IRS Tax Freedom in Prisons Across the Country

While thousands of people may delay filing their federal taxes, prisoners in U.S. jails across the country take the lead and actually enjoy filing. No more sticky street crime, say some prisoners. White collar crime suits them best, and doesn't carry half the risk. Prison officials say that the scam has been going on for a quarter century or more, making some prisoners wealthy by prison standards, and taxpayers poorer.

Some prisoners in U.S. may be entitled to federal tax refunds, especially if they're recent entrants who had earnings before incarceration. But other convicts have taken notice of tax filers and decided to file IRS refund claims based on fictional employment. Key to the scam is falsifying IRS Form 4852, used by the IRS in lieu of IRS Form W-2. All it takes is the required forms and a little effort on the part of the prisoner. Hmmm...let's see...how much did I make this year? $125,000?..... 40,000... No matter, so long as I stay under President Obama's $250,000 income limit before tax increases kick in. It's not as if prisoners have anything better to do.

Typically, there's an inmate "ringleader" in these IRS scams, someone with seniority status, someone who knows how to get things done. Since tax forms are widely available, it's little trouble to get them in prison. Ringleaders generally need a lot of the forms in order to file since, in most cases, these prisoners file for anyone who's willing to lend their names, dates of birth, and social security numbers. But if inmates can get drugs, cell phones, and other contraband in prison, it isn't too difficult to get paper.

Social Security Number and D.O.B. data and flows freely when new inmates come into lockup. A CNN story today said that some new jailhouse occupants were willing to trade their identifying data for such humble payment as a sticky bun from the prison cafeteria.

"Excuse me, dogg.... Wouldn't you like to trade your D.O.B and SSN number for this fine cupcake?"

KSL-TV reports that two inmates in Utah State prison fraudulently received $26,000 from the IRS. The CNN television report said this morning that the prison inmates illegally received millions of dollars from the IRS, since an investigation began three years ago. One of the problems of enforcement, say prison officials, is that the IRS must conduct its own investigations of inmate tax fraud, even though prison officials have already completed criminal investigations. Prosecutions are sometimes delayed for years as a result.

You'd think that the IRS, so assiduous in monitoring legal filers, would find it easy to catch criminal filers, especially since they were in jail. Not the case at all, according to CNN, which interviewed a corrections officer who showed reporters how an inmate has simply stored piles of tax forms under his mattress and bunk. Correction officers busted the scam when they noticed a large number of government IRS checks coming to a single address and person.

Sometimes the scam ringleaders received only a cut of the thousands they filed for; other times they sent the checks to outside addresses of relatives. However, the scam is played by experienced inmates, there is much help online for prisoners who may want to upgrade their white collar skills. The internet provides many opportunities for prisoners in our technological age, as this Associated Content article from another contributor will attest.

In addition, many popular "helping" websites offer advice to prison inmates in how they may file for federal tax refunds. Answerbag and Ehow are prominent and well-known sites. However, neither site advises upon nor encourages fraudulent claims.

On the Answerbag website, the FAQs points out one common question asked at that site:

"Can you go to jail if you don't file your taxes?"

I couldn't link to the answer to that question but I think I know the answer.

"It's possible, especially if you're already in jail!"