Tax fraud appears to be a popular pastime in the nation's prisons, but the Internal Revenue Service is catching on.
A government watchdog says the IRS detected more than 173,000 fraudulent tax returns from prison inmates last year — more than twice the number of fraudulent returns from inmates in 2010. Many were using stolen identities and other false information in an attempt to get tax refunds.
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 of that was claimed by just two inmates.
The inspector general for tax administration credits the IRS and prison officials with stepping up enforcement and sharing more information, but says more can be done.