Tax fraud appears to be a popular pastime in prisons, but the Internal Revenue Service is catching on, the Associated Press reports. The IRS detected more than 173,000 fraudulent tax returns from prison inmates last year, many of them using stolen identities and other false information in an attempt to get tax refunds. That's more than twice the number of fraudulent returns detected from inmates in 2010, says a new report from the Treasury Department's inspector general for tax administration.
In all, the IRS says it stopped inmates from illegally claiming $2.5 billion in tax refunds in the 2012 budget year. About $1.1 billion was claimed by just two inmates. The report credits the IRS and prison officials with stepping up enforcement and sharing more information, but it says more can be done to stop tax fraud among inmates. "Refund fraud committed by prisoners remains a significant problem for tax administration," said J. Russell George, the Treasury inspector general for tax administration.