four Senators are now working to close the loophole and protect the nation’s taxpayers from such fraud:
Sens. Charles Schumer of New York, Sherrod Brown of Ohio, Amy Klobuchar of Minnesota and Sen. Bill Nelson of Florida said the Federal Bureau of Prisons and the Internal Revenue Service have failed to cooperate and comply with a 2008 law aimed at stopping the practice in federal and state prisons nationwide.
Prisoners use their own names or the names of friends and associates to submit false claims to receive and cash refund checks.
“It is outrageous to think that convicted felons are able to fleece taxpayers from a jail cell,” Schumer told The Associated Press. He said the federal agencies’ “failure to share information has not only allowed this fraud to continue to occur, but has allowed it to more than double since 2004.”
IRS and Bureau of Prisons spokeswomen say they are working to end gaps in what is already substantial enforcement against the practice. But the IRS says congressional action is needed to require prisons to report their tax status to the Bureau of Prisons.
“We have the ability to put an end to this fraud and save taxpayers millions of dollars, but government bureaucracy has gotten in the way,” Klobuchar said. “It’s time for the IRS and the Bureau of Prisons to work together to stop felons from scamming the system.”
“Middle-class Ohioans who work hard and play by the rules shouldn’t foot the bill when convicted criminals commit tax fraud — from the very place they were locked up for committing a crime in the first place,” Brown said.
Nelson called it “prisoners ripping us off.”The IRS and Bureau of Prisons say they’re already on the case.
“The IRS is very successful at detecting and stopping incorrect refunds, including criminal refund fraud, and prevents the vast majority of refunds from fraudulently going to inmates,” said IRS spokeswoman Christina A. D’Amico.
“Our systems provide special scrutiny to reviewing prisoner refunds, and we continue to increase our efforts,” she said.
Prisoners either file false returns in their names or file fraudulent tax returns with phony names and Social Security numbers often using accomplices outside prison to receive and cash refund checks.But D’Amico said prisons aren’t required to provide all the needed tax information on prisoners.
“This information is provided by federal and state prison systems on a voluntary basis,” she said. “Federal law covering taxpayer privacy prevents the IRS from providing tax return information to state and local prison officials … without congressional action to require state and federal prisons to report the status of inmates to the IRS, there will be gaps.”
The senators disputed there are any remaining privacy obstacles beyond the 2008 Inmate Tax Fraud Prevention Act to overcome and said fear of lawsuits by prisoners is thwarting action. The senators threaten to hold hearings on the issue if the agencies don’t work out a way to stop the practice fast.
The issue was the topic of a recent Treasury Department inspector general report. It found refund fraud by prisoners “is increasing at a significant rate.” Overall, the report found that $123 million in fraudulent refunds were paid to prisoners from 2004 to 2009.
The analysis also found that 12 percent of prisoners in 2009 who filed had missing or inaccurate data, including Social Security numbers, questionable dates of birth. Much of the same data was found missing or inaccurate in a 2005 report.
According to the IRS, fraudulent tax returns filed by prisoners in the U.S. rose to almost 45,000 in 2009, up from 18,000 in 2004. Between 2004 and 2009, as much as $123 million more in fraudulent claims were paid to prisoners.
The senators were to release letters to the bureau and IRS on Sunday.“If these two agencies fail to put corrective action in place immediately, then I intend to call for oversight hearings to compel them to,” Schumer said.
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Comments (59)
ronmorgen
Posted on January 17, 2011 at 8:30amThe biggest criminals are the government. This wouldn’t have been possible in the original constitutional republic. I don’t believe any government has ever voluntarily made itself smaller. They always get bigger and bigger until they crumble under their own weight. I give the USA about 2 years.
Report Post »orcainohio
Posted on January 17, 2011 at 8:22am120 million paid to prisoners , Bet that is just a drop in the bucket compared to how many file for ssi dissability from prison. The dems don’t mind it gives them a bigger voter base.
Report Post »1minuteman
Posted on January 17, 2011 at 8:18amisn’t that where obama gets his talent pool for jobs like czars? van jones anyone? where were these senators when convicted felons helped al frankin get elected?
Report Post »sodun
Posted on January 17, 2011 at 8:08amAnother BIG Government poster child.
Report Post »irritated1
Posted on January 17, 2011 at 8:05amBut try to claim home office on your return…Then you’ll see how the IRS works. Seriously, This is a great example of how the government will not have the savings on fraud that they claimed on the CBO report for the healthcare bill. I hate when the goverment “Estimates ” anything, The proof is in the pudding.
Report Post »INTHEBEGININGGOD
Posted on January 17, 2011 at 7:55amWhat hypocrits, Schumer and other senators are worried about prisioners getting millions back in refunds. How about the Trillions of dollars your party stole from the American tax payer in two years. I would like to have them trade places with these cheap skates and we would come out way ahead.
Report Post »Ron_WA
Posted on January 17, 2011 at 7:50amAgain, a flat tax w/ limited or no deductions would certainly help or fix this.
