IRS Can’t Stop Tax Fraud by Prisoners

November 26, 2014 Taxation in USA

Tax fraud in the USAWASHINGTON D.C. – The IRS’s inactivity regarding tax fraud committed by prisoners has resulted in a drastic spike in the number of attempts by prisoners to commit tax fraud.

Over the course of 2012 prisoners in the USA and their accomplices attempted to perpetrate ate least USD 1 billion worth of tax fraud, according to new information released on November 25th by the US Treasury Inspector General for Tax Administration (TIGTA).

When the TIGTA first began to maintain records of the occurrences of tax fraud committed using the social security number of a prisoner in 2010, there were an estimated 37 000 such instances per year, with a total value of USD 166 million, however, in the 2012 financial year, the numbers have risen to 137 000 and USD 1 billion respectively.

The experts of TIGTA concluded that the increase in the tax fraud activity committed by prisoners was partially due to the IRS’s inaction to address the issue, as tax authorities have not yet begun to share with prison official details of the attempted cases of tax fraud.

Further, the IRS also does not adequately complete and present to Congress reports on tax fraud committed by prisoners, as the tax authority is required to do.

In addition to the inaction, the experts of TIGTA also identified a computer error in the IRS’s administration system, which allowed some tax returns filed by prisoners to be accepted without having been passed through specific fraud-detection procedures.

Photo By: Tony Hisgett