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Not a name, but a number: inmates' identities used for tax fraud

Prison inmates have often been forced to wear numbers on their backs, removing the dignity that comes with having a name -- not a number -- as their identity.

That is bad enough. But it is even worse when prisoners’ actual identities are used in tax refund fraud schemes.

It’s an issue we’ve been following for a few months now. In our November 30 post last year, we took note of the increase in tax refund fraud behind prison walls. In that post, we reported on a federal report showing that the IRS paid out more than $1 billion in fraudulent refunds in 2012 to prison inmates or those who gained access to prisoner information.

Inmates are by no means the only participants in the correctional system who are committing tax fraud based identity theft. As the Wall Street Journal reported yesterday, others are as well.

This includes corrections officers and at least one bail bondsman. There have been numerous federal prosecutions aimed at schemes in which stolen Social Security numbers belonging to inmates were used to seek false refunds.

Experiencing identity theft can make it even more difficult than it already is for former inmates trying to reenter society after release from prison. One nonprofit group estimated that about 1 ex-offender in every 5 has credit problems that can make it difficult to rent an apartment. And many of those problems are due to identity theft.

The larger question is what the IRS is doing to finally solve the long-running problem of tax refund fraud based on identity theft. In one of our posts next week, we will update you on the agency’s efforts to use special PIN numbers for this purpose.

 

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