Report Post »BoilitDown
Posted on January 17, 2011 at 9:27amYou raise an excellent point. There are so many advantages to a “fair tax”, “flat tax” or “consumer tax” system that benefit our freedoms and economy that I find it unbelievable why it is not more emphatically considered.
Report Post »The IRS is an unwieldy monstrosity that promotes corruption.
Hefsmaster
Posted on January 17, 2011 at 7:49amAre we still talking about the prisoners, or the criminals?
Report Post »Desert Dog
Posted on January 17, 2011 at 7:47amThis problem, as well as many others, would go away with a flat tax.
Report Post »beebacksoon
Posted on January 17, 2011 at 7:35am“The issue was the topic of a recent Treasury Department inspector general report. It found refund fraud by prisoners “is increasing at a significant rate.” Overall, the report found that $123 million in fraudulent refunds were paid to prisoners from 2004 to 2009.” So, these 4 decide to reign in the fraud NOW? “…government bureaucracy has gotten in the way”? Puleeese. How about investigating ballots hand-delivered to prisons at election time, while you’re at it!
Report Post »Darla_K
Posted on January 17, 2011 at 7:26amIt seems to me that these inmates committing fraud for tax refunds should automatically receive additional time on their sentences and how come the IRS data system can’t flag these people?
Report Post »cykonas
Posted on January 17, 2011 at 7:16amThis is a perfect example of why a radical downsizing of our Federal government is the only solution that makes sense. Two agencies that have conflicting rules and goals and they can’t work it out without passing another law. In private industry a higher level manager would just say, “stop it”, and it would be over. Let’s quit calling for small changes. Dismantle the government down to it’s Constitutional size. This is nuts!
Report Post »Ray2447
Posted on January 17, 2011 at 7:13amSarcasm:
…but, but, but that’s racist and class discrimination, since most of the inmates are members of “special identity groups” and deserve special privileges and protections outside that old outdated document the U.S. Constitution – ACCORDING TO DEMOCRATS. Never mind that those prisoners have had equal opportunity, equal rights, equal protection and equal justice as guaranteed by law. ACCORDING TO DEMOCRATS – they are entitled to special rights, special justice, and special opportunities. (end sarcasm)
Democrat policies and laws are a festering, divisive force, rotting away the very foundation of American society.
Report Post »338lapua
Posted on January 17, 2011 at 9:02amTime to get rid of em all!!
Report Post »wolverine
Posted on January 17, 2011 at 7:01amIsn’t that cruel and unusual punishment
Report Post »jhonjhonson1
Posted on January 17, 2011 at 6:58amWhat are the Feds going to do, put them in jail
Report Post »scout n ambush
Posted on January 17, 2011 at 6:53am“We are from the government and we are here to help”.Why are they just now so concerned about this if they had not been so busy passing bills that would tell us what to buy think and how to live they could have fixed this crap 6 yrs ago they have had control for 6 yrs and should have stopped this then and who knows how many other cases of financial fraud .Well just heard Wiki leaks assange is going to release records on wealthy Americans who are holding money in offshore accounts this could be interesting .Wanna bet That’s why he was arrested .
Report Post »Docroxall
Posted on January 17, 2011 at 6:21amSo, why isn’t THIS racial profiling? A large percentage of prisoners are minorities?! Why aren’t these lib politicians railing against this obviously RACIST practice (LOL). I’ll tell you why…they KNOW this will win them some respect in the eyes of the Tea Party…we are changing behavior folks!
Report Post »RightUnite
Posted on January 17, 2011 at 5:57amWell, if the Federal Bureau of Prisons and the IRS both have knowledge of this crime, then those who are aware of it also should be held accountable, and put in jail for fraud.
Report Post »scout n ambush
Posted on January 17, 2011 at 7:03amBut if they put these IRS agents in jail who will oversee obamas health care law being enforced ?
Report Post »EP46
Posted on January 17, 2011 at 5:16amI heard a report a couple of days ago that I do not understand.
The Feds are sending out 600,000 letters (how much does that cost ?)
These 600,000 letters go to people who will receive tax refunds but do not have bank accounts
Report Post »The letter says you can receive a prepaid debit card in the amount of the refund
How do you qualify for a tax refund and not have a bank account or a way to cash a check?
How do you cash a pay check?
Are these refunds made to people who pay no tax? Do not work? Are criminals or illegals?
Anyone have any information on this ?? Thanks
TMGallagher
Posted on January 17, 2011 at 7:45amMost ILLEGALS do not have bank accounts. They don’t have the documentation necessary to open them. Most of those letters are most likely going to illegals.
Report Post »proliance
Posted on January 17, 2011 at 8:43amThere is a large group of people with very poor money management skills who are rightly refused by banks to open an account. They cash their checks at grocery stores and have to make the rounds to pay their bills in cash. And yes, many are on welfare.
Report Post »HumbleCitizen
Posted on January 17, 2011 at 9:42amThere are some people who can not open a checking account for a variety of reasons. They cash their checks at a grocery stores or other check cashing place and pay their bills with money orders. Frequently these people make too little to have anything left over to hold in the bank to bother with the finance fees of a checking account.
