IRS Corners Prisoner Tax Cheats

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In their ongoing efforts on catching tax cheats, the IRS has prevented $4.4 billion in bogus tax refunds from being given out this year. This represents an increase of 171% from the previous year, according to the report released by the Treasury Inspector General for Tax Administration (TIGTA). The TIGTA reported in 2010 that a total of almost 50,000 prisoners claimed more than $130 million in tax refunds, which largely went unscrutinized.

The TIGTA report also states that, “As of April 30, 2011, the IRS reported that it had selected 199,854 tax returns filed by prisoners for screening. This represents a 256 percent increase in the number of prisoner tax returns identified and sent to screening when compared with the same period last processing year.”

The increasing incidences of tax cheating by prisoners still serving their sentences has been a thorn in the IRS’ side of late, which explains the IRS tightening their monitoring of such crimes. In fiscal 2010, investigations into tax fraud increased by 14% and the corresponding recommendations for prosecution rose by 18%, figures that exceeded the IRS’ own targets. Audits of millionaires spiked by a hefty 73% last year as the IRS strived to close the tax gap (the difference between the amount of tax collected and the amount actually owed), all in the midst of Congressional budget cuts.

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