Feds Crack Down on Prison Tax Scam
Law enforcement moves to end millions in refund ripoffs
By Mark Russell,  Newser Staff
Posted Feb 3, 2011 3:44 AM CST
New York Sen. Charles Schumer arrives for a news conference on Capitol Hill in Washington yesterday.   (AP Photo/Manuel Balce Ceneta)

(Newser) – Fraudulent tax returns filed by federal and state prisoners have soared over the past five years, but under pressure from the Senate, the FBI and Bureau of Prisons finally got their act together and signed a memo of understanding to crack down on the operations, reports AP. "This agreement means that prisoners will no longer be able to bilk taxpayers out of millions of dollars," said NY Democratic Sen. Charles Schumer. "The impasse needed to end, and today it's over."

The scam was outlawed in 2008, but red tape between the FBI, the Bureau of Prisons, and the Justice Department made enforcement difficult. The number of bogus tax returns from prisoners doubled between 2004 and 2009 to nearly 45,000, with the refund amounts claimed more than quadrupling, to $295 million. One New York prisoner claimed $15,000 in refunds on 21 different tax returns, which he had visitors submit. "It's shocking that inmates are ripping off the taxpayers right under the government's nose," said Florida Democrat Bill Nelson.