US prisoners filed more than 173,000 fraudulent tax returns in 2012, claiming $1.1 billion in rebates

Ruse detected by the IRS, which blocked a total of $2.1bn in fraudulent refunds in 2012

New York

Prisoners filed more than 173,000 fraudulent tax returns with the US Internal Revenue Service last year, with offenders claiming $1.1bn (£690m) in rebates from behind bars, it has emerged.

The ruse was detected by the IRS, which blocked a total of $2.1bn in fraudulent refunds in 2012, more than six times the $384m it blocked in 2010.

According to a report released by the US Treasury’s inspector-general for tax administration, J Russell George, fraudulent tax returns from prison inmates has been rising, from about 77,000 in 2010 to 168,000 in 2011 before swinging past 170,000 in 2012.

“Refund fraud committed by prisoners remains a significant problem for tax administration,” he said.

In many cases, the fake refunds are not detected until the money has been paid out.

This week, the case of Arnold Tobias Gervais, 34, came to light. He filed no less than seven tax returns in 2009 – six in his own name and one in the name of an acquaintance – claiming more than $3.4m. He is reported to have received nearly $3m as a result of the scheme, which was based on claims of significant earnings from a fake company called Safety, Shoes & More. The fictitious business was reported to be based in Rome.

It is not difficult to guess what put Gervais in prison in the first place: according to a Georgia newspaper, he was jailed in 2008 after submitting a fraudulent tax return claiming a refund of more than $600,000.

Rivalling Gervais is Kevin Dunham, a Missouri inmate, who was reported to have pleaded guilty last year to claiming more than $139,999 in fraudulent refunds for himself and others.

More than $50,000 was paid out as a result of Dunham’s scheme, which involved preparing false returns using a prison typewriter and then secretly passing them to his friends’ families, who sent the fabricated documents to the IRS. His fee for this in-house service? It could be seen as a steal at $200 to $300 per return.

The Treasury Department report says the IRS and prison officials are stepping up efforts to enforce the law and sharing more information, but it also calls for more to be done to stop tax fraud among inmates.

The document released to the public is heavily redacted and contains few details about the scams run by inmates, although it is thought many use stolen identities to file fraudulent returns. Tax information – including that of prison inmates – is protected by privacy laws.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Canteen Assistants Required

Negotiable: Recruitment Genius: This is an opportunity to join the UK's Frozen...

Recruitment Genius: Facilities & Operational Administrator

£20000 - £25000 per annum: Recruitment Genius: An exciting position has risen ...

Ashdown Group: Sales Support - Buckinghamshire - £25,000

£20000 - £25000 per annum + benefits: Ashdown Group: Internal Sales Executive ...

Recruitment Genius: Field Smart Meter Engineer - Gas and Electric - Dual Fuel

£28000 per annum: Recruitment Genius: This company specialises in the installa...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum