IRS Needs Info On Precisely Who Is In Prison, Who Is Not

Washington, D.C. - Though some penitentiaries help IRS officials verify if tax refund claimants are incarcerated, many do not.

The requests from Treasury officials are answered on a completely voluntary basis.

About 50,000 inmates claimed more than $130 million in tax refunds without having to provide any wage information, according to Treasury Inspector General J. Russell George.

“Expanded and expedited access to wage and withholding information would significantly increase the IRS's ability to verify information reported on a tax return when processed and prevent fraud,” he said in a report released today.

Though the IRS is “very successful” at detecting and preventing fraud, the situation could be improved if Congress would act to force penitentiary officials to provide up-to-date information because prison populations are constantly changing, Mr. George concluded.

Verification is not a simple process, he explained.

One complicating factor includes the fact that some inmates and their families are eligible for a tax refund claim.

“However, without congressional action to require state and federal prisons to report the status of inmates to the IRS, there will be gaps in the prison data and compliance problems will persist,” according to the IRS statement.