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Hundreds of thousands of prisoners are filing phony tax refund claims and the IRS is not doing enough to quash the problem, according to a watchdog report.
The Treasury Inspector General for Tax Administration (TIGTA) said in its report Tuesday that refund fraud associated with prisoner Social Security numbers is a “significant problem” for the tax agency that is only getting worse over time.
According to the report, more than 137,000 phony tax returns were filed in 2012 using a prisoner’s Social Security number to the tune of $1 billion. While many of the fake refunds were flagged and prevented by the agency, the IRS issued $70 million in bogus refunds.