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TIGTA Says IRS Not Doing Enough to Combat Prisoner Tax Fraud

The Treasury Inspector General for Tax Administration (TIGTA), has concluded that the Internal Revenue Service (IRS) has not been sufficiently cooperative with prison officials at the state and federal levels in combating tax fraud perpetrated by inmates.

Orange County tax fraud attorneys noted that the TIGTA report says the IRS is not sharing tax return information with prison officials. The 2008 Inmate Tax Fraud Prevention Act, gave the IRS the authority to disclose information on fraudulent tax returns filed by inmates and give that information to state corrections officials and to the head of the Federal Bureau of Prisons. TIGTA is required by the Inmate Tax Fraud Prevention Act to provide a report to Congress on whether the IRS is sharing information on inmate tax fraud.

In its obligatory report, TIGTA had to say that the IRS had not provided any information on prisoner returns to either state officials or the Federal Bureau of Prisons as of October.

TIGTA said that the IRS needs to provide tax information to prison officials right away, because the authority to share the data will expire at the end of 2011.

The report said the IRS's process for identifying prisoner returns lacked oversight to ensure accuracy. The IRS agreed to TIGTA's recommendation to improve this process.

TIGTA said that the IRS is also not reporting the full extent of inmate tax fraud. For 2009, the IRS identified around 45,000 fraudulent tax returns filed by prisoners. But TIGTA said that only accounted for returns investigated by the IRS. TIGTA was able to find 54,000 returns filed by prisoners that the IRS did not even identify as prisoner returns. Those unidentified returns alone represented ten percent of the total of all prisoner tax returns for 2009. The IRS disagreed with the conclusion that it had underreported prisoner tax fraud.

TIGTA recommended that the IRS and the Treasury Department should work together to extend the authority for the IRS to disclose tax fraud data. The IRS agreed with this recommendation.


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