Report: Prisoners get millions by claiming bogus tax refunds

Prisoners who made bogus tax refund claims were paid $70 million in 2012, the IRS inspector general revealed today.

The Washington Times reports that the 2012 figure is down from the $156 million paid out in 2011, though the IRS has yet to take enough steps to combat the fraud.

Among the flaws discovered by investigators were several fraud cases the IRS didn't catch, long-overdue reports to Congress, and a delay in signing memos with state prison officials that makes the IRS aware of prisoners who request bogus refunds.

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According to the Times, the IRS rejected the inspector general's request that the IRS come up with data analysis tools to try to spot the recurring problems, "saying it was comfortable with its methodology and saying it believed the inspector general was overly broad in spotting potential tax fraud."

In an official response to the reports, the IRS stated that flagging every inmate that files a return for more investigation "is not a productive use of our resources."