Report Post »justice
Posted on January 17, 2011 at 5:06amIs this damn Goverment nuts. Thank God Issa is in charge. Follow the taxpayer money trail please. I know there is alot more to be found. How about GM getting a Bonus, and we the tax payers have not been paid back yet, there is another start. The big banks and others were critized for getting bonuses.
Report Post »RECOVERING-LIBERAL-IN-WOODSIDE-CA
Posted on January 17, 2011 at 3:52amAnd the government wants us to pay more taxes so they can give it to more people who do not deserve it. Sounds like redistribution of our wealth.
Report Post »obamanation
Posted on January 17, 2011 at 3:49amFederal income tax is illegal. Where are the senators on that one?.. Oh ya!!
Report Post »(The never ratified 16th Amendment)
proliance
Posted on January 17, 2011 at 8:38amThe 16th Amendment was ratified by 42 of the 48 States. Please explain where this “never ratified” idea comes from. I hear it repeated but never explained.
Report Post »NJartificer
Posted on January 17, 2011 at 10:20amproliance
Report Post »why dont you show us the statute that requires us to pay federal income tax
hkyfan36
Posted on January 17, 2011 at 2:20amI’m sure Jessy and Al and the ACLU will try and block this legislature
Report Post »IVillageIdiot
Posted on January 17, 2011 at 2:18amWhy aren’t they being charged with fraud?
You have all the evidence, don’t you?
Report Post »hkyfan36
Posted on January 17, 2011 at 2:17amFiling fraudulent tax returns …. these people ought to be in jail!
Report Post »CatB
Posted on January 17, 2011 at 2:41amYes … isn’t this illegal already? .. what took so long? .. how do they “cash” these checks? .. I am so sick of the fraud thoughout the government .. it is starting to look like there is more fraud than not. About D*mn time!
Report Post »RobertCA
Posted on January 17, 2011 at 5:17amFree rent
Report Post »Free food
Free medical care
+
Tax return
it sounds more like a retirement retreat than a jail .
Sledgehammer
Posted on January 17, 2011 at 6:43amMe thinks, that laws need not apply to the federal fifedoms, and that they are for keeping we the little people in line! If there are laws already in place to cover this, those who are not following them should be punished!
Report Post »scout n ambush
Posted on January 17, 2011 at 6:58amSledgehammer More like federal thiefdoms.
Report Post »oldguy48
Posted on January 17, 2011 at 6:58amSmoke and mirrors, they want to steal more money from us with this next debt limit increase. The fed keeps printing which is going to cause, at least, serious inflation, which is a hidden tax on all Americans. They want to destroy the right of free speech. The want to gut the right to bear arms. The few remaining industries will be chased out of the country through taxes and crazy regulation (epa cap and trade ruleings)
Report Post »They have been destroying AMerica through stupidity (actually it sounds more like an organized plan) a piece at a time for the last 100 years.
And they lose Billions to fraud in Medicade, welfare and steal whatever they can.
The Mafia ran a cleaner organization.
Colonial Revolutionary
Posted on January 17, 2011 at 7:25amSo how do they get the tax forms to fill out? Just stop giving them the forms. Duh….
Report Post »grandmaof5
Posted on January 17, 2011 at 7:26amPersonally, being from FL, I would like to thank Bill Nelson for this legislation. Seems to me there are some IRS and Federal Bureau of Prison people who ought to be in jail right along side the people they are aiding and abeiting.
Report Post »Kurty C Wipe
Posted on January 17, 2011 at 7:44amIRS running Barrycare, what could possibly go wrong?
Report Post »grandmaof5
Posted on January 17, 2011 at 7:51amCATB, I don’t know if you have checked this site (I’ve mentioned it a couple of times), http://www.gradegov.com, is done by Elizabeth Letchworth, out of Ocala, who worked for the Senate for 26 yrs. You can comment on any member of Congress(only comments from the member of your state will be posted publically, the rest just go to the member). I mention this because I usually leave Bill Nelson a less than complimentary comment on her site, hence I actually said something nice today. I will work dilligently against him in 2012, if there is a candidate worthy running against him, as I’m sure all conservative Floridians will. Have a great day!
Report Post »MR_ANDERSON
Posted on January 17, 2011 at 9:26amI remember when I use to play Monopoly…late in the game, jail was the best place to be!!!
Report Post »psst
Posted on January 17, 2011 at 10:32am@HKYF.
Report Post »That’s a good one.
yougottabekidding
Posted on January 17, 2011 at 2:01pmAnd if the progressives have their way, they’ll get to vote (lots of new Democratic votes)
Just a lingering thought: All prisons should be shielded so no cell phone calls could come or go from inside a prison!
Report Post »LadybugsTX
Posted on January 18, 2011 at 12:23amWow. We’ve known about this how long?
Knock yourself out Chuckie, but keep in mind, the shellacking you took in November was for one reason and one reason alone no matter how you try to spin your way out of it. Healthcare. So go ahead. Take care of this little problem now that you see the writing on the wall. But keep in mind, every second Obamacare is still relevant is another second for me to save up my cash to donate to your opponents to make you irrelevant.
Report Post »